Huge accumulated losses, low productivity owing to antiquated machinery, absence of further capital investment, severe competition from companies abroad, shortage of manpower and high rate of financing charges have been among factors that have already pushed the public sector Keltron Component Complex Ltd. (KCCL) into a deep crisis.

The full dimension of the crisis was unravelled before the Public Undertaking Committee of the Assembly in its sitting held in Kannur on Wednesday. The panel comprising MLAs Elamaram Kareem and N. Jayaraj as well as panel officials got a clue of the seriousness of the crisis being faced by the KCCL, a subsidiary of the Kerala State Electronics Development Corporation Ltd.

While the authorized share of the company manufacturing aluminium electrolytic capacitors is Rs. 35 crore, its accumulated loss is Rs. 34.73 crore.

The Keltron chairman C. Prasanna Kumar, Executive Director K.M. Gopinath and Managing Director T.A. Karunakaran and General Manager E. Suresh were present at the sitting held at the Government Guest House here by the house panel for exclusively on the activities, assets, liabilities, turnover, human resources and other issues of the KCCL.

The KCCL at Mangattuparamba, which had commenced its commercial production in 1978, now has the capacity to manufacture almost all types of electrolytic capacitors required for the electronic components market. With the merger of three other Keltron units – Keltron Magnetics, Keltron Resistors and Keltron Crystals – merged with the KCCL in January 201 to form a single entity.

According to Keltron officials the productivity of the company was lower owing to obsolescence of the machinery installed two or three decades ago. Capacity enhancement in the company had been carried out during 1990. In 2007, the State government had sanctioned Rs. 2.3 crore for installation of automatic machinery in the MPP capacitor line and the company was targeting a turnover of Rs. 16 crore for MPP capacitors as output in that segment had increased, they said. The KCCL, which had been continuously making profits since 1981 to 1999, started facing pressure from competition following liberalisation. As a result of the reduction of import duty on capacitors by the Central government, import of finished capacitors had become cheaper leaving the company in an unhealthy competitive situation, the officials said.

Upward variation of foreign exchange value against the rupee as well as the higher rate of financing charges worsened the situation for the KCCL, they pointed out. Modernisation and upgradation of the existing facilities was the only way to make the company profitable, they told the panel.

In a note presented to the panel, KCCL Managing Director T.A. Karunakaran said that the company has submitted a Rs. 3.95 crore proposal to the government through the Restructuring and Internal Audit Board (RIAB) for setting up a production facility for manufacture of large can high CV value capacitors. He said that the project proposes to enhance the existing range of high CV capacitors to meet the entire size required by the market. The increase in turnover expected per annum is Rs. 11 crore with quantity addition of Rs. 13.5 million capacitors, he added.

Following the merger of the three Keltron units with the KCCL, the company had to take over all the pending liabilities of the merged units. The financial position of the KCCL at the time of the merger was not healthy and it was under the purview of the Board for Industrial and Financial Reconstruction (BIFR). As on January 1 this year, the company still had to pay employee related outstanding amount of Rs. 1.79 crore, he informed. The KCCL had urged the government to provide a one-time assistance of Rs. 1.75 crore for the settlement of long-pending issues, he added.

The Keltron officials also told the House panel that the KCCL was facing acute shortage of skilled technical personnel. The shortage of qualified technical personnel was causing heavy strain on the organisation effectiveness, they pointed out. They also urged the government to permit the KCCL to go for recruitment.

The panel members later visited the KCCL campus at Mangattuparamba.

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