Tiruchirapalli

Engineering ancillaries in Tiruchi in dire straits, look for RBI rescue

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Their immovable properties classified by banks as non-performing assets

At least 60 engineering ancillaries of BHEL in Tiruchi district are on the verge of closure as banks are in the process of enforcing SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) Act.

Due to slackness in orders from power utilities over the last few years, and domination by Chinese power equipment manufacturers, operations of about 25 local industries, including three major manufacturers, Cethar Vessels, GB Industries, and Veesons Energy Systems Pvt. Ltd., came to a halt.

The immovable properties of the industries have been classified by the banks as non-performing assets.

The dismal state of the boiler sector that has reflected in the closure of the ancillary industries has rendered several thousands of workers jobless, proprietors lament.

Unlike a decade ago, when BHEL used to have a smooth sail, having to stave off competition only from local contenders and could retain two-thirds market share, the maharatna company faced a setback in securing orders in recent years due to the tough competition posed by Chinese companies.

Buoyed by BHEL’s ambitious forecast of capacity addition during 2010-11, many of the engineering ancillaries scaled up their capacities by raising huge bank loans.

But when the order position of BHEL took a hit in later years due to aggressive strategies adopted by the Chinese power majors, the immediate impact was felt on the ancillaries that could not secure the conversion orders to even sustain their operations, leave alone debt-servicing, according to an industrialist who has shut down his unit.

The silver lining has been the string of recent orders secured by BHEL over the last year based on which the engineering ancillaries are hoping to bounce back.

At this juncture, what the harried industrialists look for is a moratorium on loans and fresh infusion of capital.

A delegation of Tamil Nadu Boilers Association has approached the Department of Financial Services with thehope that Reserve Bank of India will prevail upon the lenders, the nationalised banks, to put on hold confiscation of immovable properties of the companies that had defaulted on repayments.

“We have received positive indications,” TNBA treasurer Rajappa Rajkumar said.

“Intervention by RBI in the prevailing situation is crucial for revival of hundreds of engineering ancillaries in Tiruchi that are otherwise staring at closure,” he noted.

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Printable version | Jan 27, 2020 5:32:16 AM | https://www.thehindu.com/news/cities/Tiruchirapalli/engineering-ancillaries-in-tiruchi-in-dire-straits-look-for-rbi-rescue/article25877774.ece

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