Health clinic revives sick units in Telangana

Hyderabad: After successfully rehabilitating 33 sick units, the Telangana Industrial Health Clinic Ltd (TIHCL) is aiming to revive 100 ailing MSMEs (micro, small and medium enterprises) during the current fiscal.

Marketing and managerial issues were the main reasons for sickness, said Dr Yerram Raju, adviser to TIHCL, while urging the state government to release its revival policy for the sector early as possible.

It’s a year since the state government in June 2017 announced the formation of the TIHCL to address the issue of industrial sickness. In the past year, it has received 43 applications for revival advice from MSMEs. 

“There’s general apprehension that monetary-related issues are mostly daunting small units. Rather than cash flows, other factors such as managerial and marketing aspects mainly cause sickness in the industry. Without extending financial support, we have resolved the issue for many sick units,” Mr Yerram Raju said.

“We have so far revived 33 sick units, while seven are in progress. We’re aiming to revive 100 units in the current fiscal. All these units are from the manufacturing segment,” he said.

The state government yet to release the revival policy, which would help resolve issues relating to power dues and commercial tax dues, he said. Revival policies are being implemented by Gujarat, Tamil Nadu, Karnataka and Madhya Pradesh. 

Mr Raju said the TIHCL had studied the problem of industrial sickness and was drawing up an action plan for revival of sick units. “Seventy per cent of these units are proprietary firms. For instance, we have rescued 25 entrepreneurs in the Sircilla Textiles Park from financial collapse,” he said.

Generally, the TIHCL allocates a consultant to the units that approach it for help. Since a majority of entrepreneurs don’t know the real cause for the sickness, TIHCL mostly offers investment analysis and employment analysis before advising them on a revival package. The TIHCL will also focus on working capital requirements and how to manage the cash flows. 

Another problem being faced by small units is the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) Act, 2002 that allows banks and financial institutions to auction residential or commercial properties to recover loans.

“Once the sick units’ properties are auctioned, the entrepreneur can’t continue in business unless he gets another round of financing from another source. We have successfully stopped sale of properties belonging to five units under the Sarfaesi Act by providing advice and other necessary inputs to banks,” Dr Raju said.

Some units that approached the TCHIL were already declared NPAs by their lenders. :We need to study their bank statements, three year I-T returns and other financial statements to ascertain real problem,” Dr Raju said.

The TIHCL is not accepting applications from secondary steel, cement, rice mills, clinkers, etc. 

“We don’t accept firms declared as willful defaulters by banks also. Our main objective is to provide necessary solution and problem of the client should be resolved within one month,” he said.

Fifty-one per cent of industrial units are located in four districts – Ranga Reddy, Sanga-reddy, Karimnagar and Medchal.