MP scheme for revival of sick units fails to take off

Only 140 small companies offered packages so far

The Udyog Mitra Yojana, a Madhya Pradesh government initiative to deal with sick units in the small-scale sector, has failed to take off.

Under the scheme, public sector banks are to provide a rehabilitation package or an exit route to the sick SSI units. But the lack of data on sick small-scale units and unawareness about the scheme among industrialists have prevented the scheme from succeeding.

"Not many people know about the scheme," said an entrepreneur at the Govindpura industrial area.

The state government procedure requires names of closed units, sick units and units that want a rehabilitation package or an exit route. In absence of data there is a communication gap between banks, state government and small-scale industries.

Only 140 small units had been offered a package under the scheme so far, said industry sources. The MP Laghu Udyog Sangathan is likely to take up the issue with banks on July 25.

According to an RBI report, of the 78,066 small units registered in the state, 11,985 are sick involving Rs 1,200 crore including Rs 400 crore loans provided by banks. The credit to the small-scale sector in the state stands at Rs 1,650 crore or 7 per cent of total credit of Rs 25,046 crore.

Responding to the SSI units' demand for a revival package at a recent state-level bankers committee meeting, S Bhattacharyya, State Bank of India chief general manager (Bhopal circle), said banks wanted to help out sick but viable units. He asked the MP Laghu Udyog Sangathan to prepare a list of sick SSI units and give the SBI at least one-month time to respond.

Reacting to Bhattacharyya's statement, MP Laghu Udyog Sangathan chief RS Goswami told Business Standard" "How can the Sangathan prepare a list of sick or defaulting small-scale units? There are number of public sector banks and each bank has its own case. Why they (bankers) do not prepare a list on case to case basis?"

"We are expecting as many as 1,000 cases of sick units to be settled or rehabilitated under the scheme but banks have no data," said Goswami.

On the state government's other initiatives to revive the small-scale sector, Anil Shrivastava, industries commissioner, told Business Standard, "the government is planning to waive stamp duty if a buyer takes over a sick unit."

The annual credit plan for the SSI sector for commercial banks in the state stands at Rs 364.89 crore against the Rs 424 crore of the previous year. The banks achieved 78.5 per cent of the credit target and disbursed Rs 333 crore this year.

"The recovery from the small-scale sector is poor. It will be difficult for the banks to increase credit if the recovery rate remains low," said VN Saxena, executive director of the Central Bank of India, the lead bank for the Bhopal district.

No credit

• According to an RBI report, of the 78,066 small units registered in the state, 11,985 are sick.
• Credit to the small-scale industries in the state stands at Rs 1,650 crore.