TN Boilers Association seeks relief from tough law on loan default
The Tamil Nadu Boilers Association on Friday urged the Central government to reconsider action taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, which permits banks to take over and auction properties of defaulting units.
By : migrator
Update: 2018-08-24 21:55 GMT
Thiruchirapalli
Speaking to reporters, president of the association B Pattabiraman said several entrepreneurs, who had humble origins, had developed their business with an investment of Rs 2,500 crore. This facilitated employment opportunities to over 40,000 persons directly and indirectly because of orders from Bharat Heavy Electronics Limited (BHEL).
Stating that BHEL produces 800 mV boilers at present, the boilers association chief said this had prompted several boiler units to get bank loans. However, the business declined after the Supreme Court banned as many as 219 coal mines in 2013, which resulted in orders for over 20 boilers being cancelled.
Meanwhile, the BHEL which produced boilers to the tune of Rs 15,000 crore in 2013-14 saw its production portfolio reduce to Rs 7,000 crore. As a result, auxiliary units have suffered a huge loss and are not able to pay back their loans, Pattabiraman said.
In addition, demonetisation and the rollout of GST has dealt another big blow to the units. Four boiler units have been shut down as they could not repay their loans, while around 75 units were subject to action by the banks.
In such a backdrop, the industry witnessed a positive surge as orders were given by the railways and defence departments.
“Despite these orders, however, the action taken under SARFAESI act had left several units on the verge of either losing orders or closing permanently. It is time for the authorities to reconsider the legal action,” Pattabiraman said.
The boilers association appealed to the Central government to rehabilitate the units with the support of RBI. “If there is no chance of rehabilitation, the government should give at least 12 months grace period to settle the dues. The RBI as well as the public-sector banks should come forward in helping us by disbursing loans,” he appealed.
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