Tiruchi MSME fabrication crisis demands urgent government intervention

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Tiruchi MSME fabrication crisis demands urgent government intervention

Tiruchi MSME fabrication crisis demands urgent government intervention

Industry News
Sep 18,23

Tiruchi, once renowned as a premier fabrication hub in South Asia, owed much of its reputation to the welding expertise cultivated through collaboration with BHEL.

Tiruchi MSME fabrication crisis demands urgent government intervention

In recent years, a concerning trend has emerged in Tiruchi, where numerous small and medium fabrication units have fallen into financial distress. Recognising the gravity of the situation, the Tamil Nadu Boilers Association has urgently called upon both the state and central governments to provide immediate assistance for the revival and rehabilitation of these micro, small, and medium enterprises (MSMEs).

Tiruchi, once renowned as a premier fabrication hub in South Asia, owed much of its reputation to the welding expertise cultivated through collaboration with BHEL. This region was a vital contributor to the domestic market, manufacturing over 60% of the windmill towers and earning the moniker of "tower city," as acknowledged by industry stakeholders.

Over time, approximately 450 MSMEs were established, boasting an annual capacity of 7 lakh metric tonnes for steel fabrication and component manufacturing. At its zenith, this sector employed roughly 40,000 individuals directly, with an additional 40,000 people providing various support services. Many of these enterprises originally operated as BHEL ancillaries, initially engaging in light fabrication. However, as their expertise grew, they expanded their capabilities to manufacture complex structures for boilers, windmills, and other industries.

The downturn began in 2016 when several BHEL ancillary units struggled to secure adequate orders from the major public sector company. The resulting recessionary conditions placed immense stress on these units, rendering them non-performing assets (NPAs). The COVID-19 pandemic further exacerbated the situation, leading to the closure of approximately 150 units, while several others joined the ranks of NPAs, according to Rajappa Rajkumar, President (in-charge) of the Tamil Nadu Boilers Association.

Some of the stressed units managed to survive through interim relief measures announced by the central government in recent years. Out of the 51 units declared as NPAs, 31 still clung to existence by tapping into their own resources and securing loans, all while hoping for a government assistance package.

In response to the appeals made by industry representatives, both the central and state governments have been considering recommendations for the implementation of a rehabilitation package. "The MSME Ministry has forwarded our recommendations to the Department of Financial Services of the Union Finance Ministry," stated Rajkumar.

These NPA-designated units have been awaiting this package for five years, with banks now moving toward auctioning NPAs—a potentially catastrophic outcome for the industry. Faced with this looming crisis, the Tamil Nadu Boilers Association initiated a legal process to halt the auctioning of these NPA units by banks. Recently, they obtained an interim stay for eight weeks from the Madurai Bench of the Madras High Court. Rajkumar emphasised that their legal action was a last resort for survival and not a stance against the banking institutions. They hope that banks will consider a viable one-time settlement that could facilitate the reestablishment of their businesses.

Additionally, the association earnestly appeals to both the central and state governments to swiftly devise a workable package. Such a package would harness the capacity and capabilities cultivated over the past two to four decades, ultimately fostering the growth of the MSME sector.

Source: The Hindu