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Wednesday, Jan 05, 2005

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Sick seafood units seek PM's help to stop recovery by banks

Vipin V. Nair

Kochi , Jan. 4

AROUND 130 seafood units that are in financial trouble have sought the intervention of the Prime Minister, Dr Manmohan Singh, to stop the recovery proceedings initiated by banks and financial institutions against them.

The seafood units have taken their grievance to the Prime Minister through some 50 members of parliaments (MPs) of coastal States such as Kerala and Andhra Pradesh, industry sources said.

The MPs said in their memorandum that the Prime Minister's help was sought because the matter of providing a breather to the sick seafood units comes under the purview of various ministries and departments.

Though the units had approached the Indian Banks' Association (IBA) with a proposal to revive their fortunes through multiple financial packages, some banks had begun the process of recovering the debts by way of attaching factories and other assets, seafood industry sources said.

The debt-laden seafood units - most of them declared sick — had teamed up under the aegis of Forum for Revival and Reconstruction of Seafood Export Industries and approached IBA to work out a relief package.

They had suggested proposals such as rehabilitation for potentially viable units by waiving all interests and half of the principal amount related to working capital and term loan and consolidation or merger of units.

Seafood industry sources said that though IBA held a round of discussions with the industry in October last, no progress could be made on their proposals. The association was of the view that the units should take up their problems with individual banks, the sources said.

Meanwhile, the banks had gone ahead with their recovery proceedings, they said.

Collectively, the troubled seafood units owe around Rs 260 crore to the banks and financial institutions, of which over 50 per cent is accumulated interest on loans.

The seafood industry blames their problems on factors `beyond its control,' such as the plague in Surat in 1995, diseases in aquaculture farms, the ban by the European Union on Indian seafood exports in 1997 and South-East Asian currency crisis.

Also, the industry had to invest huge sums in upgrading the facilities to meet the stringent quality standards stipulated by the EU. Non-tariff barriers imposed by the US and Europe as well as the antibiotic and muddy smell problems of black tiger culture shrimps added to the problem.

Besides the Prime Minister, the seafood units have also appealed to Mr P. Chidambaram, Union Finance Minister, and Ms Sonia Gandhi, Chairperson of the National Advisory Council, to prevail upon the banks to agree to the rehabilitation package submitted by them.

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