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`Gujarat model' scheme to revive AP sick SSIs

Amit Mitra

Visakhapatnam July 31

IN a significant development for sick units in the small scale industries (SSI) sector in Andhra Pradesh, the State Government has introduced a revival scheme, modelled on the scheme for rehabilitation of small scale non-BIFR sick but viable industries r ecently introduced by the Gujarat Government.

Containing a slew of fiscal and non-fiscal concessions for revival of these units, the scheme, which is being implemented under the banner of A.P. Small Scale Industries Revival Scheme (APSSIRS), came into effect from early this month.

With heavy incidence of sickness in the SSI sector in the State causing considerable concern for the Government and with the SSI sector not coming under the purview of the BIFR, the Government took the initiative to study the Gujarat model and introduced the scheme in the State.

Salient features of the Gujarat model scheme include establishment of an effective mechanism for identifying deserving or viable sick units, timely identification before it is too late for any revival and the active involvement and participation of the b anks and financial institutions on the one hand and the promoter on the other.

Under the APSSIR scheme, a unit will be considered sick when any of its borrowal accounts has become a "doubtful advance" as defined by the RBI-- that is the principal or interest in respect of any of the borrowal accounts has remained overdue for a peri od exceeding two and a half years.

Further the unit should have suffered an erosion in its net worth due to accumulated cash losses to the extent of 50 per cent or more of its peak net worth in the preceding two accounting years or 30 per cent or more of its peak net worth in the precedin g two accounting years in case of reference made by its financial bank or financial institution.

A viable sick unit, as per the scheme, will mean an unit in the manufacturing sector, with investment in plant and machinery of over Rs 5 lakh, that would be in a position to repay the restructured loans and interests fully to banks/financial institution after the implementation of the rehabilitation package spread over a period not exceeding five years.

According to authoritative sources, the State has accepted in principle that the parameters applicable to the medium and large scale units for the purpose of BIFR would also apply to the sick SSI units while formulating the rehabilitation package.

Also, necessary funds to operate the scheme shall be provided in the budget allocation to Industries and Commerce department, with the number of units to be provided relief proposed to be restricted to the funds available in any given year.

While the non-fiscal concessions include relaxation from power cuts and grant of permission to mortgage surplus land that has been exempted under Section 20 of the ULC Act, the fiscal concessions include deferment of payment of arrears under purchase tax , sales tax and interest for two years from the date of grant of revival package.

The State Government has constituted a special cell with the Commissioner of Industries as the chairman. Any sick non-BIFR SSI unit can approach the special cell directly, with proposals for rehabilitation of the unit. After examining the merits of the proposal, the special cell will allot a register number to the unit and a final decision on the revival package will be taken within 30 days of application.

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