Over 20,000 MSMEs turned sick in AP during Jan-Mar

Hyderabad: In a major blow to the micro, small and medium enterprise (MSME) sector in Andhra Pradesh, as many as 20,912 MSME units had turned sick during the three month period from January to March this year. This represents an alarming 140 per cent increase in the number of sick units from 14,964 units during September-December 2013 period to 35,876 units in Jan-March 2014.

“There is a substantial increase in number of sick units i.e. 20,912 units during the quarter mainly due to 19,077 sick units reported by the SBH which are inclusive of service sector units, and 7,023 sick units reported by Indus Ind Bank,” said a report tabled at the 35th meeting of the Empowered Committee (EC) and 100th meeting of the State Level Inter Institutional Committee (SLIIC) on MSMEs of Andhra Pradesh recently.

According to it, the State Bank of Hyderabad (SBH) reported only 3,845 units while Indus Ind Bank did not report any sick units during the quarter ended on December 2013. The report says though there is abnormal increase in number of sick units, the outstanding amount has actually decreased. “In terms of the outstanding amount, it has come down from Rs 1,286 crore in December quarter to Rs 952.03 crore,” it added.

During the March quarter, only 1,425 units were put under nursing out of 2,251 sick units which were reported to be potentially viable. However, this was much better when compared with December 2013 quarter when just 1,488 units were placed under nursing out of 4,288 sick units that were found to be viable for revival. “There were 300 units (1,556 units in Dec 2013) for which viability is yet to be decided. As per the guidelines, the decision on viability of the unit should be taken at the earliest, but not later than three months of becoming sick under any circumstances,” it added.

Industry bodies are blaming power shortage and political uncertainty for MSMEs becoming sick in AP. “MSMEs are becoming non-performing assets (NPAs) or sick units because of power crisis for the past three years, un-scheduled power cuts, political uncertainty and general economic slowdown. Nearly 98 per cent of MSMEs are not willful defaulters,” A P K Reddy, President, Federation of Small and Medium Enterprises of Andhra Pradesh (FSMEAP), told The Hans India.

According to him, to be successful, MSMEs need proper technology, marketing tie-ups and most importantly sufficient financial resources and power. “Lack of such facilities will render MSMEs sick,” he explained. He urged the new governments in both Seemandra and Telangana states to announce bailout package for the MSME sector.

As per the data submitted by the State Level Bankers’ Committee (SLBC) at the SLIIC meeting, the total outstanding credit for MSME sector in AP stood at Rs 69,272.55 crore as on March 31, 2014, a growth of 5.83 per cent from Rs 65,455.25 crore as on December 31, 2013. Of this, the public sector banks accounted for Rs 42,281.87 crore while the private sector banks accounted for Rs 9,874.77 crore. There are close to seven lakh MSME units in undivided Andhra Pradesh, employing over 40 lakh people.