New industrial policy opens exit window for state’s sick cos
NON-VIABLE industrial units in Maharashtra, which have availed of government incentives and want to get out of the loss-making ventures, have an escape route now. For the first time, the government of Maharashtra has offered an early exit option to such units in the form of one - time settlement of government dues. So, a business venture that held promise earlier but turned non-viable for a number of reasons can clear government dues in one go under a special amnesty scheme offered by the government and stage an exit. The scheme is part of the new industrial, investment and infrastructure policy announced by the government of Maharashtra. “Under this scheme, non-viable units can take the exit option by going in for one-time settlement of government dues which they have taken in the form of incentives. In this case, government will grant a complete interest waiver on government dues. Make one-time settlement, avail of interest waiver on government dues and get out of it,” said industry minister Ashok Chavan. What is an ideal non-viable unit the scheme seeks to target? “There was this classic case of a unit manufacturing plastic floppies. Only some months into business, technology got upgraded to compact disks and later on to pen drives. So, this venture turned non-viable and it genuinely deserved an exit option,” explained industry secretary Vinesh Kumar Jairath. “There could be many genuine reasons for business turning non-viable, like changes in the market environment or labour problems,” Mr Chavan said. The scheme makes life a little easier for such business ventures in the sense that it provides for an early exit. At present, the plastic floppy manufacturer has to run his unit because there is a timeframe for getting out of it. No time limit for sick cos in new exit option MAHARASHTRA government has decided to offer an early exit option to sick and un-viable industrial units in the form of one-time settlement of government dues. “The difference between the earlier exit option and the amnesty scheme is that the latter offers the OTS option. Earlier, the exit option prescribed certain time-frame for the units depending upon their size,” said state industry secretary Vinesh Kumar Jairath. For large scale unit, the exit period was ten years, for medium scale seven years and for the small scale five years. The non-viable units, however, can avail of the amnesty scheme only up to March 31, ’08. Mr Chavan said the policy would go to the labour department which “hopefully will clear it soon.” The government officials, however, said the non-viable units which take the exit option would have to settle a lot of other issues as well besides clearing the government dues. “For electricity charges, the units would have to approach the authority concerned and the electricity regulatory commission,” Mr Jairath said. Not many in the government think the scheme would work wonders. “The OTS option for government dues is not enough to bail out a non-viable unit. There are also bank arrears and dues from other creditors which might take lot of time to settle,” an official said. Labour department officials said units would have to settle their labour dues first. “Along with the government dues, they also have to clear the claims of their staff if they want to take an early exit route,” said an official. But it’s unlikely that the labour department would not approve the scheme, sources said.

source: Economic Times ( Friday 3 nov. 2006 )