Forgings industry seeks bailout package

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BUSINESS LINE

Forgings industry seeks bailout package

2008-12-01 09:13:30

RBI

Pune: A beleagured forgings industry, reportedly working at 20 and 30 per cent capacity utilisation on account of the slowdown in the automotive sector, is seeking RBI intervention and a bail-out package from the Government in order to survive the current crisis.

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The Pune-based Association of Indian Forging Industry (AIFI) held a meeting here recently to review the measures that needed to be taken to help the industry deal with the situation.

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The demand from Tier I companies, down by as much as 65 per cent, and non-realisation of payments has led to multiple problems, Asheet Pasricha, Joint Managing Director, Trinity Engineers, said. These include devolvement of LCs and defaults in instalments on term loans.

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“The defaults are classified by many bankers as NPAs (non-performing assets) and a penal rate of interest as high as 24 per cent a year is charged on these dues from the first day of advance, besides other measures such as not considering further working capital limits, term loans and LCs. Restructuring of overdues/loans, not classifying as NPAs, and other forms of leniency by banks is the need of today. RBI intervention is required immediately,” a member of AIFI said.

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The RBI should initiate measures to bring the economy out of the throes of recession. If necessary, some steps on the lines of the US Govt measures have to be taken to bail out the auto industry, he added.

Though the forgings industry as a whole has been affected by the current situation, the units in the western region are worse off as they cater to the more seriously hit commercial vehicle segment.

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“Most of the plants in the organised sector are also working only 2-3 days a week, and at least three units have ceased production,” Pasricha said, adding that, on an average, production is down to 25-30 per cent of what it was a year ago.