The Hindu Business Line : Kovai micro units in the dark

Coimbatore, Oct. 3 For the over-20,000 micro and cottage industries in and around Coimbatore, already reeling from the impact of spiralling raw material cost and rising interest rates, the stretched power cut has put a question mark on their survival.

The crippling power cut for five-seven hours daily has come as a body blow to these units, which play a key role in manufacturing diverse products meeting the needs of sectors such as defence, railways, textiles and automobiles. The entrepreneurs fear that once the orders slip out of their hands, they would find it difficult to get the business back even if the power situation improves in the future.

Fear of losing talent

These industries, which work on thin margins and survive on job works, are not able to lay off workers for fear of losing the talented labour pool, already seen drifting to construction work that is thriving in Coimbatore.

Mr J. James, Coimbatore district President, Tamil Nadu Association of Cottage and Micro Enterprises (TACT), ruefully remarks, “We are facing a slow death and no one seems to realise that. There is a big question mark over our future.

But now survival has become an issue for the 20,000 to 25,000 cottage and micro units, most of which share residential space in the city.

Tracing the problems the sector has been facing for the past 10 months, he said the cumulative hits these units have taken because of the acute power shortage could be around Rs 800 crore in Coimbatore alone. Earlier, since the power cut was unannounced, the industries could not schedule their work but had to pay their workers, who are mainly paid on hourly basis irrespective of their units actually functioning. This made a big hole in their pockets but the industries were left with no choice.

But with the TNEB announcing schedule of power cut, staggered over 5 to 7 hours a day, the industries are able to schedule their work. But this helps only in areas where the power cut is in force from 6 a.m. to 9 a.m. and there the units start their work after 9 a.m.

But in areas where the power cut is enforced in the later part of the day or when the cut is staggered, the units are not so lucky.

As they work mostly in residential pockets, they avoid working in night shifts for fear of earning the wrath of residents, he said.

The workers are also drifting to working in construction projects around the city as they do not want to remain idle and be paid.

Mr James said with Diwali round the corner, the micro and cottage units are in need of financial infusion. The State and Central Governments should ensure that these units are provided with interest-free financial assistance of Rs 1 lakh to Rs 5 lakh each to meet their financial commitments. The Governments should also take steps to waive the interest for bank loans during last year and extend the interest waiver for the current year.

Mr James said bank finance is hard to come by for these micro and cottage industrial units that employ close to 2.5 lakh persons in the city and they have to depend on private money lenders, often paying Rs 5 to Rs 10 a month as interest for every Rs 100 borrowed. But even this source is drying up because the money lender are wary of extending financial assistance to units that face long hours of idling due to power shortage.

Putting the present scenario in perspective, he said in 2001-02, due to industrial recession, the small units experienced a tough time but the orders from MNCs and large industrial units kept the small and micro enterprises going. These units are engaged in plastic molding, CNC lathe work, etc., and are key associates for component makers in sectors such as defence, railways, automobiles and textiles.

But the current scenario is different in that these units are not able to execute the orders because of the power shortage. He said units are trying to tide over the situation by juggling their working hours and the large clients are also helpful because they realise the predicament these tiny units face. But if they are unable to meet their deadline continuously, then the large clients may shift their orders elsewhere and once the business goes out to other States, then these micro units may find it difficult to get the orders back when the power situation improves. This would put their survival on the block.

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