The Hindu Business Line : KSIDC working on revival plan for seafood units

THE scores of seafood units in the State struggling to find their feet in the changing scenario on the export front may well turn to the Kerala State Industrial Development Corporation (KSIDC) which is working on a revival plan for them.

The plan involves merger of under-performing or even closed units into a common company with diversified product range. Alternatively, they can operate under the umbrella of a holding company.

Mr P.H. Kurien, Managing Director of KSIDC, told Business Line that the proposal was the offshoot of the sectoral study done by the agency on the seafood industry. KSIDC had conducted 17 such sectoral studies covering various industries in the State.

Apart from under-performing and closed units that are under the purview of either the Board for Industrial and Financial Reconstruction (BIFR) or the Debt Recovery Tribunals, even healthy units can be part of the proposed scheme that seeks to ensure better bargaining powers for the industry in the future.

The plan calls for the involvement of banks and other financing agencies for settling the liabilities and dues of the units. KSIDC will coordinate the efforts and, if necessary, will also consider extending financial assistance in select cases.

The sectoral study has found that most of the units were hit by raw material scarcity, problems in the export market and conditions imposed by the importers, with the result that individual units had faced stocks erosion of between Rs 3 and 10 crore. It is estimated that more than 130 units have turned sick, of which around 90 are under the Debt Recovery Tribunals.

The KSIDC plan is modelled on an experiment tried out and succeeded in Iceland about 15 years ago. Nearly 100 units in that country had found the going tough in the wake of economic liberalisations, but were saved by the timely intervention of the government and the banks.

These units were merged into10 major companies by a series of measures such as additional funds infusion, floating of shares, creation of centralised purchase mechanism and marketing arrangements. The plan did wonders for the units financially and in terms of operations.

As many as 10 units have already come forward to be part of the programme and KSIDC has appointed a consultant to study the financial and operational profiles of each of them and determine the viability of their mergers. KSIDC will work out a package, including floating of shares, based on the studies.

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