This is with reference to “Skewed approach to bad debt” by Nirmal Gangwal (October 24). Stressed assets are a major concern now. Many causes can be attributed to them. But an important reason is the poor appraisal system and governance. Asset reconstruction companies (ARCs) have been established primarily to address the issues of stressed assets.

But then, ARCs could not achieve the desired objectives, partly because of the regulatory challenges and lack of management expertise. The need of the hour is to strengthen ARCs so as to enable the mechanism to function effectively and speedily more so in the midst of un-precedented rising stressed assets.

Ravindranath Shetty


The time of sale of a stressed asset by a bank to an ARC alone determines the technical viability and the financial feasibility of an industrial project.

Even at the negotiation stage, an ARC critically examines factors such as the present working condition of the plant and machinery (P&M); current industrial relations; continued availability of raw material and power; future market demand for the product manufactured; absence of statutory dues (such as PF and ESI) and/or other legal hurdles.

The recent Kingfisher Airlines’ fiasco is a case in point; except for a leading private bank, no other lender has offloaded its burden to an ARC. Where viability is in question (fraught with the associated risks listed earlier), ARCs are reluctant to buy the stressed assets, regardless of the current assessed value of the securities.

The reason is ARCs are legally prohibited from acting as real estate brokers: For example, where the P&M is junk and the current assets are absent, ARCs may be left only with the fixed assets as realisable assets.

N Swaminathan


Labour pains

This refers to “Finally, a push for labour reforms” by Pravakar Sahoo (October 24). It is heartening to see that the need for a holistic approach to reforms is slowly getting recognition.

So far, efforts to rationalise labour laws were getting stuck, perhaps because deliberations on the issue got on to the wrong track, issues involved being misunderstood as employer vs employee, employee vs employer and government, Centre vs State or vice versa. Politicisation of trade unions also contributed its share of confusion in debates.

For the current moves to fructify, a lot of give and take between Central and State governments in terms of powers and resource-sharing and a clearer understanding of social and humanitarian issues involved in handling lowest strata of unskilled workers will be necessary. The issues in manufacturing and production sectors are not comparable with service sectors such as IT or banking where ‘policy decisions’ can enhance profitability and where, so far, margins are decided by owners because of the captive clientele.

As social security systems improve, the problems emanating from frustration will become manageable and the present apprehensions about trade union militancy will fade out.

MG Warrier


The Prime Minister's unveiling of labour reforms is a bold decision. The reforms could act as a catalyst to translate the ‘Make in India’ idea into reality. It is a baby step forward to end trade union terrorism and inspector raj to usher in easy access to schemes such as the Provident Fund for workers. The unclaimed amount of a whopping ₹27,000 crore, lying in the suspense account maintained by the Employees' Provident Fund (EPF), can be utilised for welfare of the workers instead of allowing it to remain dormant, generating no interests.

HP Murali


Open coal

This refers to the editorial “A small step forward” (October 24). The Government should be bold in its reform of the coal sector. We cannot afford to import $16 billion worth coal when we have huge coal reserves. We need more competition in our coal sector.

CR Arun


This refers to the article “Skewed approach to bad debt” (October 24). The NPAs now in existence is a whopping figure and the various efforts put by the authorities concerned appear to be not much effective. The article is educative and would serve as a caution as well as the method required to be adopted to recover the debts. The present approach is to treat the NPAs as a ‘problem’ relating to the banking industry but there is need for examining individual cases with regard to the various reasons which led to the failure to repay since they could vary due to operational reasons. One single method of recovery may not suit the entire lot of cases. Therefore the need is for a centralized office with necessary expertise to examine individual cases and in consultation with the debtor devise remedies with his approval and occurrence.

TR Anandan


This refers to “finally, a push for labour reforms” (Business Line October 24.) The author appears to think that all labour laws put impediments to business and pamper labour. Trade Union Act enacted in 1926 merely decriminalised formation of union by workers while industrial countries during those times were allowing workers freedom to improve conditions of employment through collective bargaining. This right to collective bargaining is unavailable in India even today while in almost all countries workers enjoy this right barring exceptions such as India, China and the USA. The employers in India make use of Trade Union Act to form association to strengthen their position to collectively bargain with labour. Likewise, Industrial Disputes Act, 1947 curbs workers’ right to go on strike in various situations. The Act almost eliminates any situation when strike in India is legal. To counter balance this one-sided law, there are certain restrictions on employers curbing their freedom for closure and lockout. In practice no employer waits for such permits because establishment grinds to halt with nobody permitting it. If employers want freedom for closure it must be given. Likewise, workers must also be given right to collective bargaining and right to go on strike. Law must equally treat both employers and workers and if the laws are reformed freedom must be given to both to workers and employers in equal measure.

KVA Iyer


The Prime Minister Narendra Modi's largesse to the State of Jammu & Kashmir in the form of a slew of relief measures including a special package of Rs.745 crore from his relief fund should gladden the hearts of the people of the flood ravaged region. Record rains in the valley had crippled infrastructure and left many homeless and devastated. It will be a tall order for the the state government to reconstruct and restore damaged homes and public infrastructure including roads, bridges, schools and hospitals. However, the Prime Minister's Diwali gift should do much to put the state back on the rails and restore a semblance of order. Modi's gesture to take time off from his busy schedule and celebrate the 'Festival of Lights' with the Siachen Jawans by distributing sweets and handing over a cheque of Rs.5 lakh for their welfare deserves a pat on the back and speaks volumes about his ability to get along with people of all ranks. What more can our armed forces expect from a Prime Minister who is firmly behind them?

NJ Ravi Chander



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