KARACHI, Jan 9: The sponsors and owners of more than 140 sick industrial units have failed to convince the private sector dominated Committee for Revival of Sick Industrial Units to get their loans restructured and rescheduled and they have been refused any relief.

“May be many of them could be given rescheduling relief for revival, but only after the change of the managements,” a well-placed banker, associated with the revival of sick industrial units, told Dawn on Wednesday.

The committee with an overwhelming majority membership drawn from the private sector is meeting in the city again on Friday and Saturday to discuss about a dozen more cases.

Sources close to the committee say that top executives of the banks and DFIs have been lined up to attend the two-day meeting where they would offer their reports on the units in which these institutions have been associated as financiers.

Sponsors of more than 140 sick units were refused any financial relief on reports of the banks and the financial institutions. Banks and DFIs, dealing with most of these sponsors, found them chronic defaulters, who were offered financial relief, more than once in the past, but failed to bring their house in order.

A quite good number of such sponsors, bankers say, are the textile tycoons, sugar barons and cement manufacturers, who are still in the business, earning rich profits and living a lavish life but are unable to clear the defaulted amounts on their sick units.

The last meeting of the committee, in which finance minister Shaukat Aziz and State Bank Governor Dr. Ishrat Hussain attended in Lahore early December, found that so far 257 cases of sick units were examined. Out of these 113 units were offered financial relief and 37 units were offered for auction. Of these 24 units have already been auctioned, which fetched a total of Rs290 million.

The committee is meeting on Friday to offer financial relief to these sick industrial units amidst reports that the amount of non-performing loans have piled up to about Rs151billion in the commercial banks and more than Rs131 billion in the specialized banks and the financial institutions.

“Groaning under a heavy burden of non-performing loan of Rs282 billion till mid-November, the banks and DFIs have provided relief to 113 units, which showed a total outstanding amount of more than Rs32 billion and a default of about Rs14.5 billion,” confided a banker.

Those who received the benefits of financial relief include sponsors of 27 spinning units, 11 weaving units, four knitting and two other textile units. An overwhelming majority sponsors of more than 50 plus textile units belong to the super rich class.

The committee has never released the amount of relief offered to the sick industrial units by showing how much amount of accumulated mark-up has been waived and what concession has been offered in payment of utility bills and recovery of principal amount.

Repeated questions to the committee has failed to bring forth answers on the performance of the sick industrial after their revival on getting financial relief.

Bankers are convinced quite a big number of these sick units are a total loss and as a banker pointed out that the sponsors of such units have failed to service their loans for the last three years and more. The only chance of recovery from such sponsors is by selling the junk available in the factory premises in the name of machinery and the real estate value of the plot.

The Committee for Revival of Sick Units has claimed to have obtained Rs290 million by auctioning 24 units. How much total amount these units had to pay to the banks is a question that remains unanswered.

The committee was re-constituted in April 2000 with Tariq Hamid as its chairman, and include Mian Usman of the FPCCI, one business representative from each of the four provinces and presidents and chief executives of the United Bank, Habib Bank, National Bank, National Development Finance Corporation, Investment Corporation of Pakistan and the Pakistan Industrial Credit and Investment Corporation of Pakistan.

The bankers who are associated with the committee expressed their helplessness in monitoring the operations of those sick industrial units, which have been offered financial relief. “This is essentially the job of the lender bank or the DFI,” a senior banker said.