"A technical committee, formed to carry out required study prior to declaring any firm sick, has recommended labeling the two companies as sick," a high-level government official at the Ministry of Industry (MoI) told Republica. [break]
This suggestion will soon be forwarded to the cabinet for final approval, according to the official. "Once the cabinet extends green signal, the firms will be entitled to special treatment from the government, which will provide impetus for their revival," added the official, preferring anonymity as he is not authorized to talk to media.
Of the two companies in line to be named sick, Shree Nepal Borders, a Bara-based firm, has accumulated loss of Rs 480.9 million as of fiscal year 2010/11.
To resurrect itself, the company has requested for more than a dozen incentives from the government, documents obtained by Republica show. These include easy access to loan, smooth power supply, availability of raw materials from Sagarnath Forest Development Project, three years of moratorium for loan payment and one year for interest payment, credit at six percent interest rate and availability of Rs 70 million in loans.
"The incentives and facilities will be provided as per the provisions in the Industrial Act 1992," the official said.
Birat Leather, another firm likely to be declared sick, also has its list of request, including permission to sell fixed assets.
The firm, established in 1981 under the name of Hetauda Leather Industry, then a state-owned enterprise, was renamed to Birat Leather after it was privatized in 1996. It has remained closed since June 2008 as per the court decision.
"The company has requested the government to grant it permission to sell its property to be able to pay back the loan," reads the document submitted to the MoI. "The company has also requested for loan restructuring."
The current initiative taken by the government to revive ´sick industries´ is based on a report prepared by a high level committee under the leadership of Dipendra Bahadur Kshetry, vice chairperson of the National Planning Commission.
However, the MoI, entrusted with the task of implementing recommendations of the report -- formally approved by the cabinet around a year ago -- has argued that the government can´t extend incentives outlined in the report as they are not in line with the existing Industrial Act.
"The companies will get certain facilities as per existing laws after declaring them sick," the MoI official said.
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