One out of four SMEs defunct in TN

SMEs in Tamil Nadu (TN) had a tough time sustaining their operations in 2009-10, with official figures revealing that one in every four companies registered with the Registrar of Companies of TN has become non-operational.

According to sources, each year a large number of small and tiny industrial units are struck off from the list of the Registrar of Companies of TN. During the current financial year too, it had to declare nearly 1,044 companies out of the 58,000 private firms and 7,400 public companies as defunct.

"The last financial year has been challenging for most of the small and micro industries in TN since they had to cope with dwindling margins and face the adverse global economic climate," said S Swamy, proprietor of Subhalakshmi Textiles, a small-sized textile manufacturer in Coimbatore, TN.

However, officials in the Registrar of Companies of TN do not agree that the closure of small firms has largely been due to the global economic slowdown, revealing that there has been no increase in the number of companies that have become defunct in the current financial year.

"Several small-scale industrial units start operations with a limited paid-up capital and with the objective of making short-term gains rather than achieving long-term success. Therefore, these firms close down after their objectives are met," said H Laddha, proprietor of Marble Emporium, a small-sized marble godown in Chennai.

Sources believe that if the closure of SMEs in TN would have been a result of the recessionary pressures then the number of firms to get listed would have also plunged drastically over the last 2 years, which has not happened.

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