CHENNAI: The Collapse of Infrastructure Leasing & Financial Services (IL&FS) will not affect the New Tirupur Area Development Corporation Ltd (NTADCL), to which it owes around Rs 80-116 crore.
IL&FS, an infrastructure major, ran into trouble after it was found that the company had an outstanding debt of over Rs 91,000 crore. Speaking to TNIE, a top official of Tirupur Development Corporation explained why it would not be affected: “NTADCL owes IL&FS Rs 180 crore.”
Major shareholders in NTADCL are Tamil Nadu
Water Investment Company Limited, with 32.5% share; AIDQUA Holdings (Mauritius) with 27.8%share; IL&FS with 11.68% share and others such as LIC, GIC and Mahindra & Mahindra. The aim of the project, inaugurated in 2003 at a cost of Rs 1,023 crore, was to improve the competitive advantage of the export hub. The project was to provide water to industrial units, villages and the municipality area and meet the sanitation requirements of the municipality.
As per the agreement, both the State government and Tirupur Municipality gave the corporation the right to draw a maximum of 250 million litres per day (MLD) of raw water from the Cauvery. Of this, up to 48.7 MLD was to be allocated for domestic and non-domestic purposes within Tirupur Municipality, 165 MLD for industrial units outside the municipal area and 36.30 MLD for domestic requirements of wayside panchayat unions.
While the wayside panchayat unions, town and villages were charged Rs 3.50 per thousand kilolitres, the rates for industries and urban domestic consumers were much higher: Rs 45 per KL and Rs 5 per KL respectively.
Troubles
The project suffered huge a blow after it failed to deliver water to several industries. Units continued to tap groundwater, even after the project went on stream. Officials say the situation worsened after 700 bleaching and dyeing units, a big chunk of their consumer base, were shut down by a High Court order for causing pollution. As a result, no water was sold till 2011.
This resulted in the bleeding of the company and infighting between IL&FS and AIDQUA.
In 2012, the MD of the Corporation came up with a corporate debt restructuring plan to infuse life into the company. A `150 crore package was offered by the government and the restructuring was done by banks.
A government order was issued, asking it to pay ‘fair price’ for 100 MLD supplied by the corporation.
A decision was made to buy water at Rs 21 per kilolitre for domestic consumption. Officials say the company has slowly started making profits now. It reported profits of Rs 27 crore and earnings of Rs 190 crore.
Ruling out allegations of malpractices, officials said returns initially promised to investors cannot be delivered till the full potential of the project is realised. Though the debt restructuring was approved by the Company Law Board in 2012 and upheld by the Madras High Court in 2014, one of the disgruntled investors moved the Supreme Court and the matter is now subjudice.