Financial Daily from THE HINDU group of publications
Sunday, Sep 28, 2003
Financial Daily from THE HINDU group of publications Sunday, Sep 28, 2003 |
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Industry & Economy
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Textiles Debt repayment of textile units can exceed 5 yrs Our Bureau
New Delhi , Sept. 27 IN a bid to kickstart the implementation of its scheme for restructuring high-cost debt of integrated textile units, the Finance Ministry has come up with a host of clarifications to sort out some of the issues raised by industry on the scheme. A term loan exposure of about Rs 6,000 crore of banks and financial institutions (FIs) are to be restructured. The Finance Ministry has clarified that the repayment of loans is not restricted to the five years in the scheme. It held that the period of repayment may exceed five years, but the external commercial borrowing (ECB) would be permitted only for five years. While permitting banks/FIs to access ECB and convert rupee term loans into foreign currency loans, the Ministry clarified that the recipient units would pay interest at the targeted rate of 8 per cent to 9 per cent on rupee-loan basis. As per the scheme, announced in the first fortnight of September, banks and FIs are to be permitted to access ECBs and convert rupee term loans into foreign currency loans. The ECBs by banks/Fis would be permitted for five years. It had also said that the entire scheme would have a five-year tenure. The package should be made applicable to all units in the organised sector with a minimum debt exposure of Rs 2 crore. Further, the time by which the stipulated debt equity ratio of 1:1.33 may be achieved is left to the lender to decide. While the decision on conversion of working capital into working capital term loan may be left to the lenders, the Finance Ministry held that the rate of interest on working capital loans would follow the internal guidelines of the lender bank/FI. Further, the Ministry said that healthy units, which are able to service their loans, would be provided assistance under the Technology Upgradation Fund Scheme (TUFS) even if they were not paying any dividend. The reference to payment of dividend has now been deleted. The Ministry has also permitted the Textiles Ministry to decide the technical agencies that would assess the technical viability of the units seeking assistance under the package.
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