• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G. Gurumurthy

Coimbatore , Dec. 16

THE special purpose vehicle (SPV) implementing the Rs 1,000-crore private drinking water project for Tirupur, has sought a rate cut on the debt funds from institutional lenders citing the prevailing low interest rate regime.

The New Tirupur Area Development Corporation, the SPV, has taken up its plea for the rate reduction with some of the institutional lenders figuring in the consortium of bankers who are tied for debt funds for the Tirupur water and sanitation project. The project is expected to gain momentum over the next few weeks.

"We have requested some of the consortium bankers to reduce the rate as we find that the average rate of interest charge on our debts at 15 per cent is quite high in today's environment. Some of them have promised to consider our requests," said Mr Sameer Vyas, Managing Director of the corporation.

The development corporation is slated to step up its drawal of funds, both borrowed capital and equity in due proportion, in the coming weeks with the physical execution of the engineering contract getting past the all crucial engineering design stage.

The interest rate could be a matter of concern for the promoters of the private water project at this stage when the corporation is said to have already drawn some Rs 200 crore for the project execution and when it has also started paying interest on its borrowings.

The Tirupur water and sanitation project will bring 185 million litre per day (mld) treated water sourced from downstream Bhavani-Cauvery river confluence primarily for consumption of the Tirupur knitwear industries located in the local planning area, wayside village panchayats falling under the area besides the Tirupur municipal area. The project is being implemented in three part distribution divisions with simultaneous execution.

While the drinking water supply for the Tirupur local planning area, which would cover supply to the knitwear industries, also coming under the part-1 distribution, is set to be completed in 30 months from commencement of work, the work relating to supply of treated water and sanitation for the Tirupur Muncipality is expected to get over in 36 months."As things stand today, the schedule of work execution is being maintained and we are committed to commissioning the project as per schedule as we are aware that any time overrun would only push up the project cost," Mr Vyas told Business Line.

The project's engineering contract has been left to the two infrastructure engineering companies, Hindustan Construction Corporation Ltd which is involved in executing the engineering procurement contract (EPC)-I and Larsen and Toubro engaged in carrying out EPC 2.

The EPC I work would involve setting up water intake structure at the river-point, transmission pipeline to a distance of 55 km from the river up to Tirupur and the master balancing reservoir.

L&T, which is responsible for EPC 2, will set up feeder main pipelines for all three parts of distribution zones, create distribution networks including building overhead/ground level tanks and set up the sewerage network in Tirupur town area.

Both the EPC contractors are believed to have completed so far about 30 per cent of the work. "We hope the construction activity including all the electrical and pipeline laying works would be completed by November 2004 so as to enable the SPV have the test running of the project from December 2004 onwards," said Mr Vyas.

He feels that after testing and plant stabilisation for two or three months, the Tirupur industries and residents coming under the part -1 service area would receive the treated water supply from April 2005. In the case of the Tirupur municipal area and the sanitation project for the town, the corporation's targeted time for launching the services would be October 2005. "We are fairly confident that we would be able to meet the deadline and may be the final project cost could be pegged down at less than the originally projected cost of Rs 1,023 crore," maintained Mr Vyas.

The corporation's capital base consists of Rs 614 crore debt and Rs 409 crore equity which includes a subordinated equity of Rs 86 crore.

Article E-Mail :: Comment :: Syndication

Stories in this Section
FICCI suggests measures to generate more employment

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line