Financial Daily from THE HINDU group of publications
Wednesday, Jan 08, 2003
Industry & Economy
Codissia in spot over trade fair complex Seeks grant to meet SIDBI commitments
COIMBATORE, Jan. 7
THE Coimbatore District Small Industries Association (Codissia) is scouting for options to generate additional resources to meet its payment commitments to Small Industries Development Bank of India (SIDBI) for the loan it had taken for constructing the Rs 12-crore Codissia Trade Fair Complex in the city even as its requests to the Union Government for financial assistance have not elicited any positive action so far.
It has also been requesting SIDBI to reduce the interest rate from15 per cent at which the loan was availed to a more realistic level so that it can adhere to its payment obligations.
Codissia Trade Fair Complex has advertised for promoters for establishing theme park/entertainment centre/multiplex or any other commercially profitable activity on part of the land in which the complex has come up in a bid to rustle up income that it sorely needs.
The complex authorities are inclined to give about 8-10 acres of land, out of the nearly 40 acres of the area under their control, for this purpose.
The advertisement also mentioned about availability of space for drive in theatre/parking etc. Mr A.V. Varadharajan, President, Indian Chamber of Commerce and Industry, Coimbatore, who played a key role in the establishment of the Trade Fair Complex and former president of Codissia, said the organisation has been seeking relief from both the Centre and the State Governments so as to lighten Codissia's financial burden but still was waiting for a positive outcome.
He said Codissia had invested about Rs 12 crore on the trade fair complex project Rs 8 crore as loan from SIDBI and the balance from its own resources.
Codissia was prompted to take up the project in view of the strategic location of Coimbatore as an investment destination and the need for an exhibition ground for industries to showcase their products.
Codissia has been successfully conducting once in three years an industrial exhibition-INTEC- for more than a decade in the city that has been a huge draw and the establishment of the fair complex on its own provided Codissia a readymade infrastructure to organise the show on its premises.
Mr Varadharajan said Codissia was to pay an interest of Rs 3.6 crore for the three-year period _ from 2000 to 2002 _on the loan it had taken from SIDBI but it has been able to pay only Rs 2.3 crore.
As it has not been able to service even the interest payment in full, it has not been make any payment towards the principal. He said the organisation had approached SIDBI for slashing the interest rate to 6 per cent but it had expressed its inability to meet this demand.
The fair authorities have sought reduction of interest rate to 10 per cent to be implemented retrospectively. He said of the total area of about 40 acres for the project, the fair complex has come up in about 4-5 acres of land.
The authorities were planning to allot 8-10 acres of land on the northern side for any new activities that the promoters, for which advertisement was placed today, were planning to take up.
But no outright sale of the land was being contemplated. The offer of promoters willing to offer a lump sum payment for taking on long lease the land under offer may be considered.
Mr Varadharajan said when the complex was built, it was expected that the premises would fetch a good rent. But this did not materialise.
The industrial recession that gripped Coimbatore even as the project was completed was yet to loosen its hold. A more important problem was the lack of convenient flights connecting Coimbatore and Mumbai and Coimbatore and Chennai, both in the mornings and evenings. He said this put off visitors to Coimbatore from distant centres since they were forced stay back in the city for a minimum of two days.
He said if the trade fair complex, having a built up area of about 1.50 lakh sq ft, was fully occupied at least for 40 days in a year, they could achieve break even.
But currently, both the occupancy percentage in terms of space and the number of days it was booked was far less.
Mr Tee. Narayanaswami, President, Codissia, in a memorandum to the Union Finance Minister, Mr Jaswant Singh, has sought a grant of Rs 6 crore to Codissia to tide over the financial burden it was facing following the construction of the trade fair complex.
In another memorandum to the Tamil Nadu Chief Minister, Ms J. Jayalalithaa, he said Codissia was `undergoing untold hardships to pay interest and to repay principal amount to SIDBI'.
He requested the State Government to exempt the nearly 40 acres of land from the payment of urban land tax and advise the Coimbatore Municipal Corporation to waive property tax and vacant land tax.
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