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Palladam weaving park achieves financial closure

G. Gurumurthy

The SPV now hopes to place the machinery orders for the weaving plants proposed in the park project by January 2006.

Coimbatore , Dec. 25

SPECIAL purpose vehicle Palladam Hi-Tech Weaving Park (PHWP), which promotes the Rs 155-crore modern weaving cluster in the district has achieved financial closure raising hopes for PHWP to become the first weaving park project to take off infrastructurally.

Having achieved technical and financial closures, the SPV now hopes to place the machinery orders for the weaving plants proposed in the park project by January 2006 and the first set of looms may go on stream for commercial production sometime June/July next year. The work on building the factory sheds have just started.

As per the financial closure, the cost of the infrastructure project for the PHWP, including the buildings is put at Rs 55 crore.

While the 105 investors, essentially small-scale powerloom owners from Palladam area, would contribute Rs 3 crore, the project would carry Rs 20 crore subsidy from the Centre under the integrated textile park scheme and another Rs 5 crore subsidy from the Tamil Nadu Government. The balance Rs 27 crore is being raised as long-term loan from the financial institutions/banks.

Infrastructure Leasing and Financial Services Ltd (IL&FS), which has been roped in as the project management consultants for all integrated textile park projects by the Centre and the Small Industries Development Bank of India (SIDBI), have taken the lead role in syndicating the long-term loan for the PHWP project with a consortium of banks, namely, Canara Bank, Bank of India, Central Bank of India and Indian Bank. While IL&FS and SIDBI would contribute Rs 6 crore each towards long-term loan, the balance would come from these banks.

To put the PHWP on take-off mode, the SPV company has structured the infrastructure loan component of the project in such a way that the building of factories also forms part of the infrastructure component to avoid making the small-scale powerloom operators running around shopping for loans, thereby delaying the project start.

To keep the construction activity going at the project site, the SIDBI and IL&FS has also arranged Rs 10 crore as bridge loan (each providing Rs 5 crore), a crucial element in the financial arrangement for the project considering the small and medium enterprise character of the promoters of the scheme, said Mr R.C.M. Reddy, Chief Executive Officer of IL&FS (Cluster Development Initiative). Both the long-term loan and the bridge loan would attract 9 per cent interest.

In a small gathering of the promoters of the SPV, lenders and ILFS and SIDBI held at the project site yesterday in which the State Backward Classes Minister and local MLA, Mr Se Ma Velusamy also participated, the bridge loan document for Rs 12 crore was signed.

The PHWP coming up on a 65-acre site at the outskirts of Palladam town will have 750 high productive airjet and projectile looms spread between four categories of loomsheds to be owned by 105 investors. The infrastructure components of the project will include factory sheds, roads, water supply, sewage, effluent treatment, captive power plants, training centres, testing centre, crush for workers wards, workshop and raw material godown.

Mr Senthil Kumar, Chairman and MD of the PHWP, hoped the project, expected to go commercial by middle of next year, would turn out Rs 500 crore worth of products per annum to start with and depending on the market linkages it could establish over the years, the value addition in the park's output would rise.

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