MUMBAI: Better days ahead for loss-making but popular brands: Maharashtra government can now take over bankrupt but strategically important entities belonging to government, public, private or semi-government establishments, to an extent by even participating in their auctioning.
Deputy chief minister Devendra Fadnavis on Monday told the state assembly that the state-formed asset restructuring company (ARC) can take over loss-making entities such as toll companies or sugar factories which are otherwise sold to private companies at a very low price. He said these buyers upon buying them at throwaway prices obtain loans from private banks to restore their businesses and eventually earn profits. “Instead, we can restructure them,” he added.
According to Fadnavis, there are several bankrupt entities earlier funded by the government upto 70-80% of the capital value. "Eventually they get sold to private companies at a cheaper rate. In the case of the government-owned entities, the ARC will itself do the restructuring of establishments. There are seven to eight sugar factories in the state that are facing a financial crisis," he pointed out.
Maharashtra is the first state to set up such an asset reconstruction arm and seek RBI approval for the same. The ARC move is politically significant, too, as the cooperative sector in Maharashtra has traditionally been dominated by leaders from the Congress and the Nationalist Congress Party (NCP), with the Bharatiya Janata Party (BJP) — now part of the state government, in coalition with the Shiv Sena faction led by CM Eknath Shinde — trying to establish their stronghold.
Fadnavis was replying to a demand from leader of opposition Ajit Pawar to explain the purpose of increasing the contingency fund by Rs 300 crore under ARC as a similar ordinance was tabled before the house. "Our purpose of the ordinance is that, taking advantage of poor finances, no private entity can take away our endeavours. Instead, we ourselves refinance and rehabilitate our companies and people employed with them. This will save our finances going into private hands," Fadnavis added.
Earlier, Maharashtra government had incorporated Maha ARC Limited with an initial capital of Rs 111 crore from the state contingency fund. The capital is now being enhanced mainly to facilitate restructuring firms that are under financial distress or on the brink of it, and with which the Maharashtra government has direct links. Many such companies which the government wants to revive through ARC, have either received land, properties or an equity investment from the government, or have the government subscribing to their shares, offering donations, grants or loans, or been a guarantor for their loans.
The move will help protect the interests of shareholders, members, employees and beneficiaries of the company concerned, and even the public at large. Maha ARC will not run the distressed companies but will try to sell off their assets or dispose of them. “In a way, knowing this can happen, will also make the companies that rely on the state government for debt and loan payments be more responsible in the conduct of their business,” sources pointed out. Maha ARC has a board of eight members, six of whom are government officials. Other than six top bureaucrats from state departments such as finance and planning, there are two independent directors.
Additional Rs 52,000 cr funds to enhance civic infra and offer subsidy to power consumers
Chittaranjan Tembhekar
MUMBAI: Maharashtra assembly on Monday approved the supplementary budgetary demands worth over Rs 52000 crore, probably the highest so far, with major impetus on civic and infrastructure, electricity and village development.
Some of the major financial approvals have been given to subsidise power supply to agriculture pumps, handlooms, textile and other industrial power consumers, and to create state of the art civic amenities in the municipal corporations and councils across the state, a senior state official told TOI. Other approvals include contingency funds to compensate damages to farmers due to natural calamities, and releasing arrears of the seventh pay commission to the school teachers.
