Maharashtra repays Rs 105 crore co-op dues to FIs

The Maharashtra government has paid Rs 105 crore worth state-backed loan outstandings of 10 co-operative sugar factories and 12 co-operative spinning mills to financial institutions (FIs). These co-operatives in the state had defaulted on their debts.

The government has also committed to pay a nine per cent simple interest on the principle amount within 18 months to the Industrial Development Bank of India (IDBI) and IFCI. This is likely to fetch the institutions at least Rs 100 crore more.

A state government official said: "In the out-of-court, one-time settlements with IDBI and IFCI, the principal amount of Rs 60,71,74,629 owed by 10 sugar factories and Rs 44,59,11,000 owed by 12 spinning mills were paid to the financial institutions in December. A simple interest of nine per cent per annum (computed from the date of default by the co-operatives) on the principle amount will also be paid by the state to the institutions within 18 months."

The institutions had invoked the Maharashtra government's sovereign guarantees following the defaults and successfully made out their case before the Debt Recovery Tribunal and the Mumbai High Court, before the state government conceded to an out-of-court settlement.

In December 2002 ICICI had similarly gone in for a one-time settlement of Rs 25 crore with the state government on loans defaulted by co-operatives.

However, while ICICI had then agreed to even discount a portion of the principal sum owed to it, this time the financial institutions have managed to secure a nine per cent upon the principal outstandings.

Among the defaulting co-operative sugar units are Sindkheda CSF, Jaikisan CSF, Sanjay CSF, Shetkari CSF, Satpuda Tapi Parisar CSF and the Satpuda CSF.

The 12 defaulting co-operative spinning mills include the Baramati CSM, Vasantdada CSM, Jawahar Shetkari Cooperative Roto Spinning Mill, Ambajogai CSM, Maharashtra CSM, Vir Jagderao Cotton Utpadak SSG, Baramati CSM, Solapur Vikas SSG, Renuka Adivasi CSM, Khandesh Spinning and Weaving Mills and Satvahan Cotton Growers Mill.