MP's bail-out package for PSU to support VRS

The Madhya Pradesh government is planning to offer the voluntary retirement scheme (VRS) to employees of the Madhya Pradesh State Industrial Development Corporation (MPSIDC) from a share of the recently approved bail-out package for the corporation.

A multi-crore scam haunts the MPSIDC, in which a state police wing is probing the complicity of officials of the corporation. The corporation has 102 employees in Bhopal.

After Uma Bharti's departure from chief ministership, the ruling establishment has not shown much interest in recovering almost Rs 1,000 crore from industrialists.

In a cabinet decision, the cabinet approved a bailout package of Rs 210 crore to the MPSIDC. The government has recommended forwarding the approval to the Department of Company Affairs at the Centre for action.

"A major part of the package will go in repaying secured loans which the corporation had obtained in 1999. The state government is likely to offer voluntary retirement to the staff of the corporation from a portion of the amount," a well-placed insider in the corporation told Business Standard.

The corporation has to repay secured loans of the IDBI (Rs 135 crore), Mumbai District Central Cooperative Bank (Rs 90 crore), Bombay Mercantile Cooperative Bank (Rs 14.50 core) and bonds (Rs 64.79 crore).

In addition to this amount, the corporation has to pay interest of Rs 291.46 crore. Thus, Rs 715.45 crore is needed to repay loans. A one-time settlement scheme has been proposed with these bankers.

Earlier this year the state government decided on the closure of the MPSIDC, which has been running in losses for years. In 2004, the state industry department floated a new entity named the Madhya Pradesh Trade and Facilitation Corporation.