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G. Gurumurthy

COIMBATORE, May 23

IT'S now time for the Tirupur-based knitwear manufacturers to form one more private company, even as they inch towards realising their dream project that would bring them the much-needed industrial water supply.

The new company, Tirupur Infrastructure Development Company incorporated last month under the Companies Act, has been jointly floated by the Tirupur knitwear exporters and the Tirupur Dyers Association.

The company will for all practical purpose remain an investment arm of the knitwear industries — garment exporting units, dyeing and bleaching units or their supportive industrial houses — with the limited objective of bringing their equity portion of Rs 10 crore to the special purpose vehicle company, New Tirupur Area Development Corporation Ltd (Ntadcl), which will actually implement the Rs 1,000-crore private water scheme for Tirupur.

According to knitwear industry sources, the local industries, who are stake holders in the private water supply project , have been constrained to launch the infrastructure development company, as their existing trade/industrial representative bodies, by virtue of their being non-profit making bodies, could not directly make investments in any commercial ventures.

In the specific instance, Tirupur Exporters Association (TEA) or the Tirupur Dyers Association, though actively involved in the promotion of the Ntadcl for the water project, are essentially service organisations; are registered under the Societies Act and, hence, cannot invest in profit-making ventures.

Ntadcl has been incorporated as the SPV for implementing the Rs 1000-crore private Tirupur water supply scheme under built-operate-own-transfer (BOOT) basis, the project financing of which would be through debt-cum-equity route.

The recovery of the investment would be mainly through collection of user charges for the water it would supply to the local textile processing units, besides the assured supply of drinking water to residents.

The local industries, as represented by the members of the TEA and the knitwear processing units, are to share equity capital of the Ntadcl equally with the Tamil Nadu Government, the Centre and Infrastructure Leasing and Financial Services Ltd (IL&FS) at Rs 10 crore each.

The Tirupur knitwear industry sources told Business Line that the infrastructure development company had raised its share of equity capital from among the knitwear exporters, dyers and other supporting industry-members by floating shares of Rs 1,000 each and the entire Rs 10 crore were collected from about 350 or so members.

The sources said that considering the importance attached to adequate supply of industrial water by the local knitwear processing industries and the likely consolidation in the knitwear exporting industries in the coming months, the rate of return on investment in the Ntadcl's private water scheme, estimated at around 10-11 per cent, is being touted as a profitable investment avenue.

It is also hoped that the Ntadcl's water scheme, once it comes through, will spur further investments in both service and manufacturing sectors in Tirupur, giving a spin-off effect to local economy and according to sources, Tirupur could gain a spin-off benefit to the tune of Rs 200 crore that may percolate to the local population.

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