The Business Line 29.08.2009
Tirupur water utility project seeks debt revamp
| Losses mount on low capacity utilisation. |
What went wrong
The economic slowdown hit export units leading to low capacity utilisation.
The law to regulate exploitation of ground water directly by the industries is not enforced strictly.
M. Balaji 
A file picture of the New Tirupur Area Development Corporation water project. —
R. Balaji
Chennai, Aug. 28 New Tirupur Area Development Corporation Ltd (NTADCL) the public-private water and sewerage utility, is seeking a debt restructure as low capacity utilisation has hit revenues, according to sources in the know.
NTADCL, a Rs 1,023-crore project with a 30-year concession for supplying water to the knitwear industry and residents of Tirupur, is in the fourth year of operations.
The sources said NTADCL lost Rs 70 crore in 2008-09, taking the accumulated losses to Rs 177 crore.
It has sought a Rs 65-crore assistance from the State Government to support its debt restructuring by a consortium led by IDBI.
Special purpose vehicle
NTADCL is a special purpose vehicle promoted by the Government of Tamil Nadu and IL&FS. The project has been funded with an equity component of Rs 323 crore and debt of Rs 700 crore.
The project is to bring water from the Cauvery River about 60 km from Tirupur, treat and supply to the bleaching and dyeing units and the households in the town and villages along the line.
Profitable supply of water to the industrial units was to have supported subsidised supply to residents.
The water supply started in mid-2005, but has not crossed half its capacity.
Against a capacity of 185 million litres a day (mld), industrial units were to take 130 mld of water at Rs 55 a kilolitre while the balance was to be supplied to the residents at a subsidised rate of Rs 3.50 a kl. For NTADCL the cost of pumping, treating and supplying the water is Rs 41.70 a kl.
‘Domestic’ target met
But NTADCL supplies about 100 mld with the domestic segment consuming the planned capacity of about 45 mld while industry’s consumption is yet to reach a third of estimates. This means NTADCL loses about Rs 5.2 crore a month, say sources.
The economic slowdown which has hit exports is the reason for the low capacity utilisation.
Another reason, the company attributes is the State Government not enforcing a law to regulate exploitation of ground water directly by the industries. Overexploitation of ground water was one of the reasons for the project being conceived, say sources. This has also added to the loss of business for NTADCL.
Offer to Coimbatore units
Meanwhile, the company is also looking for support from industrial units in Coimbatore who could use the surplus water if they invest Rs 120 crore in a 60-km pipeline to carry the water from Tirupur.
NTADCL will compensate them on the cost of water, said sources.
Sewerage system
The original project will take full shape next month when NTADCL completes the sewerage system for Tirupur, when the residents of the town will get this luxury for the first time ever.
Over 20,000 households, about 60 per cent of the population will benefit from this infrastructure
