Guwahati: Even after four years, the much-hyped Tech City in Assam has yet to be a reality but the story does not end here.
The Bank of Maharashtra has slapped a Rs 2.81 crore penalty on the state-own Assam Electronic Development Corporation (AMTRON) that initiated the Tech City and Electronic Manufacturing Cluster project at Bongora in the outskirts of Guwahati in 2018.
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According to an audit report, AMTRON moved the Bank of Maharashtra for a fund of Rs 400 crore loan for the project. The bank released Rs 100 crore between July to September 2021.
As per terms of the loan agreement, AMTRON was to provide an irrevocable and unconditional guarantee of the Assam government to the extent of loan to the bank by October 202 1 failing which the company was liable for payment of a penalty of two per cent per annum on the outstanding amount of loan from the end of October 2021.
AMTRON requested the Assam government in August 2021 and April 2022 to provide a guarantee to which the Assam government informed its inability to provide a guarantee for the loan.
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As a result, the bank stopped (September 2022) releasing further loan and claimed (March-September 2022) an amount of Rs 2.81 crore as additional penal interest on the outstanding loan.
For servicing the interest portion of the loan, AMTRON needed a revenue surplus of at least Rs 8.25 crore each year from 2022-23.
However, during 2017-22, the company generated an annual revenue surplus of only between Rs 1.46 crore and Rs 2. 10 crore which was largely insufficient for loan servicing.
With the present condition of operation, AMTRON’s financial health will further deteriorate if remedial measures are not initiated to pre-empt drastic rises in operational losses due to the interest burden on the loan.
The same happened with the Centre. As per the sanctioned order, after it received the first instalment of Rs 25 crore for the EMC project, the company failed to form the special purpose vehicle (SPV) to ensure the release of the next instalment.
As a result, the Centre skipped the remaining fund amounts.
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“Through the company nominated (July 2018) its subsidiary company AMTRON Informatics India Ltd as SPV, but due to poor progress of the project only 5 out of 41 acres of leaseable land could be allocated to 3 units. The Centre, thus, stopped the release of the balance amount for the project for non-compliance of the condition,” reads the audit report.
But strangely, in 2019, the company continued construction of the G+8/G+4 steel structure building, an international internet gateway, which is never part of the EMC component, without tying funding sources.
The audit report said the decision of AMTRON to execute both components of the project without ensuring the availability of funds was not prudent.
Due to poor management of the project, the company not only incurred an extra liability of Rs 2.82 crore towards interest but also resulted in a blockage of Rs 159.39 crore already invested without achieving the objective of the project even after more than five years.
AMTRON earned a total net profit of Rs 9.04 crore during 2017-2022 which included interest of Rs 18.59 crore earned on investments. Thus, the company had an overall operational loss of Rs 9.55 crore (Rs 18.59 crore – Rs 9.04 crore) from 2017-18 to 2021-22.
The total income of the company increased from Rs 30.82 crore (20 17- 18) to Rs 52.17 crore (2021-22) but the net profit decreased from Rs 2.04 crore to Rs 1.91 crore during the same period due to a loss in the operation oftwo2 commercial activities.
The report claimed that the total loss of Rs 2.63 crore on two commercial activities was due to a reduction in consumer base, lack of competitive tariff and poor recovery mechanism.
The audit report observed that AMTRON neither fixed the target date nor tied up the source of funding for the completion of the Tech City project. As a result, the company not only incurred extra liability of Rs 2.82 crore towards interest but also resulted in a blockade of Rs 159.39 crore already invested without achieving the objective of the project even after more than five years as of the date.