In a significant move, the Maha Vikas Aghadi government has released a comprehensive policy to give sick cooperative sugar factories or those under liquidation for running on partnership or joint venture or on lease. It aims at the revival of these units while maintaining its cooperative structure.
As per the same policy, the cooperative factories can purchase subsidiaries, including co-generation projects of such sick factories or those under liquidation on build own operate transfer (BOOT) basis. The government has laid down stringent conditions to facilitate the entire transactions in a transparent manner and thereby avoid scam.
The state government has issued a 12-page notification, giving in detail the procedure to be followed to take such factories on lease or on partnership or through JV arrangement.
According to the government, those factories can be given on lease who have incurred loss in three consecutive years, the net worth is negative, exhausted the limit to borrow from the market, annual audit for three years has been ranked C and D rank and have arrears towards the government guarantee. The lease agreement will be for a minimum of five years and maximum of 15 years. The cooperative factory will lease out to a new operator by a transparent bidding process approved by its lenders.
After the lease agreement ends, the concerned factory will have to make efforts for its revival or again try to give on lease or sell its properties with the government approval.
As far as partnership is concerned, two or more cooperative factories can bid for running sick factories or a factory in liquidation after it was okayed by the 3/4th of its members. The factory will have to select partners by inviting expressions of interest and give under this arrangement for a minimum of five years and maximum of 18 years.
In case of giving sick factories and those units under liquidation for operation through collaboration, the government has said that the investment from the industry, including private sector, financial institutions, marketing and management organisations or with the government approved undertakings can be possible. The government has made it clear that the cooperative setup will not be hurt during collaboration, but it should further strengthen the cooperative movement. This will be possible for a minimum of five years and maximum of 18 years.
