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Madurai Corporation feat in bond issue

MADURAI: The Madurai Corporation has earned the distinction of being the first civic body in the country to have successfully floated bonds to meet the cost of a toll road. The Rs 29-lakh bond issue brought out in March has been fully subscribed as at th e end of April.

According to Mr Gagandeep Singh Bedi, Corporation Commissioner, the 27.27 km long ring road connecting Madurai - Tiruchi highway with the Madurai - Kanyakumari highway at a project cost of Rs 47.35 crore was taken up in 1997 and completed ahead of schedu le at a final cost of Rs 43.35 crore. While the Government had granted a sum of Rs 14 crore, the remaining sum of Rs 29 crore was taken at the interest of 15.5 percentage from Tamil Nadu Urban Development Fund (TNUDF).

The Commissioner said that to repay the loan, the Corporation floated bonds to the value of Rs 1 lakh each, at a repayment period of 15 years carrying an interest rate of 12.25 percent. The issue was fully subscribed and the loan amount was repaid on Apr il 29. The institutions that have subscribed for the bond included the Punjab National bank, Food Corporation of India, Indian Overseas Bank, Indian Bank, Canara Bank besides the TNUDF itself.

The Commissioner further said the additional credit to the corporation has been the guarantee from the State Government to pay the bondholders in the event of the civic body failing to meet the obligation. The bond issue at a lower interest rate has enab led the civic body save roughly Rs. 1 crore per annum towards interest payment. A proposal to add two more lanes to the ring road is being planned and would be sent for government approval, he added.-- Our Correspondent