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APIDC unveils IT venture fund

Our Bureau

HYDERABAD, Feb. 25

ANDHRA Pradesh Industrial Development Corporation Ltd (APIDC) has unveiled the new information technology policy for the companies coming out with their initial public offers (IPOs) with a view to encouraging and developing IT industry in the State.

Addressing a press conference here on Friday, the APIDC Chairman, Mr. N. Yethiraja Rao, also announced the incorporation of the new venture fund exclusively for IT in association with the Small Industries Development Bank of India (SIDBI) and Andhra Prad esh Industrial Infrastructure Corporation (APIIC).

The IT venture fund, to be operational in a month with an initial corpus of around Rs. 15 crores, would be managed by the Hyderabad Information Technology Venture Enterprises Ltd (Hitvel), an asset management company. The fund would supplement the effort s of APIDC to meet the immediate and future requirements of IT companies coming up in large numbers in the State, the HITVEL Chief Executive Officer, Mr. Rajesh Desai, said.

Elaborating on the new IT policy, the APIDC Vice-Chairman and Managing Director, Mr. M. Narayana Rao, said the corporation would invest in the equity share capital of the IT company a minimum of Rs. 25 lakhs and a maximum of Rs. 50 lakhs. However, the co mpany should have an IT expert as a wholetime director and also hold at least five per cent of the company's equity.

APIDC's total exposure would be at a minimum of 10 per cent of the total project cost by way of both equity share capital and term loans as per SEBI guidelines.

While the normal loan period should not exceed three years, the collateral security for term loan was fixed at 125 per cent of the loan sanctioned. The corporation would disburse the entire financial assistance, both equity and term loans, well before th e commencement of public issue.

Stating that the disbursement would not be linked to the asset creation, Mr. Rao, however, said the funds would be released only after the company complying with all the legal formalities and raising of 100 per cent of equity share capital by the promote rs and the required unsecured loans and share capital.

The corporation has already invested up to Rs. 90 lakhs towards equity and Rs. 4.81 crores as term loans in six IT projects going for IPOs shortly. Nine more IT companies are currently awaiting clearance.

Revised interest rates

FOLLOWING the recommendations of a high-level committee, the APIDC board has recently approved the revised guidelines pertaining to interest rates, modification in the existing term-loan scheme and other new schemes, the APIDC Executive Director, Mr. P. Nageswara Rao, said.

The corporation has decided to reduce the interest rates on term loans under IDBI/SIDBI line of credit to four per cent over and above IDBI/SIDBI rate, wherein the new rates would work out to 17.5 per cent/16 per cent as against 19.5 per cent/16 per cent presently being charged.

For the first time, APIDC has introduced a rebate of 0.5 per cent for all the prompt payments. The corporation has also slashed the interest rates on short-term corporate loans by one per cent, from 20 per cent to 19 per cent, to make cheaper funds avail able for the corporates.

New medium term corporate loan scheme-2000: APIDC has also come out with a new medium term corporate loan scheme for working capital requirements of companies with good track record.

Under this scheme, the assistance would vary from a minimum of Rs. 50 lakhs to a maximum of Rs. 2 crores at a rate of 18.5 per cent. Further, the corporation has announced a unique scheme to provide loan for acquiring pre-existing productive assets/equip ment owned by a third party which were charge-free. The assistance under this scheme would vary from a minimum of Rs. 20 lakhs to a maximum of Rs. 1.5 crores at a rate of 20 per cent for a period of two to five years.

``We expect that all these new schemes with attractive interest rates would certainly encourage many new entrepreneurs to come forward to APIDC in this competitive environment and take advantage of the facilities and set up their new projects'', Mr. Yeth iraja Rao added.