State to restructure OSIC

The Orissa government has decided to restructure the Orissa Small Industries Corporation (OSIC), the state-owned company with a mandate to promote small scale industries (SSIs) in the state. The state cabinet chaired by the chief minister Naveen Patnaik today approved a proposal to this effect.

Under the restructuring package, the authorised share capital of OSIC will be raised to Rs 50 crore from Rs 15 crore at present. Similarly, the paid-up equity share capital of the state government will be raised to Rs 49.91 crore from Rs 9.66 crore.

Sources said, the restructuring process includes financial restructuring, business restructuring and man power restructuring. Under the financial restructuring, the outstanding liability on account of the loan from Small Industries Development Bank of India (SIDBI) and the government guaranteed bonds will be settled on One Time Settlement (OTS) basis. 

It will be in the form of complete waiver of outstanding interest of about Rs 12.79 crore by September 2008.The principal amount shall be paid by the government through zero percent redeemable preference capital participation in OSIC. This will be re-deemed in 10 years.

Under the business restructuring plan, the OSIC is intended to move from non-profitable and fund-based activities where there is a huge requirement of working capital to non-fund based commercially viable activities.

Similarly, from the 13 depos of the corporation, unviable depos will be closed down under manpower restructuring plan. The manpower engaged in the unviable depos will be shifted and will be engaged in emerging economic activities.

OSIC will act as the state level nodal agency for supply of raw-material to the micro, small and medium enterprises (MSMEs) in the state. Apart from providing the marketing support to the MSMEs to sell their products, it will promote suitable consortia and cluster for this purpose.

Besides, it will be the nodal agency for procurement of construction material such as steel and bitumen on behalf of the state government and the agencies under its control. The corporation, which was incurring loss from 1998-99 to 2006-07 aggregating Rs 21.56 crore till March 2007, achieved a net profit of Rs 3.08 crore in 2007-08. Accordingly, the cumulative loss declined to Rs 18.48 crore.

During the current fiscal, it is projected to achieve a turnover of Rs 305 crore and net profit of Rs 5 crore. In another decision, the state cabinet also approved the adoption of a One Time Settlement (OTS) by OSIC benefiting the small scale units unable to clear their principal and interest on the loans availed from the corporation.

While the outstanding was about Rs 4.78 crore, the corporation has already received Rs 1.9 crore. The remaining Rs 2.88 crore is the recoverable. This amount will be utilised for repayment of principal amount of Rs 1.27 crore outstanding loan of the state government.