Tidco, Elcot Plan Rs 265cr Bond Issue

Encouraged by the success of the maiden bond issue of the Tamil Nadu Electricity Board, two more state government agencies _ Tamil Nadu Industrial Development Corporation (Tidco) and the Electronic Corporation of Tamil Nadu (Elcot) _ are jointly planning a Rs 265 crore bond issue.

The money raised will be used to fund the TIDEL park project, an IT park complex jointly promoted by Tidco and Elcot.

The cost of the project has been pegged at Rs 290 crore, of which, Rs 25 crore is the land cost.

The project is being implemented through a special purpose vehicle (SPV), which will have an equity of about Rs 60 crore.

They are presently weighing a debt-equity ratio of 3:1, but may increase it to 3.5:1. The remaining funds for the project will be raised through debt.

Ruling out retail sale of the bonds, state industries secretary M S Srinivasan told newspersons on Friday ,that the bonds will be targeted at banks, financial institutions and other bulk subscribers.

Srinivasan said a preference issue was also being considered.

Tidco and Elcot are considering holding about 80 per cent equity between them in the SPV.

The bond issue will be a structured obligation and will be unconditionally backed by state government guarantees, the first in the country. The coupon rate and the tenor of the bonds are being finalised, officials said.

The foundation stone for the IT complex was laid by the Tamil Nadu Chief Minister M Karunanidhi. The `millennium project' is to be handed over to software companies on January 1, 2000.

The construction of the TIDEL park has been split into eight `packages'. Vendors will be selected for each package through competitive bidding. These vendors will be placed under the main contractor, who will build the complex's super structure. On completion, the complex will be handed over to an operation and maintenance contractor selected through international competitive bidding.

According to Srinivasan, an international marketing agency will also be appointed to attract companies to set up operations at TIDEL park.

Global majors Alcatel and EDS have evinced interest buying 75,000 sq ft and 50,000 sq ft space respectively in the complex.

The state government is also preparing another site for infotech firms at Kelambakkam. The state government will offer land to the companies, who can then use it to set up their own facilities. Infosys Technology is planning to set up a centre here.

TIDEL will offer corporates ready-made office space with state-of-the-art communication facilities.

Tata Consultancy Services (TCS) is setting up its largest development centre in the country nearby.

According to Srinivasan, attractive pricing of the independent units will be the key to successfully marketing TIDEL.

The promoting agencies are prepared to wait in the initial years and not "frontload" all costs while ensuring that the "bottomline is not eroded", he added.

Preliminary market surveys done by TCS for Tidco indicate a "good response" for TIDEL. Srinivasan, however, warned "we will have to be prepared for rotation of customers," given that most companies prefer a short-term lease agreement for the premises.