Maharashtra To Securitise Sales Tax Receivables

In a novel move that underscores the proliferation of the securitisation market in India, the government of Maharashtra has decided to securitise its sales tax receivables to mop up Rs 250 crore.

The Maharashtra Vikrikar Rokhe Pradhikaran (MVRP), the special purpose vehicle of the state government, entered the market today with an issue that resembles "securitisation of loan asset", the first of its kind in the country.

Analysts said this could be the harbinger of similar moves by other state governments.

Maharashtra provides sales tax incentives to corporates willing to set up industrial units in the state by permitting them to defer their tax obligations. The deferment is in effect a loan component given to corporates by MVRP. The current paper is being raised against these future receivables, said an investment banking source.

The MVRP issue, with a notified amount of Rs 150 crore and a greenshoe option of Rs 100 crore, is rated AA by Icra.

The issue is backed by a guarantee of the state and supported by budgetary receivables. Sicom is the lead arranger to the issue, while ICICI Securities and Finance, Alliance Capital and Centrum Finance are the other arrangers.

The issue has four options. The first option provides a 11.70 per cent annualised coupon which can be redeemed in four equal annual installments after the second year.

The second instrument, with an annualise coupon of 12 per cent, will be redeemed after five years. The third option bears a coupon of 12.25 per cent and will be redeemed in equal installments after the sixth and seventh year.

The last option, coupon for which has been pegged at 12.50 per cent, will be redeemed in three equal installments after the eighth, ninth and tenth year.

MVRP is a joint venture of Sicom, Maharashtra State Industrial Development Corporation and Maharashtra State Finance Corporation (MSFC). Sicom and MSFC each hold a 49 per cent stake in the company, while the rest two per cent is held by MSIDC.