Maharashtra Under Icra Rating Watch

Rating agency Icra has assigned a LAA- (structured obligation) (rating watch with negative implications) to the Rs 250 crore bond programme of Maharashtra Vikrikar Rokhe Pradhikaran Pvt Ltd, a special purpose vehicle (SPV) floated by the Maharashtra government.

The rating is based on a structured payment mechanism through which the payment of the principal amount of bonds and the interest component is secured by a budgetary provision and an irrevocable guarantee by the Government of Maharashtra (GoM).

This payment mechanism is enforced through a tripartite agreement between GoM, the SPV and the trustees. It also has a time bound trigger mechanism under which the trustees can invoke the GoM guarantee if the GoM fails to meet the interest and principal payments.

Since various incentives have been given to companies to open units in rural areas, the GoM has various outstanding receivable from various units across the state. The GoM's present bond issue of Rs 150 crore with an option to retain oversubscription of upto Rs 100 crore is believed to a move to curtail the backlog of these incentives, an Icra release said.

The SPV is a non banking finance company (NBFC) which is owned by Sicom (49 per cent), Mahrashtra State Finance Corporation (49 per cent) and Maharashtra Small Scale Industries Development Corporation (2 per cent).