PROFILES OF MEMBER CORPORATIONS
TAMILNADU INDUSTRIAL INVESTMENT CORPORATION LIMITED (TIIC)


Immediately after independence in the year 1948, the  then Government of Madras contemplated the formation of a State Level Financial Institution to help promoting and accelerating the pace of industrialisation of Tamilnadu.   It was at this juncture that the Tamilnadu Industrial Investment Corporation (TIIC) (earlier called Madras Industrial Investment Corporation till 1971) was incorporated and registered under the Companies act on 26.03.1949 and started functioning from 01.09.1949.  Shri P. Prabakaran, IAS is the Managing Director of TIIC.  His brief profile is as under :
 

Name : SHRI P. Prabhakaran
M.D., TIIC
Academic Qualifications : M.Sc., M.A., (Public Admn.)
Experience : Posts held include that of District Collector,  Executive Director, Council for Leather Exports, Ministry of Commerce, Government of India, Secretary to Government of Tamilnadu.

THE ACTIVITIES AND THE PERFORMANCE OF THE CORPORATION 

The main objective of the Institution is to provide financial assistance on long and medium term basis for the purpose of creating fixed assets in the shape of land, building and machinery for starting new industrial units as well as for expansion, modernisation and diversification of existing industrial units.   TIIC also provides assistance in the form of Equipment Leasing and Hire Purchase besides the traditional term lending and equity assistance.

TIIC initially carried on the lending activities with its own share capital.   Since 1954-55 it has also been raising bonds guaranteed by the State Government and later started availing refinance facilities from Industrial Development Bank of India (IDBI) and Small Industries Development Bank of India (SIDBI).   Presently, the main resource base for the lending operations is refinance by IDBI and SIDBI.

TIIC has played a catalystic role in the promotion and development of industries in the State and there is hardly any successful industrial group in Tamilnadu which has not been assisted by TIIC sometime or other.   Among the major industries which owe their development, in part, to the support given by TIIC are sugar, cement, textile and textile machinery, paper and aluminium.  TIIC has also had its share in promotion of area-oriented industries like hosiery in Tirupur, Textiles and Foundries in Coimbatore, Sericulture and Sago in Salem and Dharmapuri, Offset printing and Match units in Sivakasi and Sattur, etc.

In the first decade (1949-59) TIIC was restricting itself mainly to loans and conventional lending.   This assistance was utilised mainly by Textile and Electrical industries.

The next decade (from 1959 to 1969) witnessed substantial expansion and diversification. TIIC also provided assistance in the form of deferred payment guarantee to machinery suppliers, guarantee loans, etc.

In the middle of third decade, other State Level Institutions like Tamilnadu Industrial Development Corporation (TIDCO) and State Industries Promotion Corporation of Tamilnadu Limited (SIPCOT) were established in Tamilnadu. The former concentrated on the promotional role and the latter started providing assistance to Industries in the medium scale sector. With the result, TIIC, started laying more stress on the promotion and development of small scale industries, backward area development, assistance to technocrats, etc. from the third decade (1969-79).

In the fourth decade (from 1979 to 1989) TIIC was giving more emphasis on socially oriented schemes and towards economically weaker sections of the community in rural areas by providing Mini Loans, assistance for setting up of Match units, Silk Reeling units besides providing assistance for purchase of Motorised Cycle rickshaw, etc.

The early nineties witnessed major economic reforms in the country mainly with reference to Liberalisation and Globalisation. With the opening of investment opportunities for foreign investors, the economy witnessed an upward trend, and the market turned buoyant. The financial market also witnessed an appreciable boom and the institutions started vying to woo clients with each other to introduce several new schemes to take advantage of short term lending and increasing interest rates.  

Alive to the changing scenario, in order to enlarge the volume and scope of additional business activities and also to help/retain good clients with satisfactory track record by providing assistance on increased measure, TIIC has also introduced New Schemes of assistance such as Hire Purchase, Leasing and Factoring Scheme i.e. (Discounting of Supply Bills by constituents). Concessional Schemes such as Mahila Udyam Nidhi, National Equity Fund were also popularised by the Corporation during this decade. TIIC has also decided to provide Merchant Banking Services to assist its clientele in their expansion / diversification by providing Merchant Banking support such as Corporate/Project Counselling, Issue Management, Underwriting, Acting as Co-Manager / Consultants to the Issue, etc.  

In the early years of its operations, TIIC was considering sanction of loans upto Rs.75.00 lakhs and subscribed to shares to the extent of Rs. 100.00 - 150.00 lakhs. Presently, the maximum assistance is fixed at Rs.300.00 lakhs to Private, Public Limited Companies, Registered Co-operative Societies.  In the case of Proprietary or Partnership concerns, this limit has been restricted to Rs.120.00 lakhs. As regards Leasing/Hire Purchase activities, the maximum and minimum has been fixed at Rs. 250.00 lakhs and Rs. 5.00 lakhs respectively. 

PERFORMANCE  

The performance of the Corporation viz. sanctions, disbursements and collections during the last three years and for the current year are set out below : 

(Rs. in Crores)
YEAR
SANCTIONS
DISBURSEMENTS
COLLECTION
 
No.
Amount
Amount
Amount
1996-97 5021 440.43 344.31 328.97
1997-98 4224 242.08 192.89 326.40
1998-99 2675 154.69 117.74 268.45
1999-2000
(Upto October ‘99)
1636 102.87 59.52 135.88

Small Scale Industries which promote more employment at lesser investments occupy a prime place in the TIIC’s operations. On an average, more than 97% of the total number of sanctions are availed by SSI Units. 

EMPLOYMENT

The units assisted by TIIC generate employment opportnities to a sizeable number of people.   Employment opportunities created by TIIC during the last 3 years are given as follows:
 

YEAR
NO. OF PERSONS
1996-97 46404
1997-98 29972
1998-99 19630
1999-2000
(Upto Nov. ‘99)
11234

Limits of sanctions and disbursements  

Over the years, the Corporation has decentralised its activities. The Branch Offices are now vested with powers for sanction upto Rs.30.00 lakhs with effect from July 1999. However, documentation and disbursement of all loans including those sanctioned at Head Office are carried out at Branch Office level, thus obviating the trouble for the entrepreneurs to come to Head Office from various Districts. The decentralisation of operations has also facilitated close and effective monitoring of units assisted both during project implementation and loan recovery stages.

Financial Highlights

During the year 1998-99 the Corporation has suffered a cash loss of Rs. 2913 lakhs. After depreciation of Rs. 536 lakhs the operational loss was Rs. 3449 lakhs. Taking into account the write-off of Rs. 462 lakhs, the loss before provisioning was Rs. 3911 lakhs. With the additional provisioning requirement of Rs. 7787 lakhs on substandard and Doubtful Assets the loss for the year is Rs. 11698 lakhs.

Resources 

The authorised Share Capital of the corporation is Rs. 100.00 crores. The subscribed and paid-up share capital as on 31.03.1999 was Rs. 42.50 crores.

Pattern of Share Holding

The position of share capital and the pattern of share holding as on 31.03.1999 are given below : 
 

Sl.
Pattern of Shareholding
Share Capital as on 31st March 
(Rs. in Lakh)
% as on 
   
1997-98
1998-99
31.03.1999
1. Government of Tamilnadu 2502 2502 58.9
2. IDBI 1700 1700 40.0
3. Govt. of Pondicherry 15 15 0.3
4. General Insurance, Corporation of India and Subsidiaries  8 8 0.2
5. LIC of India 4 4 0.1
6. Other Banks incl. Co-op Banks 21 21 0.5
Total 4250 4250 100.00

Bonds 

During the year 1998-99 although SIDBI has allotted SLR Bond quota of Rs.45 crores for the Corporation, the same was not raised in view of the comfortable funds position. The bonds to the extent of Rs. 1458 lakhs were redeemed.  

During the year the Corporation could raise priority sector bonds to the tune of Rs.50 crores subscribed by Banks as against as Rs. 37 crores during the previous year.

Refinance

The Corporation’s major source of funds as hitherto had been ‘refinance’ from IDBI and SIDBI.   The Corporation drew refinance from IDBI/SIDBI to the extent of Rs. 64.71 crores in 1998-99 as against Rs. 104.57 crores during the previous year. During the year the repayment was Rs. 160.29 crores (as compared to Rs. 76.31 crores in the previous year). With a view to reduce the overall cost of borrowings, the Corporation also made pre-payments to the extent of Rs. 76.44 crores to IDBI in respect of those cases carrying higher rate of interest. The outstanding amount of refinance stood at Rs.408.25 crores as on March 31, 1999 as against Rs. 503.83 crores at the end of the previous year. The details of refinance portfolio for the past two years are given in the table below : 
 

(Rs. in Crores) 
Year
Application Preferred
Refinance Sanctioned
Refinance drawn
Repayment mode
Outstanding at the end of the year
No.
Amt.
No.
Amt.
Amt.
Amt.
Amt.
1997-98
SIDBI
3186 96.36 2991 93.75 86.69 64.55 399.82
IDBI 34 88.31 32 85.83 17.88 11.76 104.01
Total 3220 184.67 3023 179.58 104.57 76.31 503.83
1998-99
SIDBI
1559 1550 79.16 64.71 71.82** 392.71
IDBI 88.82 88.47* 15.54
Total 1559 88.82 1550 79.16 64.71 160.29 408.25

*   Includes prepayment of Rs. 76.44 crores to IDBI
** Includes prepayment of Rs. 1.78 crores to SIDBI