Government of Kerala
Abstract

 Industries – cluster Development Programme- Scheme & Rules approved – Orders issued.

 Industries (B) department

 G.O.(Rt) 652/2003/ID                                                                           Dated, Thiruvananthapuram 4-7-2003

 Read:1.      G.O.Rt/1189/02/ID dated 26-12-2002
          2.      G.O.Rt.45/03/ID dated 15-1-2003
          3.      Letter No.TC/T2/9466/02 dated 15-5-2003 from the Director of Industries &
                   Commerce, Thiruvananthapuram
          4.      Minutes of Working Group Meeting held on 6-6-03.

 ORDER

In the circumstances reported by the Director of Industries & Commerce in his letter read above and also based on the decision in the Working Group meeting held on 6-6-2003 in the chamber of Principal secretary, Industries Department, sanction is accorded for implementing the scheme “Industrial Cluster development programme” as per the rules appended.

Expenditure in this regard will be met from the provision under head of Account 2851-00-102-55 in the current years budget.

By Order of the Governor

 R.Vijayalekshmi
Deputy Secretary to Government

MARGIN MONEY LOAN TO CLUSTER DEVELOPMENT ACTIVITIES
 (MML-CDA)

Cluster Development involves the creation of Common Corporate entities, which serve the needs of cluster and are owned by them. Such entities can take up activities like sourcing of raw material, mutual credit guarantee for sourcing loans, common brand creation, marketing, setting of common Facility Service Centres, Quality testing facilities etc. For these activities fixed assets and working capital is required. Margin money loan @ 20% as applicable under this scheme for cluster development activities subject to a maximum of Rs. 5 lakhs

 Rules and conditions for providing Margin Money Loan           Also see amendments

Margin Money Loan for Cluster Development Activities will be given for both term loan and working capital loan. MML for term loan shall be computed as the difference between the cost of project approved by the Financing Agency and the term loan extended by them to the Cluster Development.

1.      Common Corporate entity shall form a consortium registered as a private Ltd. company under the Companies Act and approved by the Director of Industries & Commerce. Such entities will take up activities like bulksourcing of raw material, credit guarantee for sourcing loans, common brand creation marketing, setting up of Common Facility Service Centre, quality testing facilities etc.

2.      Cost of the project will include

i)      Cost of land and its development including documentation charges.

ii)      Building.

iii)     Plant and Machinery including all accessories / tools / jigs / fixtures / essential office equipments and furniture / lab equipments / effluent treatment plants or equipments.

iv)      Electrification both industrial and building

v)         Preliminary and pre-operatives expenses which shall include Registration charges of the firm, engineering drawings,  cost of. the project report, Technical know-how, cost of technical supervisors during the implementation period. However this preliminary and post operative expenses shall not exceed 10% of the cost of project.

In the case of working capital the margin will be treated as the difference between the total working capital requirement as assessed by the Financing Agency and the loan made available to the entity .In case any margin money loan is sanctioned by any term loan lending institution towards working capital it shall be deducted from the total margin stipulated by the institution lending the working capital loan before computing the eligibility for margin money loans for working capital.

3.      Rs 5 lakhs will be the maximum limit of this scheme for MML under term loan and working capital put together. MML shall be limited to 20% of the cost of the project in the case of MML for term loan and 20% of the total for working capital requirement in the case of MML for working capital loan.

4.      The consortium/Entity however will have to take a minimum of 10% of the cost of project and working capital put together. MML shall not exceed 50% of the margin stipulated by the Financing Institution either for term loan or working capital loan.

5.1   The application along with the prescribed remittance chalan (in original)shall be given to the General Manager,  District Industries Centre concerned duly completed with all enclosures in Appendix 1. Recommendation of the Financial institution / bank shall however be obtained before sanction of the loan. No application preferred after availing all the installments of term loan/or working capital from financial institutions, if the loan is disbursed in two or more installments or after one month form the date of availing the loan if disbursed in one installment by the financial institution, shall be accepted or entertained.

5.2   The General Manager, District Industries Centre shall forward completed application with due recommendation to the DI&.C within 7 days of the receipt of the application.

5.3   Director of Industries shall have sanctioning powers for margin money loans to any entity including MML for both working capital and term Ioan put together.

5.4   Sanction of the MML shall be in the proforma in Appendix. 11. An agreement in the prescribed form (Appendix-iv) shall be got executed on stamp paper worth Rs. 50/- or fixed by Government from time to time by the competent authority representing the entity before the bill is drawn and payment effected in favour of the entity.

6.  MML will be disbursed to the entity on1y through the financing institution concerned. The bank/financing institution shall disburse the amount to the Common Corporate Entity on pro-rata basis along with the disbursement of term loan and /or working capital. The CCE shall be bond to pay the interest from the date of drawal of DD. 

7.   In case of any reduction and refixation of the loan, proportionate reduction shall be made on the MML and balance unspent amount, if any shall be returned to the DI&C forthwith by the bank/financing institution. However, the loanee shall be liable to pay the interest for the amount so returned till it reaches the Director of Industries and Commerce In any case the Bank / financing institution shall complete disbursement of the MML amount released to them by the DJ&C in 3 months .from the date of its receipt.

8.  The Financing agency shall advise the Director along with its recommendation, the schedule of repayment of the loan so as to enable the Director to prepare the repayment schedule for the MML.

9.  The Margin Money Loan sanctioned under this scheme shall, carry an interest of 9% p.a.  Penal interest on defaulted payment will be charged as provided in para 13.  All payments made by the loanee will first be adjusted against penal interest of defaulted principal and/or interest, if any, and them against principal.

10. Margin Money loan granted under this scheme is to be repa1d by the loanee in 16 equal quarterly installments. The .first installment shall fall due 3 months after the date on which the last installment of term loan falls due as scheduled by the Bank/financing institution originally or on completion of the 51^st month of the disbursement of MML whichever is earlier.

11. In the Case of MML for working capital the principal shall be paid back in 16 Quarterly installments on completion of the 51^st month from the date of disbursement.

12. Interest in both the above case will be paid on a quarterly basis from 90^th day of disbursement of MML by the Director of Industries & Commerce.

13. There will be a penal interest of 3% p.a. for any defaulted payment of either principal or interest.  Any payment not made within 7 days from the date it fell due will attract the penal interest of 3% p.a. for the entire arrears.

14. The Director will advice the loanee in writing while sanctioning the Margin Money Loan on the payment schedule for the MML and this will also form part of the agreement.

15. No-collateral security or charge on assets of the CCE during the pendency of loan by the CCE to the financial institutions or banks is required for the MML. But the Government shall have a charge on the assets of the CCE once the term loan liabilities are serviced. The Financing institution will advice the Director of Industries & Commerce in writing of their intention of releasing the charges created in their favour in case of full repayment or of taking over the CCE in case of default so as to ensure that the assets are not disposed of without the knowledge of the Department. Government will hold pari-pasu charge in the assets along with financing institutions towards security for Margin Money Loan.

16. In case of default by CCE of the dues under MML, the entire amount outstanding shall be liable to be recovered as if it were arrears of land revenue under the provisions of the Kerala Revenue Recovery Act 1968 from the assets of the CCE and  its promoters and in such other manner as Government may deem fit.

II. Grant Assistance to Cluster Development Activity

The grant shall be utilised for giving training to cluster members, awareness creation to stake-holders, participation in national and international Trade Fairs and Exhibitions, study tours field visits etc. The grant assistance will be limited to 50% of the actual expenditure subject to a maximum of 50,000/- per cluster per year for the activities like:-awareness creation to stake-holders, participation in national and international Trade Fairs and Exhibitions, study tours field visits etc. Training programme on effective business counselling in Industrial clusters will be entrusted with professional agencies with repute in this field; like Entrepreneurship Development Institute of India Ahmedabad or such Institutions which have international reputation. Total grant eligible for all activities will be limited to 2.00 Lakhs per cluster. 

INSTRUCTIONS
TO FILL UP THE APPLICATION FORM
MARGIN MONEY LOAN ON CLUSTER DEVELOPMENT ACTIVITIES

     Click below for Appendices/formats

Application form 

Recommendation of the Financial Institution

Proceedings of the Director of Industries & Commerce

Agreement format

Acknowledgement of receipt

APPENDIX -I
(Prescribed application fee to be remitted)

 APPLICATION FOR MARGIN MONEY ON CLUSTER DEVELOPMENT ACTIVITIES FROM THE GOVT. OF KERALA

1.   Name & address of the applicant common corporate entity

2.   Constitution of the common corporate entity
Proprietary / Partnership / Pvt. Ltd. Company (Score out inappropriate entries)
(Enclose copy of articles and memorandum of association attested by all board               
 of directors)

3.   Particulars of members of the consortium  

 4.  Name of person authorised to sign on behalf of applicant entity with self- attested copy of enabling resolution

5.   Registration No. of the consortium
(Self attested copy to be attached)

6.   Approval order No. & date of consortium from the Director of Industries & Commerce {Self attested copy to be attached)

7.  Margin Money Loan against term loan

1.      Project cost as approved by lending institution

2.      Term Loan sanctioned

3.      Margin

4.      50% of Margin

5.      10% of Project cost

6.      20% of Project cost

7.      Eligible Margin Money Loan

8.      Margin Money Loan for Working Capital

1.      Working capital required as per the financing institution

2.      Working Capital Loan sanctioned

3.      Margin to be taken by the common corporate entity

4.      50% of Margin

5.      10% of Working Capital

6.      20% of Project cost

7.      Eligible Margin Money Loan for working capital

9.   1.   Eligible Margin Money Loan against term loan

2.    Eligible Margin Money Loan against working capital

3.    Total eligible Margin Money Loan (Limited to Rs. 5.00 lakh)

10.  Name and address of lending institution

I/We …………………………. on behalf of M/s. ……………………. Bearing Approval Order No. of the Director of Industries and Commerce ………………… ….  hereby apply for a margin money loan of Rs. …………… ……………. against term loan and margin money loan of Rs. ………………… …. against working capital loan for setting up the common corporate entity.

I/We have read the rules of the Margin Money Loan Scheme on Cluster Development Activities and undertake to abide by all the provision therein.

I/We also undertake that the entire loan taken by me / us under this scheme shall be paid with interest thereon at the rates prescribed by Government form time to time and also that in case of default, the said loan along with the interest and penal interest shall be recoverable as if it were arrears of land revenue from the movable and immovable assets owned by me / us under the provisions of the Kerala Revenue Recovery Act, 1968.

I/We declare that the facts stated above are true to the best of my/our knowledge and belief.

Signature of the person(s)
authorised by the Common Corporate Entity.

APPENDIX-II

Recommendation of the Financial Institution

(to be enclosed along with attested copy of loan sanction order attested by Manager of Bank/ Financial Institution)  

We have examined in detail the application submitted by M/s…………………. having satisfied about the feasibility and viability of the scheme proposed by them we have sanctioned a term loan of Rs ………... (Rupees ……………. only) and working capital loan of Rs …………. (Rupees………………on1y) on ………..(date)

The cost of project comes to Rs ………….(Rupees …………………..only). The Margin to be brought in by the common corporate entity comes to Rs ………. (Rupees…………only). The DER stipulated is ……………

The total requirement of working capital comes to Rs …………… (Rupees …………………… only) 

The first installment of loan was disbursed on ………….. 

We shall furnish you the schedule of repayment on execution of agreement by the party and disbursement of the 1st installment of loan by us.

We also undertake to advise you on the completion of repayment of loan by the loanee or on any legal action against or take over of the unit by us.

We also undertake to keep the department posted on any and all development relating to the entity which may adversely affect the interest of the Government/Our bank /Institution.

Station:                                                                           Name & Signature of the Agent /Manager
Date:

(Seal) 

Name and address of the Bank

To 

The Director,
Directorate of Industries & Commerce.

Appendix -III

Proceedings of the Director of Industries & Commerce

(Present:                ……………………………   )

No.
Dated.

Sub: -Industries -Margin Money Loan on Cluster Development Activities sanctioned orders issued – 

Ref: -            I.
                               2.

ORDER

M/s ………………………………………….., an approved Consortium bearing Approval order No……… engaged in the service of ……………………….….. has applied for a Margin Money Loan of  ……………….. as per the reference second cited above.

The application has been scrutinized and found to satisfy the conditions laid down in the reference first cited above. The common corporate entity is found eligible for a Margin Money Loan of ……………………. against term loan and Margin Money Loan of  ……………………. against working capital loan.

In the circumstances sanction is hereby accorded for payment of ……………… …. as Margin Money Loan subject to the following conditions:

1.      The Margin Money Loan against term loan shall be repaid by the applicant common corporate entity in 16 quarterly installments starting from the 91^st day after the date on which the last installment of the term loan falls due as scheduled by the financing institutions/bank originally or on completion of the 51^st  month from the date of disbursement of the Margin Money Loan whichever is term loan falls due as scheduled by the financing institutions / bank originally or on completion of the 51^st month of the date of disbursement of the Margin Money Loan whichever is earlier.

2.      The Margin Money Loan against working capital loan shall be repaid by the applicant common corporate entity in 16 quarterly installments on completion of the 51^st month from the date of disbursement of the Margin Money Loan. 

3.      The rate of interest shall be 9% per annum.

4.      The interest in both the above cases shall be paid on a quarterly basis from the 90^th day of disbursement of the Margin Money Loan by the Director of Industries & Commerce.

5.      There shall be a penal interest of 2 ¾% per annum for any defaulted payment of either principal or interest. Any payment not made within 7 days from the due date shall attract penal interest of 2 ¾% per annum for the entire arrears. All payments made first be adjusted against penal interest on defaulted payment and/or interest, if any and then against interest and then against principal.

6.      The Margin Money Loan shall be disbursed to the common corporate entity through the financing institution/bank through which the term loan and / or working capital loan , has/have been disbursed. The date of release of the Margin Money Loan by the Director of Industries & Commerce to the financing institution/bank shall be deemed to be the date of disbursement of Margin Money Loan. The financing institution/ bank shall disburse the Margin Money Loan to the entity on a prorate basis along with the disbursement of the term loan or working capital loan. The unit shall be bond to pay the interest from the date on which the DD is drawn whether it is released to the common corporate entity or not by the financial institution.

7.      In case of any reduction or refixation of the loan, proportionate reduction shall be made on the Margin Money Loan and balance unspent amount if any shall be returned to the Director of Industries & Commerce forthwith by the Bank/Financing institution. The loanee shall be liable to pay the interest for the amount so returned till it reaches the Director of Industries & Commerce. In any case the Bank/Financing institution shall complete disbursement of Margin Money Loan amount within three months from the date of receipt.

8.      In case of default by the common corporate entity of the dues under the Margin Money Loan the entire amount outstanding shall be liable to be recovered as if it were arrears of land revenue under the provisions of the Kerala Revenue Recovery Act. 1968 from the assets of the entity and its promoters and in such other manner that the Government may deem fit.

9.      The loanee shall execute an agreement in the prescribed form agreeing to the above conditions within 30 days of receipt of this order, failing which it shall be taken that the entity is not interested in availing Margin Money Loan and the case closed automatically.

10. Any officer authorised by the Director of Industries & Commerce shall have powers to call for, inspect or examine at all reasonable time any asset. properties or books of accounts in respect of the loanee's concern and the loanee shall arrange for the same.

The Administrative Assistant, Directorate of Industries & Commerce is authorised to draw the sanctioned amount and to credit it to the account of the applicant in the …………………………….. after the agreement has been produced, duly executed.

The expenditure will be met from the head of account  ………………………….. in the current year's budget subject to availability of funds. 

The Joint Director (FC) of this office shall watch repayment of the loan after making necessary entries in the loan registers of this office.

Director of Industries & Commerce

APPENDIX – IV
(stamp paper worth Rs. 50/-)

THIS AGREEMENT is executed on this the day of ……………….. Two Thousand and ………………… between Shri. / Smt. …………………. (Here enter address) …………………………… on behalf of M/s. ……………………………. registered under the Department of Industries & Commerce with approval Order No…………………..and having its Registered Office at Door No……………………………………(here in after called ‘the loanee’) in favour of the Governor of Kerala (herein after called the ‘Government’).

WHEREAS the above common corporate entity has applied for the grant of Margin Money Loan to the Government.

AND WHEREAS on the entity’s request and as per order No………………..of the Director of Industries & Commerce (herein after called the ‘letter of sanction’ which shall form part of this deed as if incorporated herein) the Government have agreed to sanction an amount of Rs……………………… (Rupees …… ……… ……… ..only) as per order No…………….(herein after called the ‘said order’ which shall form part of this form as if incorporated therein) (the receipt of which the loanee hereby admits and acknowledges) subject to the conditions contained in the letter of sanction and also subject to the terms and conditions here in after appearing.

NOW THEREFORE THIS DEED WITNESSETH AS FOLLOWS:

1.      The loanee shall Perform all the terms and conditions contained in the letter of sanction and the said rules and those conditions which are applicable to the loanee according to the provisions of Kerala Financial Code or such other rules as may be framed hereafter in substitution for or in addition to the said code.

2.      The loan amount of margin money is agreed to be repaid by the loanee(s) (a) in the case of term loan, in sixteen equal quarterly installments of ………..each, the first installment being repayable on the date of expiry of three months from the date for settling the loan account of the Bank / financial institution or on expiry of the 51^st month from the date of disbursement of the loan, whichever is earlier and subsequent installments on the corresponding dates of the succeeding quarters and (b) in the case of working capital in sixteen quarterly installments of Rs…………(Rupees………………………only) each beginning form the expiry of the 51^st month form the date of disbursing of the Margin Money by the Director of Industries & Commerce, or earlier at any time in lump in case the Bank/fmancial institution recalls its loan.

3.      Interest at the rate of  9% or at the rate prescribed by Government,. per annum is agreed to be paid by the loanee on the Margin Money Loan outstanding at the time of repayment of such installments commencing from 90 days of disbursement of Margin Money Loan. Penal interest at the rate of 2¾% per annum is also agreed to be paid by the loanee on all belated payments of both interest and principal installments over and above the normal rate of interest sanctioned above till date of their actual payments.

4.      If the loanee fails to pay the amount when demanded, the Government may recover the same from them in the manner herein provided.

5.      All sums found due to the Government under or by virtue of this agreement. shall be recoverable from the loanee and their properties, both movable and immovable, under the provisions of the Revenue Recovery Act for the time being in force as though such sums are arrears of land revenue and in such other manner as the government may deem fit.

6.      The executants here of on behalf of the loanee hereby declare that they have full power and authority to execute this deed as per resolution …………………… dated……………... 

IN WITNESS WHEREOF …………………………………………….. for and on behalf of the loanee have hereunto set his/her hand on the day, month and year first above written. 

Signed by ………………..

In the presence of witnesses:

APPENDIX –V

ACKNOWLEDGEMENT OF RECEIPT
(Applicant’s / Department's copy)

Margin Money Loan on Cluster Development Activities

Ref. No.

Received       today       an           application                 from            M/s………… ……………………………………………………………………………………………. …………………for margin money loan with full enclosures:

1.      Fully filled in application with original chalan for the fee remitted.

2.      Self attested copy of Order of Approval of the Director of Industries and Commerce.

3.      Copy of Memorandum and Articles of Association.

4.      Copy of Registration Certificate from the Registrar of Companies.

5.      Self attested copy of Board of Resolution authorising applicant to sign the application and other documents. 

6.      Recommendation of financing institution/bank.

7.      Copy of loan sanction order attested by financing institution/bank.

8.      Copy of project report attested by financing institution/bank.

Please quote Ref. No. given at the top in all further correspondence on this matter with us.

Date of receipt:

Place                  

:Signature, Name and
 Designation of the Receiving Officer

Tick ( ) against enclosures received and (x) against those not received. Note that items 3,4 and 5 are applicable only for consortiums/companies. Return immediately where any of the necessary enclosures are missing.