The managing director of Gallantt Ispat, Mr CP Agarwal told CNBC-TV18 that the government owes them almost INRs 100 crore by way of subsidy.
Mr Agarwal said that "The government owes us roughly INR 100 crore in form of capital subsidy on the amount already invested in the unit, INR 10 to INR 12 crore on account of interest free loan equivalent to the amount of tax paid by the company and INR 20 crore per annum on account of freight subsidy equivalent to the amount paid as freight on iron ore.” Out of this, INR 24 crore has already been paid to them.
Gallant Ispat has challenged a government order which withdraws these benefits from the company,and the hearing is set for 25 of January.
Below is an edited transcript of his interview with Reema Tendulkar and Ekta Batra.
Q - Could you explain to us the hearing which is expected to take place on the 25th of this month with respect to the subsidy? Also, what is the subsidy benefit you all will get through?
A - Due date was stalled on the commitment of the state government given by a notification in the year 2006. That notification of the state government provides 35% of the capital subsidy related to the investment made in the unit.
The second benefit is the 100% reimbursement of the freight whatever being paid on the iron ore that is the raw material of the unit. The third benefit was the tax payable by the unit, that is VAT, was to be converted automatically into an interest free loan payable after a period of 15 years. These facilities were available for a period of 15 years.
Q - So have you quantified how much the government owes you by way of a subsidy?
A - Roughly INR 100 crore in form of capital subsidy on the amount already invested in the unit that is INR 350 crore. Amount of at least INR 10 to INR 12 crore on account of interest free loan equivalent to the amount of tax paid by the company. INR 20 crore per annum on account of freight subsidy equivalent to the amount paid as freight on iron ore.
Out of all these claims, the state government has already paid INR 24 crore as part disbursement of the subsidy. But in the month of November 2011 they issued a notification withdrawing these facilities, refusing to pay the balance amount receivable to the company, that is around INR 125 crore till date. So we have challenged that notification on the Allahabad High Court.
Q - What is the reason that the government has withdrawn the subsidy?
A - They have just issued a two line Government Order that all the pending applications stand cancelled.
Q - Give us more details about this litigation. How much are you all asking in terms of potential damages, etc?
A - There is no question of damage. The notification itself provides the amount payable as subsidy or interest free loan are liable to be disbursed within a period of 90 days from the date of application. In case of any delay, they themselves have provided in the notification for payment of penal interest for the delayed period. So in any case we are going to get the interest component that will suffice the damages.
Source - CNBC-TV18
