SRINAGAR: In a significant decision aimed at reviving the financially frail, J&K Horticultural Produce Marketing and Processing Corporation (JKHPMC), the state cabinet on Tuesday approved conversion of government loans and financial assistance released from time to time to the Corporation into share capital.
As per the cabinet decision, the outstanding financial assistance of Rs 77.39 crore as on 31.03.2017 against the Corporation has been converted into fully paid-up share capital and the interest amounting to Rs 28.75 crore, has been converted into equity share capital of the Corporation.
“The decision has been taken to re-structure of the Corporation, improve its balance sheet, reduce dependence on the government loans and financial assistance, enable the Corporation to secure loan from financial institutions for funding its business plans and to turn around the Corporation,” said Minister for Horticulture, Syed Basharat Bukhari who piloted the proposal for the revival of JKHPMC.
Hailing the cabinet decision, the Horticulture Minister said that a five year business plan has been formulated for the gradual revival of the Corporation to make it a profitable enterprise.
He said JKHPMC was incorporated in 1978 under Companies Act 1956 as a World Bank aided project to assist J&K in pre and post-harvest management, processing and marketing of horticultural produce. “The Corporation, however, got entangled in some serious setbacks especially because of the erosion of capital assets with the eruption of turmoil in the Valley in 90’s,” he said and added that the erosion of capital and revenue generating assets, dependence on external financial sources and lack of internal cash generation resulted in over-capitalization of the Corporation, accrual of liabilities, acute financial sickness and liquidity crisis coupled with working capital shortage.
The Minister said with the current fiscal state of the Corporation, there was a working capital crisis looming for execution of future business plans. “The Corporation is cash-starved and the liquid resources have dried up to the extent that the committed salaries and other staff related dues remain unpaid to the extent of Rs 37.08 crore including salaries for the past 6 months,” he said and added that the Corporation was indebted to J&K Govt to the tune of Rs 106.15 crore as on 31-03-2017 on account of loans and other financial assistances released from time to time by the Finance Department.
Bukhari said as the Corporation was unable to pay its loans to the Government, a proposal was submitted to the Finance Department for conversion of the same into share capital, which was agreed by the Department and also ratified by the Cabinet.
The Minister said the decision will go a long way in the revival of the Corporation and facilitate it to take up new projects. He said the Board of Director of the Corporation in its 57th meeting have already approved four projects to be completed in the fiscal 2017-18 besides installation of more value-addition equipments in the existing Apple Juice Plant and establishment of APEDA funded integrated Apple House with CA Store at Chowdrigund.