Financial Assistance for Purchase of Existing Assets

What is Financial Assistance for Purchase of Existing Assets?

Financial Assistance for Purchase of Existing Assets is a term loan scheme of the Pondicherry Industrial Promotion Development and Investment Corporation Limited (PIPDIC), a Government of Puducherry undertaking under the Department of Industries and Commerce. PIPDIC's published schemes of assistance describe the purpose as assistance to units in existence for a minimum period of two years with a good track record, for the purchase of existing land, building and machinery with the prescribed residual life.

Most industrial lending funds new assets. A fresh machine from a supplier, a building put up on a vacant plot. This scheme does the opposite. It funds a unit buying second-hand assets: a neighbouring factory shed, a plot with a building already on it, a working machine being sold by another unit.

That is often the cheapest and fastest way for a small manufacturer in Puducherry to add capacity. A used injection moulding machine, a printing press or a shed adjoining the existing premises can cost a fraction of the new equivalent and can be in production within weeks. PIPDIC recognises the commercial logic and lends against it, but prices the additional risk explicitly.

What are the terms of the loan?

Minimum loan: Rs 5 lakh. The maximum follows PIPDIC's normal term loan norms rather than a ceiling specific to this scheme.

Interest: 1 per cent above the prevailing rate. This is the single distinguishing financial feature of the scheme. Applied to PIPDIC's published structure, the effective rate works out approximately as:

PIPDIC's separate 0.5 per cent concession for units promoted by women, Scheduled Caste, Scheduled Tribe or differently abled persons is published as a general norm; ask the Corporation how it interacts with the 1 per cent premium in your case.

Repayment: 5 years including a 1-year moratorium. That is a shorter tenure than most PIPDIC schemes, which is consistent with lending against assets that already have part of their life behind them.

Investigation fee: 0.50 per cent of the loan applied up to Rs 25 lakh and 0.75 per cent above, with a 50 per cent concession for SC and ST entrepreneurs.

Who is eligible for this scheme?

You can apply if:

• Your unit has been in existence for a minimum of two years.
• Your unit has a good track record; running, paying its dues, and able to show audited accounts.
• You are buying existing land, building or machinery that has the prescribed residual life.
• You need at least Rs 5 lakh.
• You can offer security meeting PIPDIC's norms, and the asset being purchased has clear title.

You cannot apply if:

• Your unit is less than two years old, or you are a first-time promoter. The two-year existence condition is the gate for this scheme. A promoter acquiring unencumbered assets to start out should look at PIPDIC's Single Window Scheme, which explicitly covers promoters acquiring unencumbered assets and allows a project outlay of up to Rs 200 lakh including working capital.
• Your unit has a poor repayment record or a live default.
• The machinery has no meaningful residual life left. PIPDIC requires the prescribed residual life, and a valuer's report showing an exhausted machine will end the appraisal.
• The title to the land or building being bought is defective, encumbered, disputed, or standing in a deceased person's name without a legal heir declaratory decree from a competent court in Puducherry.
• You need less than Rs 5 lakh.
• The assets are outside the Union Territory of Puducherry and no security meeting PIPDIC's out-of-territory norms is available.

What documents are required?

How to apply for assistance to purchase existing assets

1. Establish that your unit clears the two-year test before anything else. Pull together the MSME registration acknowledgement, audited accounts and returns that show two years of operation.
2. Get the assets valued, with a residual life assessment. PIPDIC's condition is not just value but remaining useful life, so instruct the valuer specifically on that point.
3. Get the title papers of the property being purchased, original and antecedent title deeds, a 30-year encumbrance certificate, patta, FMB copy and tax receipts. Buying existing property means inheriting its title history, and this is where these applications most often fail.
4. Register or log in at pipdic.in and open the appropriate loan application form under Loan Applications.
5. Upload documents and pay the fee online, Rs 100 for a loan up to Rs 25 lakh, Rs 200 above that.
6. Go through appraisal. PIPDIC examines the seller's title, the valuation and residual life, and your unit's ability to service a 5-year loan at 1 per cent above the prevailing rate.
7. Complete documentation after sanction; including the legal opinion report on the property, and take disbursement, normally against the registered sale.

How do I check my application status?

1. Log in at pipdic.in and open the application status view.
2. Quote the application number issued at submission.
3. Contact The Managing Director, PIPDIC Ltd., No. 60, Romain Rolland Street, Puducherry 605001, 0413-2334361, info@pipdic.com.
4. Use the Enquiry or Grievance form on pipdic.in.

Common reasons applications are rejected

• Unit less than two years old. This is the most common straightforward disqualification.
• Residual life inadequate. Machinery near the end of its working life does not meet the scheme's condition however cheap it is.
• Title defects in the property being purchased — a break in the chain of title over the 30-year encumbrance period, an unresolved mortgage, or a property in a deceased person's name without a legal heir declaratory decree.
• Valuation not from an acceptable source. PIPDIC engages Chartered Engineers from its own approved panel for security valuation.
• Loan below Rs 5 lakh.
• Track record not demonstrated, accounts not audited, or losses in the recent years.

Key dates

PIPDIC does not publish a window for this scheme. Applications are accepted through the year on pipdic.in. The Rs 5 lakh floor, the 1 per cent interest premium and the 5-year repayment with a 1-year moratorium are PIPDIC's published norms; the prevailing rate to which the premium is added is the rate in force on the date of sanction.

Help and contact

• The Managing Director, PIPDIC Ltd., No. 60, Romain Rolland Street, Puducherry 605001 to 0413-2334361, info@pipdic.com
• General Manager (Administration), PIPDIC Ltd.: mobile 9894653835
• Online applications; pipdic.in
• Scheme list: pipdic.in/pipdic_schemes
• Financial norms, pipdic.in/financial_norms
• Documentation checklist; pipdic.in/checklist_doc