Lucknow Nagar Nigam: Risking The Usual And Not Settling For The Ordinary!

Lucknow, December 28 (TNA) December 2, 2020 became a remarkable date when Lucknow Municipal Corporation got listed on Bombay Stock Exchange, becoming the first civic body in North India to issue bonds under Atal Mission for Rejuvenation and Urban Transformation (AMRUT).

LMC has raised Rs Rs 200 Cr by issuing municipal bonds on a private placement basis using BSE Bond platform. “On BSE BOND platform, the municipal corporation received 21 bids for Rs 450 Cr, which is 4.5 times of the issue size”, BSE said in a statement. The day was even more magnificent when UP Chief Minister Yogi Adityanath came by himself to ring the auspicious Opening Bell in the Bombay Stock Exchange.

All this has been in the media since last couple of weeks and more but it would be equally interesting to ponder what and how this historic day was conceptualised and scripted, and who all had been behind the scenes functioning day and night to craft it as a reality.

The journey commences back in February 2018, when Prime Minister Narendra Modi announced the Municipal Bond issue by the ULBs of Lucknow and Ghaziabad in the Smart City conclave held in 2018. It was an exigent initiative taken up by the Government of Uttar Pradesh under the able leadership of Adityanath to issue the first municipal bond in North India.

Maha Milind Lal who has been one of the key persons behind the execution of this Bond issue took charge of the office in May 2018 as the Chief Finance Officer. By the end of August 2018, the work commenced with the appointment of Transaction and Merchant bankers along with signing of the contract agreement with them for the bond issue.

By the end of December 2018, credit rating documents compilation, preparation of audited financials, bond structure preparation, appointment of Credit rating agencies, Debenture Trustee, Legal Councel, R&T agent etc was completed. In the first couple of months of 2019 itself, the credit rating of AA was obtained by two rating agencies (Brickwork ratings and Acuite Ratings) which was followed by an investor meet in Mumbai thereby finishing up all pre issue activities.

While everything was moving smooth, the issue got stuck up on account of Code of Conduct imposed by Lok Sabha Election in March 2019 till May 2019. However, this situation did not have a very adverse affect as it was a short span and also the process of proposals and approvals by the Ministry of Urban Development and UP Cabinet kept in flow.

This eventually landed up with the Government of India circular in June 2019 that stated about the incentive schemes for ULBs coming out with Municipal Bond where the GOI will incentivise Rs 13 Cr per Rs 100 Cr Bonds issued subject to a maximum of Rs 200 Cr of Bonds issued.

Another setback was faced when new guidelines of investment were issued by EPFO in September 2019 on credit rating agencies. EPFO mandated that one of the two credit rating agencies has to be from the Top 4 rating agencies i.e., Crisil, ICRA, India Ratings and CARE for making any investment in bonds rated AA and above. Since the rating criteria did not meet the above, India Ratings was approached and AA rating was obtained from the same in January 2020. Soon after this, things started moving in ultra fast mode by submitting the draft of tripartite agreement for approval in between Government of UP, Debenture Trustee and LMC.

Simultaneously, processes of Due Diligence by merchant bankers started along with relevant submissions to SEBI. The execution documents for the tripartite agreement to be submitted to the State Government was also drafted and submitted to the finance and legal department of the State of Uttar Pradesh.

When everything looked quite achievable, the Nation was hit by the worst Pandemic ever that brutally affected everyone including the fast pace progress of the LMC Bond issue. The Lockdown and precautionary measures created a huge gap of almost 8 months where nothing could have been done.

The ramshackle due to COVID19 slowly introduced life to a new normal when the organization started to pick up things where they were left when Ajay Kumar Dwivedi joined in August 2020 as the Lucknow Municipal Commissioner. Subsequently, the legal team took care of all the issues raised by SEBI and all issues were resubmitted with SEBI by the last week of Oct 2020. By October, the Balance Sheet of FY 19-20 completed auditing, issues pointed by SEBI were also rectified and AA rating by the credit rating agency (India Ratings) was also obtained.

The countdown began in November 2020 when submitted rectifications were approved by SEBI and thereafter approval for the issue of the Lucknow Municipal Bond was on the table. History was created on the bidding day itself which was on 13th November, 2020 where the issue was oversubscribed by 250 per cent on its debut at the Bombay Stock Exchange (BSE). Eventually all the hard work and dedication of all the officials behind the scene met its ultimate fate when the Bond was listed on the 2nd of December 2020 on Bombay Stock Exchange with the glamorous bell ringing ceremony by the CM of UP.

And that is how we witnessed a golden day towards the progress and prosperity of the State of Uttar Pradesh which is often conferred to as a land unlimited problems; now beautifully visualized as a Land of Unlimited Possibilities and Potential. Lucknow Nagar Nigam has laid down a benchmark and a very pertinent paradigm that breaks the routine perception about organizations like this amongst the public and the oversubscription of Bonds is colossal evidence showing the confidence of the investors in LMC.

It would be pertinent to acknowledge the great contribution of Retired IAS Keshav Verma under whose guidance the Bond issue became a successful event. Verma is also known as The Bond Man of India as during his tenure as a Municipal Commissioner of Ahmedabad, India came out with Municipal Bond in 1997 for the first time ever.

Apart from the issue of the Municipal Bonds, the Corporation has been evidently and relentlessly functioning to eradicate COVID 19 Cases in the city. The CFO Maha Milind Lal has been spotted a lot of times in the Red Zones and COVID prone areas taking relevant steps like sanitization of the areas, food distribution to the needy, even taking charge over the dead corpses of COVID deceased etc.

During peak COVID 19 lockdown, the then Municipal Commissioner Dr Indramani Tripathi IAS (presently Special Secretary to the Government of UP) ensured that nobody sleeps empty stomach in the city. He was the key person to establish COVID Helpline and command centre at the Smart City office in Lucknow. Similarly, Lucknow Municipal Commissioner Ajay Kumar Dwivedi IAS has also been seen a lot of times dealing with issues amongst the common mass during this pandemic era.

I am just looking at the scenario as a part of the common strata. The Officials could have easily sat behind and waited either for the Pandemic to get over or could have given any of the hurdles as the reason for not keeping up with the vision. What I can beautifully see that this organization no more works in routine old fashion.

All these efforts clearly symbolizes that the Lucknow Municipal Corporation is not only conducting its duties in normal course, but in fact the officials in the organization are taking ownership in the duties they are bestowed upon. In consequence to the efforts such this, a good quantum of trust and faith is getting inculcating in the public towards the organization and the government. Good days are seemingly arriving. Let’s not dream for it and wait for it to happen. Let us appreciate all good efforts put in and work on it to see it actually happening.

--Nikita Bose

(Writer is an Ex Banker, CEO of Finance Crafter Enterprises and State Co Chairperson of Confederation of Indian Micro Small and Medium Enterprises.)