Poor timing forced the AP Industrial Infrastructure Corporation (APIIC) to extend its auction for 60 acres of Raidurg land, behind Hitec City, on Monday after no one entered a bid. Unlike in Tellapur, some companies showed interest in the land but held back from the auction complaining against rigid payment schedules.

In Tellapur, the Hyderabad Urban Development Authority (Huda) had postponed its bid for a 400-acre township by almost a month. It had to finally award the project to the lone bidder, Tishman Speyer Consortium, in the second round. Companies stayed away from Tellapur in view of the Rs 1,600 crores investment required for the land component. Besides, they would have to develop the land from scratch.

The land at Raidurg (Survey No. 83) is ready to start construction. Of the 424 acres given to it by the government, the APIIC had put two plots of 30 acres each on auction.

Companies however cited problems with the timing of the auction and the tough requirements. “Several companies showed interest but complained against high EMD (earnest money deposit) and our condition that total bid amount should be paid by end of March,” APIIC managing director B.P. Acharya told this correspondent.

“The decision to extend the date and put more flexible payment schedules was taken to ensure that the project goes for a good price,” he said. “There is no change in the upset price of Rs 16 crores per acre,” he added. Accordingly, the APIIC reduced the EMD from Rs 48 crore for each 30-acre plot to Rs 10 crore. It gave companies time till April 21 to pay 30 per cent of the bid amount and the remaining 70 per cent till the end of May. Earlier, the successful bidders had to pay 30 per cent within 24 hours after the bid and the remaining by March 31.

Officials said the old arrangement had been made to boost the APIIC’s balance sheets. But the companies resisted the move as it would affect theirs. Sources said construction giants DLF, Rahejas, RMZ Bangalore and L&T had made inquiries about the project. “The timing is wrong. Being the end of the financial year the companies and their banks will not be in a position to mobilise huge amounts in March,” said the head of operations of a top player in IT parks on condition of anonymity.

“We should also pay advance tax and make payments to companies which make supplies to us,” he said. The companies complained about rigid rules being implemented by the banks for real estate projects, apparently under the guidance of the Reserve Bank of India. “There is a smooth flow of Foreign Direct Investment and it is better to tie up with international players for projects requiring such huge investments,” he added.

An official of another firm said that companies try to show some cash reserve at the end of the financial year. The kind of payments that APIIC was demanding would send the cash reserve into negative. Inquiries by this correspondent revealed that some companies expressed doubts over the legal status on the land. The High Court had ruled in favour of the APIIC against which private claimants had approached Supreme Court.

The APIIC, however, clarified to the companies that the Supreme Court had refused to stay the auction process. Some companies also made inquiries about the funnel area of the existing airport spreading over the Raidurg land. “There will be height restrictions in the funnel area. But for the location and the kind of investments to be made, companies should be allowed to go as high as possible. We are also clarifying with the Airport Authority of India officials over the funnel area,” official sources said.

SOURCES:
Deccan Chronicle