Reliance to Exit Haryana SEZ

Reliance Industries mulling to exit Haryana SEZ project

S.P.S. Pannu

New Delhi

January 17, 2012    

Reliance Industries Ltd (RIL) appears to be pulling out of the its special economic zone (SEZ) project near Gurgaon as the company is in the process of informing the Haryana government that it is ready to hand back 1,400 acres of land allotted to it for setting up the venture.

RIL's Haryana SEZ was being set up through a special purpose vehicle (SPV) in which RIL had a 90 per cent stake while the Haryana State Industrial and Infrastructure Development Corp Ltd (HSIIDC) held the remaining 10 per cent as sweat equity.

According to Haryana government sources, RIL is expected to send a formal letter containing the offer to give back the land to HSIIDC "very soon". The land was allotted for the project without a bidding process and will now be given back to the Haryana government. As part of a larger plan, RIL had acquired an additional 5,000 acres adjacent to this land.

Market sources disclose that the total value of the 1,400 acres would work out to around Rs 20,000 crore as the price of land in the region is roughly Rs 15 crore an acre. The move represents a setback for the SEZ policy, which was put in place to bring in fresh investments and create more jobs.

Haryana chief minister Bhupinder Singh Hooda has already admitted that SEZs have turned out to be a failure in the state as they have failed to generate jobs.

The RIL spokesperson did not revert to Mail Today with the company's version on the issue till the time of going to the press. RIL had originally planned one giant SEZ at Jhajjar, but after the government limited the size of such zones to 12,500 acres, the company decided to create two adjacent SEZs.

The Haryana SEZs were expected to bring in an investment of around Rs 25,000 crore and have provisions for a cargo airport and a 2,000MW power plant. RIL was going slow on the project as due to the global economic meltdown there was uncertainty among investors and the demand for commercial space had shrunk.

The company had sought a four-year extension for the project from the Union commerce ministry, which notifies SEZs and allows them various tax concessions to promote exports and generate jobs.

However, in March last year the government had granted Reliance Haryana SEZ a one-year extension. The extension was given by an inter-ministerial Board of Approval (BoA) headed by commerce secretary Rahul Khullar at its meeting on March 25 last year.

While RIL had sought extension of the original letter of approval to March 2015, the board decided to extend the validity of the LOA up to March 31, 2012. The SEZ projects had also got delayed initially as RIL could not acquire contiguous land to meet the minimum holding requirements of the commerce ministry.

Land buying had gone well to start with but then the remaining farmers had suddenly jacked up prices to unreasonable levels.


RIL arm inks JV with IL&FS for Haryana township

Published on Thu, Jan 27, 2011 at 15:45   

Reliance Ventures Limited (not to be confused with Reliance Ventures Asset Management, the corporate venture capital investment firm promoted by Reliance ADA Group), a wholly-owned subsidiary of Reliance Industries Limited, has formed a joint venture with Infrastructure Leasing and Financial Services Limited (IL&FS) to develop a model economic township and other infrastructure facilities at Jhajjar in Haryana.

While IL&FS and Reliance Ventures will own 45% stake each in the venture, government of Haryana will own the balance 10%.

The project is a spin-off from Reliance Haryana SEZ Ltd (which inturn is a joint venture between Reliance Ventures and the government of Haryana) which is located to the south west of Delhi.

Reliance had been reportedly looking to convert the proposed SEZ with a domestic tariff area (DTA) after having failed to successfully acquire the land required for the SEZ. It was believed to be negotiating to bring in Japanese companies to set up their manufacturing units in the area.

The company was previously speculated to be in talks with Singapore-based firm InfraCo besides Japan’s Mitsui to rope in as a partner for the project. On the one hand this will mark a rare JV where Reliance has brought in an outside strategic partner for a business venture, it will also kickstart a project which has been languishing for long for the country’s largest corporate entity.

The proposed Jhajjar project may also herald development for the adjoining area leading to spread of Delhi NCR township beyond its immediate vicinity related to Ghaziabad, Gurgaon, Noida and Faridabad.


January 03, 2011

Mukesh Ambani-led Reliance Industries is relooking their ambitious 25,000 acres multi product special economic zone project in Haryana which the company had practically put on hold since the beginning of this year.

In the last 7-8 days, it has started fresh land acquisition in the Jhajjar district, NDTV reported.

But this time around RIL might have to invest significantly more than in their original plan because the state government has decided to almost double the land price for the project, to Rs 38 lakh per acre, from the original contract of Rs 22 lakh per acre.

“We have decided to increase price of land, because we want prosperity to reach the last man in the mile. We have already communicated it to RIL, and they have started buying land at the increased prices,” said Shiv Bhatia, advisor to CM, Haryana government.

In fact, RIL will also have to pay an annuity income of Rs 42,000 per year for every acre of land for the next 30 years and this amount will have to keep increasing by Rs 1,500 per acre every year.

So far, RIL has acquired close to 8,000 acres for the project. According to the original contract, the company will have to buy 17,500 acres directly from the farmers and the state government will then allot the remaining 7,500 acres, to help the company achieve continuity in the project.

The RIL SEZ project has been on hold since the beginning of this year. In fact, earlier this year, RIL even proposed a watered down version of the project, mainly because of adverse conditions in the export market.

But now, the project is primarily back on track after RIL saw Mitsui and Panasonic showing interest in setting up large operations at the SEZ.



Reliance likely to rope in Mitsui for Haryana SEZ

April 13th, 2010

Mukesh Ambani-controlled Reliance Industries (RIL) is likely to rope in Japanese firm Mitsui as an investor in its special economic zone (SEZ) project in Haryana, a clear indicator that the project is finally taking off.

Mitsui has given a letter of intent to Reliance to pick up 350-400 acres of land in the SEZ to set up a logistics park, the company sources said.

At about Rs 1 crore an acre, the deal size could be as high as Rs 400 crore, said a person close to the transaction.

Last year, RIL brought in IL&FS, a specialist infrastructure financing and management company, as a co-promoter to play a lead role in the management of the $10-billion project, long billed as India’s biggest and most ambitious SEZ project spanning as much as 25,000 acres.

Though the project suffered due to the economic downturn in the last quarter of 2008, it has gained traction recently as foreign investors have become keener to participate in one of the world’s fastest growing economies.

A company official told ET that besides Mitsui, two other Japanese firms are engaged in talks to invest in the Haryana SEZ. He, however, declined to reveal the other names stating that the talks were at a very preliminary stage.

Mitsui will buy the land on the Gurgaon-Farrukhnagar stretch. The Haryana SEZ was conceived in 2005 with a target of generating 5 lakh jobs and meant to house a cargo airport, a 2,000 MW power plant and with rail linkages to Delhi.

An RIL spokesperson said the company would not like to comment on what he described as ‘market speculation’. “As per the company policy, we would not like to comment on market speculations and individual transactions. Currently, requisite permissions, statutory approvals and clearances are being processed and we are working on the financial closure of the project,” the spokesperson said.

RIL, which has held a 90% stake in the project, had also considered tie-ups with global firms such as Walt Disney, Time Warner or Universal to establish theme parks and entertainment centres.

In 2005, RIL signed an agreement with the Haryana State Industrial & Infrastructure Development Corporation (HSIIDC) under which both sides were to have directors in a ratio of 2:1 on the board of their joint venture company. The deal also involved HSIIDC giving nearly 1,400 acres for the project for around Rs 500 crore.

In 2006, when the SEZ rules were notified, there was a mad rush for setting up such projects. But demand for SEZs has cooled off since. Several big projects such as Reliance’s Navi Mumbai SEZ, Haryana SEZ, the Posco SEZ have been hit because of land acquisition problems, resistance from farmers and changing regulations.

Several projects that were announced at the peak of SEZ boom have either been called off or are stuck. Last year, real estate major DLF got four of its SEZs denotified by the commerce ministry. DLF had told the government that there was no demand for commercial space. Another real estate firm Parsvnath had put 12 of its SEZ projects on hold. Videocon had planned two SEZs in Maharashtra and four in West Bengal but has put its development plans in abeyance.



wordpress com stats plugin