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.
Source:http://economictimes.indiatimes.com/news/economy/infrastructure/Reliance-likely-to-rope-in-Mitsui-for-Haryana-SEZ/articleshow/5785926.cms
Labels: Mukesh Ambani, Reliance Industries, RIL, SEZ