Rajasthan govt to take 26% equity in Mahindra SEZ

The Rajasthan government's infrastructure development and lending arm, Rajasthan State Industrial Development & Investment Corporation (RIICO), at its board meeting held on Saturday sent a recommendation to the state government, requesting it to allow the corporation to have 26 per cent equity in the SEZ, with Mahindra & Mahindra's at 74 per cent.

"The board of directors of RIICO has recommended that the special purpose vehicle (SPV) which will execute the SEZ should have 26 per cent equity vested with RIICO while the remaining 74 per cent equity should be of M&M," a RIICO official said.

He said once the state government cleared the recommendations, the SPV would be functional. Mahindra Group company Mahindra Gesco Developers Ltd will establish the SEZ near Bagru, about 30 km from here on the Jaipur-Ajmer national highway.

Sources said M&M was keen that RIICO take higher equity because it was thought to be a way of obviating controversies and troubles.

The project is expected to bring in an investment of Rs 10,000 crore. M&M's special economic zone (SEZ) in Rajasthan has always courted controversy. The opposition Congress had objected to the way the project was cleared. Now the trade experts are also vary on the success of the project.

The Congress had other reasons to object the project. "The way the project has been cleared raises suspicions", a senior Congress leader in the state said. "The state government has flouted its own policy by not inviting any bids for the project", he said.

As per the state government's policy, private sector participation can be encouraged for the development of SEZ but for which offers would have to be invited through public notices or bidding.

The state government without adopting the process of inviting offers from other private developers decided to set up the SEZ in joint venture with Mahindra Group company Mahindra Gesco Developers Ltd. Thus depriving other private players of participation in the venture", he added.

"Eight long months to thrash out the financing pattern does not speak highly of the two parties", an industry expert said. "If you take so much time in deciding an issue then how can you be called professional", said another.

"The project was to come up in two years, but if you take over 8 months in these kind of things then can you even imagine the project coming through in next 16 months", he asked.