After industrialists, it is now the turn of private equity funds to relook their spreads in West Bengal.
Two large US-based private equity funds, Walton Street Capital and Starwood Capital Group Global with a 33 per cent stake each in Bengal Shriram's Rs 6,000-crore IT-SEZ project at Uttarpara on the outskirts of Kolkata, are unhappy with the lack of progress of the project.
The West Bengal government recently asked for more documents from Bengal Shriram Hi-Tech City Pvt Ltd regarding the land transaction, in which they bought the 314 acre plot from Hindustan Motors. In response, the company wrote a letter in which it said the US-based private equity firms were unhappy, as the clout between the government and Hindustan Motors the land sale had put the project in limbo.
"We have appealed to the government that we should not be penalised. Even four years after buying the land, we are unable to launch the project because of these complications. The confusion between the government and Hindustan Motors needs to be clarified. Any investor would be unhappy and concerned about that," said Debashis Som, chief executive officer of Bengal Shriram Hi-Tech City Pvt Ltd, the special utility vehicle floated for the project.
"We have made a total investment of Rs 370 crore till now, which is inclusive of Rs 285 crore for the land, Rs 50 crore for the stamp duty and other expenses for government clearances. The government had asked us to submit some documents and in response, we had provided the documents in the form of a letter," he added.
The developer, in the letter, also said the US companies may take up the matter at a diplomatic level. "They are US investors. Obviously, there is a possibility that they can take up the matter with the US government. I have just pointed that out," Som said.
Envisaged in 2007, the project faced initial delays due to formalities with the process of licensing, land schedule, the appointment of independent surveyors and environment clearances. The construction was finally set to begin by the end of November last year. But, the project is again in jeopardy, as the Mamata Banerjee government has initiated an investigation into the alleged irregularities in selling the land.
Hindustan Motors' Uttarpara facility, the country's oldest automobile factory which produces the ambassador car, is built on 427 acres. In order to raise funds, the crisis-ridden company sold the land to Bangalore-based Shriram Properties, which now owns 34 per cent stake in Bengal Shriram.
According to government sources, the C K Birla automobile company allegedly understated the sale of excess land at its factory site by Rs 200 crore, and the fund was not ploughed back to the company. However, Hindustan Motors has denied any irregularities.
