Govt okays 7 firms for Navi Mumbai SEZs

First-of-its-kind corporate structure to ease funding issues for SEZ.

An empowered group of officials today approved with conditions seven co-developers for the four Navi Mumbai special economic zones (SEZs) being developed by Mukesh Ambani, his associate Anand Jain and the Maharashtra government.

All seven co-developers are owned 40 per cent by Jai Corp, a company promoted by Jain, while other business associates hold the remaining stake.

These seven companies will build infrastructure for the SEZs, including power plants, an electricity transmission and distribution network, water supply, sewage plants, residential complexes and the industrial structures.

Analysts said that the move to have separate companies to develop infrastructure in the zones has been done to attract strategic investment.

"The promoters can sell a stake in the seven companies to raise funds," said an SEZ analyst, adding: "It would have been difficult to interest strategic investors had it been a single company."

According to Reliance Industries executives, the capital investment in the Navi Mumbai SEZs and the proposed Mumbai SEZ is likely to be Rs 35,000 crore.

Commerce ministry officials said that other developers could take a cue from this and float similar companies to bankroll their plans.

"The approval was given subject to their producing data on the net assets of the co-developers," said Commerce Secretary G K Pillai, who chairs the inter-ministerial board of approval for SEZs.

Jai Corp recently raised Rs 2,500 crore by selling 10 per cent to a clutch of investors including Goldman Sachs. This money, sources in the know of things said, will be used to fund the seven entities.

Originally, the Navi Mumbai SEZ was to be set up in an area of more than 5,000 hectares. But after an Empowered Group of Ministers put a cap of 5,000 hectares on SEZs and prohibited state governments from acquiring land for private zones, it was divided into four.

While one is a multi-product SEZ (it has received in-principle approval), the other three, which have been formally approved, will house pharmaceutical, IT and auto-components firms.