The Hindu : Front Page : KIADB gives away land for a song

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Sunday, Aug 19, 2007
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KIADB gives away land for a song

Bageshree S.

Land estimated at over Rs. 400 crore given away for Rs. 39.27 crore in Kadugodi

78 acres of land allotted for IT park
‘KIADB fixes rates based on cost of acquisition’

Bangalore: Even as the price of land in and around Bangalore has reached astronomical proportions, the State Government has given away a large piece of land in a prime locality in Bangalore to a firm for virtually a song. Seventy-eight acres of land in Kadugodi Industrial area (close to ITPL, Whitefield) has been allotted to a firm by Karnataka Industrial Area Development Board (KIADB) for Rs. 39.27 crore, about one-tenth of its market price.

While the lease deed has been made for Rs. 50 lakh an acre for 11 years, the market price in areas surrounding the place is estimated to be about Rs. 7 crore an acre. At the end of the 11 years, the lease deed will be converted into a sale, subject to fulfilment of all terms and conditions

Real estate developer Prestige Group, for example, bought 16 acres of surplus land of Graphite India at Rs. 7 crore an acre in April 2006.

What is even more intriguing is that why and how the KIADB arrive at the figure of Rs. 50 lakh an acre in an area where the market price is much higher. Even by KIADB’s own earlier estimate, the value should be higher than the price at which it was given on lease.

One of KIADB’s notes on the transaction, made by its chief executive officer in the last financial year, says: “The company (Concord India Ltd.) has come up with a proposal with a request to re-allot the land at current allotment price of KIADB applicable to the area. The prevailing allotment price is Rs. 80 lakh an acre.”

The reason for KIADB’s climbdown by Rs. 30 lakh an acre in its final deal (which comes to a total of Rs. 23.4 crore) is intriguing.

According to documents made available to The Hindu, the history of this piece of land (plot no. 6, survey no. 1 of Kodugodi village, Bidarahalli hobli, Hoskote taluk) goes back to 1973, when it was allotted to Steyr India Ltd. for s etting up a tractor manufacturing unit.

The lease deed was signed in 1979. The firm failed to set up the industry as per the terms of the agreement, and KIADB decided to cancel the allotment in 1981.

What followed was a prolonged phase of litigation going to the Supreme Court.

Meanwhile, in 1982, the name of the company was changed to Concord India Ltd. The Supreme Court transferred the case back to the civil court.

The twist in the protracted tale came when, even as evidence was recorded before the civil judge, the KIADB decided to withdraw the civil suit and re-allot the land to Concord India for Rs. 39.26 crore to develop it as a software park. The lease deed for this was signed in June this year with a rider that it was subject to the clearance of the High Power Committee headed by the Chief Minister.

Concord has now entrusted the task of developing it into an IT park to Embassy Group. KIADB has not done any re-evaluation to ascertain the land requirement for the new project. After all, an IT Park would not require as much land as a tractor manufacturing unit.

However, according to KIADB chief executive officer D.N. Nayak, KIADB does not fix rates based on the market value, but on “cost of acquisition and development incurred, with additional service charges”.

The land price in Kadugodi Industrial area, as per this norm, he contends, is only about Rs. 25 lakh an acre.

But why the KIADB should lease out land at about one tenth of its market value for a huge commercial venture remains a moot question.

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