Loss of at least Rs.148 crore to State by TIDCO

The Tamil Nadu Industrial Development Corporation Limited (TIDCO), a State-owned company, has caused a minimum loss of Rs.148 crore to the government by adopting wrong guideline value.

While alienating government land to DLF Limited, a joint venture promoter for developing SEZ in Taramani, TIDCO deviated from government policy and adopted the guideline value applicable for residential area instead of an industrial area, according to the CAG (commercial) report tabled in the Assembly on Friday.

TIDCO had determined the market value of land as Rs.3,520 per sq.ft by adding an annual escalation of 12 per cent on the guideline value of Rs.3,000 per sq.ft applicable for residential area on Canal Bank Road, Taramani, obtained from the Registration Department in 2006. TIDCO quoted this market rate as upset price and invited bidders. Of the eight short-listed, DLF quoted the highest rate at Rs.5,757 per sq.ft as upfront lease rent.

Subsequently, the government issued Letter of Award to DLF in February 2008, the CAG report said, observing that TIDCO erred in fixing lease rent by adopting wrong parameters. As the 49.19-acre land allotted was government ‘poromboke' land, TIDCO should have fixed market value of the government land allotted for industrial purposes at double the market rate of residential area indicated by the Registration Department. Accordingly, the upset price of this land should have been fixed at Rs.7,040 sq.ft. As TIDCO leased out at a value of Rs.5,745 per sq.ft, there was a minimum loss of Rs.148.88 crore to the government exchequer and resultant undue benefit to the JV promoter.

Fixation of lower upset price for the above land was also evident from the fact that the balance portion of land measuring 25.27 acres had been allotted (February 2008) to another JV partner, Tata Realty and Infrastructure Limited, Mumbai, for developing another SEZ at their quoted rate of Rs.12,050 per sq.ft. based on the guideline value for industrial area, according to the CAG report, signed by S. Rajani, Accountant General, Commercial and Receipt Audit, Tamil Nadu.

The government's reply (December 2009) that the plots were sold after following the tender processes to both Tata and DLF projects was not convincing in view of the fact that both the plots belonged to the government and were allotted for industrial purposes, the report said.