Hello Readers / Visitors,
Amidst all this looming global uncertainty, the last thing which one would want is more uncertainty on the home turf. So when right now liquidity is an issue and raising capital would pose some serious challenges, surely any company would like to avoid the additional stress caused by uncertainty over its project itself taking off due to land or environmental issues. In all this cacophony caused by the crisis in the world financial markets, all attention got completely diverted from the other domestic issues, which were earlier causes for pulling down the bourses.
The Tata Nano at Singur was one such issue, which simmers even today. It’s probably just that so much other bad news has come in that this is now passé, too small on a macro level. But yet, it remains an issue. There is now news of the company holding talks with the Karnataka Govt, for 1,000 acres of land at Dharwad, the alternate site for setting up the project. And if this happens, kudos to Tata Motors! And the country would boo West Bengal!
If Tata Motors moves out of West Bengal, in the present financially critical time, no company would want to take up anything in a State where there is so much uncertainty over getting land. Uncertainty over capital, uncertainties over land, how much more can any company take? It will surely put West Bengal on the world map, finding itself a place in the list of States to be avoided for doing business in India. If this is the plight of one of the most respected business house of India and of the most prestigious project for India, what could happen to those in the second rung? Naturally, others who are planning to set shop in that state, would now surely rethink.
One of the first companys’ to be vocal about it is Infosys. The IT company has plans to set up a software development centre in Kolkata but the companys’ Human Resources Chief Mohandas Pai said. "Singur has created a fear in the minds of India Inc. We have neither pulled out nor are planning to. We will rethink and reconsider the situation if need be." He has just said aloud what other companies in the state are feeling right now. Infosys is also again a very conservative group and they would not mouth such words, unless pushed to the corner. So when this is the sentiment of two of the top business houses of India, is there much hope for the state?
The official website of the West Bengal government calls itself a ‘Super Power’ and goes on to list the various advantages of doing business in the state. Well, at this juncture, we can only say, “Well designed website”. Under West Bengal Industrial Development Corporation (WBIDC) various ‘Parks’ are being set up. These parks are under various stages of progress. 2,500 acres of land is required for the Mega Iron & Steel Park and though WBIDC has identified the land, it is yet to be acquired. The Biotech park requires 60 acres and yet to be acquired. The Foundry Park requires totally 924 acres of land of which 300 acres have been purchased and the balance will be purchased through a committee set up by the State Government. For the Rubber Park, about 35 acres of land has been acquired out of total requirement of 170 acres. The Knowledge Park requires 850 acres which has been identified. This is great, so much employment would be generated. But again, it’s all about land acquisition. Will these projects be able to get the required land and even if they get the land, will they manage to start work?
If Ratan Tata pulls out, immediately under threat is the existence in the state of the ancillary units in Singur. Other companies like - Tata Realty Infrastructure, Tata Metaliks and Maithon Power might also seriously rethink. Bharat Forge, which had decided to invest big time in Bengal, around Rs.6,500 crore, largely because of the Nano, is now in two minds.
Reliance Retail was to set shop in a big way in West Bengal and even after hiring people, it was forced to shut shop and sack all the 400 people who had secured employment. Its stores were attacked by supporters of left-wing parties and made it impossible for the company to continue work. Reliance Retail is doing well today despite not operating in West Bengal. So whose loss has it been?
Videocon is setting up a 3 mtpa steel plant and has drawn out an invesment plan of Rs.15,000 crore. The company has thankfully clarified that its project is on track despite the Singur controversy. The company has acquired 400 acres of some 3,500-4,000 acres required. Here, the company is approaching the farmers directly and not through Govt acquisitions. It hopes to get all the required land by December 2008. That’s, real positive attitude, hope it works!
JSW Bengal Steel project is also going ahead and is sure of keeping to its schedule. It has already acquired 4,800 acre land and expects to commission an eight million tonne per annum iron ore beneficiation unit and six million tonne per annum pellet plant in West Bengal by 2012. How did the company manage to get the land? Like Videocon, it decided to take the lead and formed a three-prong strategy. First, instead of giving the sale proceeds to the farmers, it was decided to deposit the proceeds of land sale in a bank to ensure that they get monthly income. Second - a job to each family and third - a stake in the company. This is probably what the Tatas should have done too. But those in Bengal say that Jindal was getting jittery and to hold him back, the Govt agreed to make the Salboni unit an SEZ, the place where its greenfield unit is being set up.
Jai Balaji is putting up a Rs 16,000 crore, 5 mtpa steel plant, including a 3 mtpa cement plant and 1,214 MW captive power plant near Purulia and its land requirement is of 4,000 acres. 1,500 acres was to come in the first phase and this is yet to happen. Other projects facing similar situations are the Rs.16,000 crore investment from the Vedanta Group, Adhunik Steel (Rs 6,400 crore), Shyam Steel (Rs 8,000 crore) and Abhijit Steel (Rs.10,800 crore). These companies have either acquired a part of the land required or have fully acquired the land, yet right now, they are in two minds about going ahead.
Call it politicization or mishandling, the entire Tata Nano project has caused a dent on the brand image of West Bengal. If Tata pulls out, well, then God save the state! --
Source : Premium Investments
Regards,
Allies Financial Services
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