Sucheta Dalal :Entry barrier?
Sucheta Dalal

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Entry barrier?  

Mar 14, 2005

Sources tell us that the delay in world cement major Holcim’s open offer is not merely due to the Securities and Exchange Board of India’s (Sebi) inability to make up its mind about the different open offers and reverse book-building bids that are required in this complicated deal. It may be recalled that Holcim plans to mop up a 50.1 per cent stake in ACC and 6 per cent in Ambuja Cement Eastern. It also planned to persuade ACC to sell its 76 per cent stake in Everest India Ltd to the Adani group. The Enforcement Directorate (ED) is apparently sniffing around this deal and its financial complications. However, it is not quite clear what the ED hopes to check because its own powers are hugely restricted under FEMA rules and investment norms are fairly liberal. Sources say this could however be one reason why Sebi is not in a hurry to clear its open offer for ACC.


Nashik hub


The narrow two-lane road to Nashik, that snakes through a treacherous stretch of ghats, is called the National Highway 3, but at a time when the nation’s highways are being rapidly being quadrupled, it certainly doesn’t do justice to the city that is fast emerging as an important destination for industry, leisure and religious tourism. Several top companies including ABB, Larsen & Toubro, Mahindra & Mahindra, Ceat, Crompton Greaves, Glaxo, Glenmark, Siemens and Kirloskar are already located in the Nasik-Igatpuri belt. But it is Nashik’s world-class wine producers — Sula Wines, N.D.Wines and Vinsura who are attracting international attention. Sula Wines has raised Nashik’s global visibility through its brand building efforts and has recently expanded its brand through a deal with N.D.Wines. Shirdi, Trimbakeshwar, and the Vipassana centre at Igatpuri are other magnets that attract a rush of pilgrims daily. The Maharashtra Economic Development Council (MEDC) says, Shirdi alone attracts around 50,000 devotees everyday. All that Nashik now needs to unleash its economic potential is airport connectivity. MEDC, which is already lobbying for an airport probably needs to rope in R.C. Sinha, the man who built the Mumbai-Pune Expressway and now heads the Maharashtra Airport Development Company (MADC) that is building a cargo hub at Nagpur.


Information might


A Congress Chief Minister in Maharashtra changed the development control rules before the last assembly elections, disregarding public demand that at least one-third of the mill land must be returned to the state for development of public spaces and utilities. This would have permitted the rampant redevelopment of mill land, but for activist Shailesh Gandhi’s dogged use of the Right to Information Act to unearth the state’s dirty secrets. He discovered that ‘‘Under the garb of laws and rules citizens are being short-changed by astronomical amounts.’’ Information that he received from the Mumbai Suburban collector showed that total leased land of 98,47,372.84 sq. mts fetches a lease rent of just Rs 4,04,97,601 every year. This works out to a niggardly Rs 4.11 per Worse, lease rents seemed to drop over the decades, although property prices had spiralled up. At an average land value of around Rs 22000 per sq. mts in the Mumbai suburbs, Gandhi says lesees ought to be paying as much as Rs 1700 per sq. feet. Clearly, while industry and elite clubs got subsidised land, the municipal corporation has been steadily hiking property taxes to raise money. Gandhi’s discovery has raised a furore about mill land leases which will hopefully lead to all round change.


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-- Sucheta Dalal