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Bonanza in locked lands

In our December 2015 issue we pointed to Hindustan Teleprinters Ltd (HTL) hiving off a portion of the huge land mass allotted to them by the government at low prices for constructing houses for its employees to VGN Developers Pvt Ltd.

Bonanza in locked lands

In our December 2015 issue we pointed to Hindustan Teleprinters Ltd (HTL) hiving off a portion of the huge land mass allotted to them by the government at low prices for constructing houses for its employees to VGN Developers Pvt Ltd.

For more than five decades this public sector company, which flourished once, did not bother to construct the promised houses. The NDA I government under A B Vajpayee, as part of its disinvestment policy, sold off this company with its assets to Himachal Futuristic Communications Ltd (HFCL).

HTL which initially started with mechanical teleprinters, tried for a while to switch to electronic teleprinters, electric typewriters, switching equipment… But it failed to benefit from the boom of the 1980s when the telecom sector recorded spectacular growth. Because of this it turned sick and was in terminal support systems. Arun Shourie as Minister of Telecom & Disinvestments signed off a few non-profitable public sector units including HTL.

PSUs, liberally endowed with land allotments, are great beneficiaries of the huge escalation in land prices. Located in Guindy at the heart of the Chennai metro, HTL benefitted enormously by land prices registering huge increases. In just around three decades from the 1980s, prices of land in Guindy shot up from around Rs 10,000 to over Rs 200 lakh per ground (2400 sq.ft). At the time of allotment to HTL, in the early 1960s price of land was very much lower.

The great location advantage of the factory surrounded by the National Highway 47 (Anna Salai) in the south and the 100 ft road at the Kathipara junction in the west, is serviced by the Metro Rail networks on both sides; plus it is proximate to the airport.

Apart from the sprawling area of the factory, HTL also had a large area allotted for housing development mentioned above of 10.46 acres. This was sold to property developer VGN which availed liberal funding by the Piramals and made a killing by offering a large number of residential flats at prices above Rs 8000/sq.ft.

S Krishnan, Principal Secretary (Planning and Development), Government of Tamil Nadu pointed to the huge unearned income generated by such land deals. Krishnan expressed concern over the increase in land prices by the sheer efflux of time resulting in windfall profits to units keeping land unutilized for years. He pointed to industry, both public and private, acquiring land on special terms in extant not quite justified by the needs.

Regulatory bodies like the CMDA can certainly stipulate conditions for land utilisation as per the initial projections and terms; it can provide for re-possession of land allotted by the government if these were not put to agreed use in time.

Not just HTL, a spate of housing projects are announced by industrial houses that acquired land cheap in the evolutionary stages of the economy; these have proved to be veritable kamadhenu. When acquisition is at much larger volumes as in the case of PSUs, the bonanza is indeed fabulous. Just look at the large land area of few hundred acres allotted to IDPL’s surgical instruments plant at Nandambakkam. This unit never produced any worthwhile volume of instruments but the huge land area acquired by it has shot up in value many times more than its total production in the few years it was active! A large PSU, Fertilizer Corporation of India, has been sick for a number of years; it had land banks that ran into thousands of acres in Ramagundam, Talcher, Korba, Gorakhpur and elsewhere. Decades after, the value of these lands run into crores of rupees! And FCI died of terminal sickness!

-SV
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