Thursday, February 2, 2012

Infosys ready to come in Nagpur

The deal between Maharashtra Airport Development Company (MADC), the agency developing Mihan-SEZ, and IT major Infosys has been held up at the eleventh hour.

The Infosys team wants MADC to cancel requirement for completing the construction work within 3 years.

The signing-in ceremony for allotting Infosys 100 acres of land in the SEZ had been planned for Wednesday. However, last minute changes had to be made as the company continues to negotiate on certain conditions on the agreement with MADC.

The function was scheduled to be held in Nagpur with MADC's vice-chairman-cum-managing director UPS Madan and senior executives of Infosys being present. Now, while all of them will be present in the city, the deal will not be signed.

Infosys has been bargaining hard with the state government company which is hard-pressed to get fresh investors in the SEZ so that funds start trickling in. Earlier, it was insisting on getting a perpetual lease instead of a 99-year tenure as available to other investors in Mihan-SEZ.

Though it is learnt to have accepted MADC's terms on the lease clause, Infosys continues to seek relaxation on the time-frame for setting up the unit. "No relaxation has been done on the rates which are presently pegged at Rs 60 lakh an acre," MADC sources said.

Madan, who confirmed his visit to Nagpur, said that the deal will not be signed on Wednesday as certain issues remain to be sorted out.

"Though an in-principle agreement has taken place, it may take a few more days to sign on the dotted line," he said, adding, "The Infosys team will be visiting the site, there will be other prospective investors too."

The MADC chief said that the lease period will continue to remain at 99 years.

Madan added that Infosys wants some relaxation in the time-frame, from the regular three year period. The company wants to develop the project in phases, while MADC wants the it to take off entirely at the earliest. "It will be seen as to how far each can compromise on their respective stands," he said.

The sources said the IT major wants a relaxation on the MADC condition of consuming the entire floor space index (FSI) within three years. FSI is the allowable quantum of built-up space as against the vacant land.

MADC offers FSI that is 1.5 times of the vacant space. But it also stipulates that it has to be entirely consumed within three years. An extra charge has to be paid for the subsequent construction. Infosys wants this condition to be done away with.

According to former president of Vidarbha Industries Association (VIA), Suresh Agrawal, the MADC should weigh the investment offered and jobs being created by the company. "If it is the same as other investors, then there should be no relaxation in the terms and conditions," he said.

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