AP Vigilance Department Officials raided the premises of Emaar-MGF and the Raheja IT park, on 2 Nov 10, in the wake of allegations that they have cheated the Andhra Pradesh Industrial and Infrastructure Corporation (APIIC) by diluting its stake in joint ventures over a period of time.
The move come days after the State Cabinet had given the green signal to the APIIC to take action against Emaar or any other company if it suspected foul play.
The charge against the Mumbai based Rahejas was that it had diluted the Aphasic’s stake from 11 percent to 0.55 percent in K Raheja IT park Private Limited in Madhouse. The deal was struck in 2003 for developing IT infrastructure in 110 acres.
A joint venture was floated subsequently with an authorized capital of Rs.1 crore. The APIIC, on its part, allotted 110 acres and thus held 11 percent stake. In the name of increasing authorized capital from Rs.1 crore to Rs. 20 crore, the Rahejas brought down the stake of the APIIC to 0.55 percent since no additional land was allotted to it.
Officials said the State government had incurred a loss of about Rs.2,000 crore as a result.
According to S Sivarama Subramanyam, APIIC chairman – The developer(Rahejas) requested the APIIC to increase its share capital. Since it couldn’t contribute either in the form of equity or additional land, APIIC’s Stake came down significantly. The Rahejas had shown a development and construction value of the allotted 110 acres at Rs.4,000 Cr. Going by this estimate, the state would incur a loss of Rs. 400 Cr. But APIIC claims that the actual market value of the property is currently worth Rs.20,000 Cr. The APIIC during its next board meeting will take a decision on the appointment of the consultant and the next course of action.
A same story is with Emaar. The APIIC had entered into an agreement with Emaar in 2003 and allotted 545 acres at an estimated Rs.29 lakh per acre to develop a golf course including commercial and residential property. A special purpose vehicle, Emaar hills Township Pvt. Ltd (EHTPL), was floated for the purpose of the latter and the APIIC had 26 percent stake in it.
But later, without its knowledge, the EHTPL roped in EMAAR-MGF as a co-developer and transferred property development rights to it. Because of that the APIIC’s share had gone down drastically.
The corporation had earlier hired a Delhi-based law firm, Singhania & Partners, to ascertain the exact amount of loss caused on account of Emaar deals and suggest legal remedies. S&P prepared a 50-page report, which included multiple options of initiating action against Emaar.
The raids continued till late into the night as the officials kept searching for key documents to nail both the companies.
Source: Indian Express