GIDC allots land @ Rs 1.47 cr to company; it raises loan of Rs 400 cr from banks on it

PANJIM: Even as the controversy on compensation to be paid to the promoters of Special Economic Zones is yet to die down, Goa Industrial Development Corporation (GIDC) is in the eye of another storm, this time with the Comptroller Auditor General (CAG) catching the corporation on the wrong foot.

The CAG says that GIDC officials committed irregularities in transferring land allotted to Meta Strips to another company. The CAG also nailed GIDC for allowing the company to take loans on the allotted plot of 2.42 lakh sq metres.

As per the CAG report, GIDC allotted 2.42 lakh sq mt land, at Cortalim and Sancoale, to Meta Strips Limited (MCAL) for manufacturing copper strips and alloys. The lease deed executed in 1998 was for a period of 30 years at a cost of Rs 1.47 cr. The annual lease rent to be paid was Rs 73,567 and the company was responsible for enhanced compensation for land acquisition.

However, the CAG says, the company utilised only 27,682 sq mt and used the entire land as collateral to raise a loan of Rs 117.60 cr. 

The balance land remained unutilised for 15 years and was transferred to another party for non-industrial use as an exception. While executing the transfer deed, GIDC short-recovered transfer fee by Rs 26.61 cr, the auditor adds.

“Due to losses in the business and consequent inability of the company to generate finances for its working capital requirements it suspended manufacturing activities from June 2011 onwards. The amount due on various loans while closing was due Rs 400 cr,” it says.

Further, Meta Strips applied in March 2015 for transfer of land to Varma Sir India Logistic and Infrastructure Pvt Ltd (VSIL). As transfer of land from industrial to warehousing and logistics was prohibited, GIDC asked MCAL to approach the government in 2015.

In 2016, the government refused permission for transfer. Again in November 2016, GIDC approached the government for approval and this time it was approved in December 2016.

The land was transferred in March 2017 in the name of VSIL and the transfer fee was charged at 10 per cent of prevailing plot rate per sq mt. However, the audits point out that while the refusal was done by the chief minister, the permit of transfer had no approval of CM. 

The audits also pointed out that the as per regulations the process of transfer has to be verified by the scrutiny committee and placed before the screening committee, which submits its recommendations after verification, to the managing director, who takes the decision.

“In this case the entire transfer application was directly dealt by the managing director without following norms of scrutiny committee or screening committee,” the audits said.

They also pointed out that the transfer fee chargeable in cases which do not come under the definition of substantial completion was 60 per cent of the prevailing plot rate, whereas the transfer fee charged was just 10 per cent resulting in short-recovery of Rs 26 cr transfer fee.