The Hindu Business Line : Maharashtra Cabinet approves land allotment to Videocon

The Cabinet’s approval on Thursday will now pave the way for the electronics goods maker to set up the Rs 8,000-crore TFT-LCD semiconductor project.

Our Bureau

Mumbai Aug. 21 The Maharashtra Cabinet on Thursday formally approved allotment of 100 acres near Navi Mumbai to the Videocon-CIDCO joint venture for setting up the country’s first semiconductor project.

The Cabinet, at its last meeting on August 5, had given its in-principle approval, amidst a shrill political debate that subsequently resulted in the State Revenue Minister, Mr Narayan Rane, putting in his papers over the valuation of the land.

According to administrative norms, after the Cabinet gives its in-principle approval to any project, the subsequent Cabinet meeting has to formally approve it and get it recorded in the minutes of the meeting. The Cabinet’s approval on Thursday will now pave the way for the electronics goods maker to set up the Rs 8,000- crore TFT-LCD semiconductor project.

According to the proposal, CIDCO, the infrastructure development arm of the Maharashtra Government, will have a 26 per cent equity participation in the joint venture, while the Dhoots-owned Videocon will have 34 per cent and the balance will be through a public issue at a premium of Rs 25 per share.

The valuation for the 100 acres land at Navi Mumbai for the project is Rs 300 crore, out of which Rs 260 crore will be CIDCO’s equity contribution and Rs 40 crore will be received in cash from Videocon.

A State Government release points out that “if fully developed the realisation from this land could reach up to Rs 792 crore over a period of time.”

It further added that: “At CIDCO’s option, the joint venture partner Videocon will buy back CIDCO’s equity for Rs 910 crore. The net present value of Rs 910 crore, coupled with the Rs 40 crore to be received in cash, will cover the value of the undeveloped land being made available by CIDCO to the joint venture.”

Political controversy

The CIDCO-Videocon deal had sparked off a political controversy, with Mr Rane and other Ministers alleging that it was being given away to the electronics goods maker at a throwaway price.

However, the State Government maintains that “the technology and manufacturing of fabs, like the one we are planning, are only in Japan, Korea and Taiwan at present. India will be the next country in the world to have this project to make the vital component for LCD televisions.”

The project will also generate employment for about 10,000 people, the release said, adding that “CIDCO has spent over a year to understand the project, its economics and its implications for the region and has hence decided to go forward with the project.”

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