Fab City back on the front page..

I am trying to be as neutral as possible on this blog and thats why I had rejected a lot of politically charged rhetoric or comments that have been posted detailing the project fraud etc..

For all you that are itching to discuss this and other issues, I am about to launch a new site that will allow everyone to discuss all these and other current topics.

How much of this is real and how much of it is political grand standing I dont know.. So, I will leave it to you..

Here is the snippet that was published in Deccan.com

Hyderabad, April 21: The Telugu Desam on Saturday released documents to prove that the State government had signed the Fab City deal with a non-existent company.TD leaders K. Yerran Naidu, Dr N. Janardhana Reddy, S. Venugopala Chari and K. Rammohan Rao termed the project ‘Fraud City’ and pointed out that the company SemIndia Fab did not exist when the industries department signed a memorandum of understanding with it.
Industries Secretary Lakshmi Parthasarathi signed the MOU on February 16, 2006 with Vinod Kumar Agarwal, the supposed chief promoter of the company. However, SemIndia Fab Private Limited was incorporated only on February 20 in New Delhi, the TD leaders said. Mr Yerran Naidu said that the total paid up capital of the company was only Rs 1 lakh though it had promised $3 billion investment. “The government either did not bother to check the company’s credentials or connived with it,” he said.
The Special Economic Zone Approval Board of the Centre also gave permission to FabCity SEZ on March 17, 2006, when there was no company by that time. It was only on May 2, 2006, that the separate company for the SEZ was incorporated, the TD leaders pointed out. “The State government allotted 1,200 acres of land worth Rs 6,000 crore to a company which neither had the requisite experience nor the financial strength,” said Mr Yerran Naidu. “This is a big scam involving many people.” He further said that the the promoter Vinod Agarwal’s first venture in the United States, Logic Vision, went bankrupt.
“SemIndia has to pay Rs 480 crore for the land, but it not paid a single rupee till now,” said Mr Yerran Naidu. “No techno company has come to start its office in FabCity. Agarwal is signing MoUs with private parties to construct hotels, spas, commercial complexes and entertainment zones.” One of the promoters, Preet Pal Singh Mahal, left the company after realising that Agarwal does not have the wherewithal to run FabCity, alleged the TD leaders. “The government has learnt nothing from the Volkswagen issue,” said Mr Yerran Naidu, taking strong exception to the way the government was signing deals.

Greater Hyderabad and the 100 Stories in the making

April 16th was the birthday of Greater Hyderabad Muncipal Corp GHMC making it the second largest city in India after Delhi. [ Originally I said that we may be #1 since delhi is a UT, I received a ton of email indicating that delhi is not a UT .. So we are #2.. thanks for the correction..] Talk is now on that that the next step is to create a GHVMC.. Great Hyderabad, Vijayawada Muncipal Corp. Why not just create a TMC - Telangana Muncipal Corp, AMC-Andhra Muncipal Corp and RMC - Rayalseema Muncipal Corp which will lead to APMC - is there a need to have Hyderabad or other local governments?.

The much awaited 100 story tower bids have been closed. It will be 6 months before the technical evaluations are done. APIIC continues to find new bakras for their projects this time its reliance and an israel company. APIIC is trying to sell 76 acres of land at 6 crores an acre. Looking at the history of Golden Mile, this may end up in some legal trouble as soon as the bidders are selected and are forced to pay their advance.

Heard that cost of construction costs would run around RS 7000/sq ft., while the developer has to sell at Rs 10,500 / sq ft. to make a decent margin and to make the project viable. Now, theres a reason why we should buy apartments at 4000/sqft ;-). As of last week, some gucchibowli apartments in good gated communities were looking for buyers in the 3000 - 3300 per sq ft. range.

Hyderabad Fab City is back in news again..

Negotiations between AP Govt and the promoter of Fab city are still on. Land allocation has come down from 1200 acres to 75 acres and has been adjusted to 300 acres now. Power and infrastructure issues have held up the agreement. Point of contention is on the subsidy for power/energy. Fab city needs 200MW per day and they want it to come at 1.80 per kwh for the next 15 years. Guess what, AP govt just signed a deal with Tatapower to buy energy at 6.00 per kwh. So, thats a 4.20 per kwh loss to the govt during peak months in 2006. Adjust for inflation and thats nothing but a giant black hole. My estimate is that it will equate to a subsidy of USD100 Million per year.

IMHO, situating this assembly and test plant in Hyderabad will not create any major incentives to the prospective customers or MNC's. Fab will certainly bring more jobs, but dont expect it to do the miracles that IT+ITES(BPO) did. In tech 20% of cost was static and 80% was human driven allowing MNC's to make huge investments. As mentioned in one of my old posts, 88% of cost is static in chip fab.. giving very little incentive for companies to move here in a large scale.

I really hope that the AP govt backs out of this whole deal and invests the USD100Mn per year in Power / Energy projects

Indian Rupee at 42.87 per USD

Indian rupee has finally touched the much awaited 42.x mark. It clocked at 42.87 today and appreciated over the 43 rs per dollar mark. Thats almost a 10% gain in 9 months.

View the graph

Get the latest data on Dollar Rupee conversat at hyderabad.mylifemysite.com

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