Handsome deals for DLF & Co in Gurgaon land auction

The Haryana government provided real estate giant DLF Limited gains worth hundreds of crores of rupees through the allotment of prime property in Wazirabad village of Gurgaon in 2010 by twisting norms of allotment in the company’s favour, according to documents reviewed by Business Standard.

The Wazirabad allotment was struck down by the high court of Punjab and Haryana on September 7 and has subsequently been challenged in the Supreme Court by the state authorities. But the large concessions made to DLF have not been brought to light in the judgment. – Oct 19, 2014

DLF earlier this week was banned by the Securities and Exchange Board of India (Sebi) from accessing the capital markets for three years, because the regulator ruled it suppressed material information during its initial public offering. The company has for long been embroiled in a controversy over a deal that brought windfall profits to many politicians & co.

Government first put out an international bid for the land parcel, falling in sectors 42, 53 and 54 of Gurgaon in 2009. The plot was to have an international level golf course, a five-star hotel, golf villas, banquet halls, and business centres and other facilities. The parcel included land classified as forest land under Supreme Court orders, which could be used for construction only after clearance from the Union government.

The state government set the reserve price at about Rs 1,700 crore arising from the calculated rate of Rs 11,978 per square metre. Only one company, DLF, put in a bid. Its offer was very close to the reserve price, Rs 12,000 per square metre or Rs 1,703 crore. But DLF also requested concessions that included lowering the reserve price. The state decided to go for rebidding with some changed conditions. An additional area of 54.6 acres with a floor area ratio (FAR) of 175 was allowed for residential construction out of the green lands. But this patch fell in an area classified as forest land. In a departure from the first tender, the state government promised to get clearance from the Centre to open the forest land for construction.

The Haryana government decided that if the Supreme Court did rule against the use of land, any company holding land in the even more lucrative parts of the Gurgaon-Manesar area could actually make a bigger profit by building more houses for sale there. This provision clearly benefited developers who held other pieces of land in the belt. DLF was and continues to be one of the leaders.

This was not all. Even though the total area permitted under residential construction had been increased by 54.6 acres, the reserve price was maintained at Rs 1,700 crore. The increase in price for turning green land into an additional residential zone was not recalculated. The greens were priced at Rs 1.44 crore per acre but the residential land had been assessed at Rs 10.89 crore per acre. According to the state government’s calculations of price for the residential zone for this parcel, the 54.6 acres were worth Rs 516 crore after the change in land use.

Some media organisations sent detailed and specific queries to DLF. The company replied, “This was part of a global tender and we would not like to comment as the matter is sub judice.” State Industrial and Infrastructure Development Corporation did not reply to written and detailed queries, some media entities claimed. Neither will any future governments and sarkari babus ever like to comment on such lucrative cash-cows, who must have been handsomely compensated in the famous desi jugaad way..

October 18, 2014 | News Source: business-standard.com