Satyam's SEZ plans hang in balance

Satyam’s expansion plans in Tamil Nadu on the special economic zone (SEZ) channel have slid into uncertainty following chairman B Ramalinga Raju’s mea culpa on Wednesday morning revealing inflated revenues on the company’s balance-sheet over the past few years. Besides, the government’s plans to further probe the land dealings of Maytas Properties are likely to seal the company’s expansion plans in Tamil Nadu for the predictable future.

The company has so far spent Rs 24 crore on acquiring 50 acres of land at the IT park within the Sholinganallur IT SEZ and another Rs 7.5 crore to acquire 50 acres of land at one of the IT parks constituting the Madurai SEZ. Both SEZs are promoted by the Electronic Corporation of Tamil Nadu (ELCOT) which has hand-holded prospective companies on land acquisition, registration and other formalities.

ELCOT managing director Santosh Babu said that the corporation was yet to hear from the Hyderabad-based IT company on any change of plans on its SEZ front.

“The state government has not contemplated any action so far against Satyam. They have a time window of 3 years to initiate activity on their projects. So far, we have not heard from them on any change of plans,” Babu said, not ruling out the possibility of the company pulling out of its projects in the state.

“Money is more the issue for them today. It is quite possible that they will demand their investments back from us. As per the agreement with them, we are willing to refund the money if they request us for the same,” Babu said.

Sources said that the fund-raising plans of Maytas Properties, the realty firm in which Satyam had made an aborted $1.3-billion merger bid, have been affected by events over the past week and it could sell off some of its SEZ-focussed assets in the southern states to unlock cash.

“Land acquisitions on Satyam’s behalf were handled almost entirely by Maytas Properties and they might look at offloading assets in Tamil Nadu and Andhra Pradesh to raise cash,” a real estate source said.

Satyam’s association with ELCOT in Tamil Nadu was set to strengthen its operations in the state further.

In March last year, Satyam executives had claimed to have committed Rs 800 crore to enhance the company’s Tamil Nadu operations by acquiring land at the IT park in Madurai and also expand its Chennai operations by building its own campus at the ELCOT-promoted SEZ in Sholinganallur.

ELCOT is promoting SEZs in seven southern districts of Tamil Nadu targeting investments of Rs 25,000 crore. The parks are coming up in Salem, Coimbatore, Tiruchy, Chennai, Hosur, Tirunelveli and Madurai.

Besides Satyam, HCL Technologies, Honeywell Technology Solutions and Sutherland Global Services received land deeds last month to set up their facilities in the Madurai SEZ.

Satyam had received clearances to set up five special economic zones (SEZs) — two in Hyderabad and one each in Nagpur, Chennai and Vishakhapatnam — with a outlay of $200 million in the first phase of development.

Maytas reportedly holds about 350 acres of land in Nagpur as part of its land bank and for 25 upcoming projects in Andhra Pradesh and Tamil Nadu.

Industry sources said that as Satyam has been considering filing for bankruptcy, a good bet to raise cash at this point would be to sell off a substantial portion of its land banks in Andhra Pradesh and Tamil Nadu.

However, even that appears an uncertain bet right now as the government is tightening its noose on Maytas Properties and Maytas Infra.