Buying Land A Tough Deal For Mncs

With West Bengal land owners jacking up prices to milk opportunity

Multinationals wanting to set up shop in Calcutta have an arduous task ahead of them.

Pepsi India, which has set up two manufacturing units in the outskirts of the city, is a case in point.

The company has acquired five acres in Panagarh and 10 acres in Sonarpur, both in South 24 Paraganas.

While Pepsi has completed the formalities of getting the land converted from an agricultural one to a non-agricultural one in order to avail of exemption from the Urban Land Ceiling Act, the property acquisition process itself took more than two years, according to a company source.

The first and foremost problem facing the beverage multinational was getting to know the real owner of the piece that they wanted to buy.

This was a difficult task because of the peculiar land to the tiller policy of West Bengal.

The small size of land holdings made us negotiate with a host of land-owners simultaneously, said the Pepsi source.

These landlords would jack up the price of their property the minute they got to know that a multinational company was interested in buying it.

The company had to hire brokers for this purpose and it could never share the negotiating table with the land owners at any point of the transactions.

A lot of time was spent in sifting through the legal aspects of the acquisition case too.

Sources allege that the land records in the state have not been updated for the last 20 years.

The Pepsi representatives, with the help of their lawyers, Khaitan and Co, are believed to have gone back 30 years scrutinising the title deeds of the land in question.

A lot of time and money was also spent on searching for land.

According to sources, the state government industrial authorities do not have readymade plots which can be offered to interested investors the kind that industrially advanced states such as Maharashtra and Gujarat have.

Sources said while the state government authorities are busy hardselling the state to potential investors, it is time that they started to get their act together as far as land availability was concerned.

Most multinationals, such as Mitsubishi and Motorola, owing to this problem, have preferred to operate from the business centres of five star hotels in the city.

This spares them from the headache of looking for and acquiring land in the City of Joy.