Videocon’s Rs 8,000 crore semiconductor project near Panvel has run into trouble as employees of its business partner, the City and Industrial Development Corporation (Cidco), have objected to the land deal between the two.
The Cidco employees’ union has told the Cidco board that Videocon must buy the 100 acres of land at market price. The board has taken note of the objection and will incorporate it in its resolution passed early this week. It will then forward this to the state government for further action.
Cidco decided to be part of the country’s first ever semiconductor venture in 2007. It also decided to sell 100 acres to Videocon at a throwaway price of Rs 300 crore and invest equity of 26 per cent to manufacture semiconductors that are important components of LCD televisions.
Videocon has established a full-fledged Research and Development Laboratory in Japan to exclusively develop this product and is the first Indian company to have successfully developed it.
But, valuation of the land has sparked strong protests from the Cidco Employees’ Union. The disputed land is close to the proposed Navi Mumbai Airport and commands a hefty price tag.
Revenue Minister Narayan Rane had opposed the deal in 2008. Following Rane’s remarks, the Videocon group said it would not mind moving the project out of Maharashtra, but insisted that it was interested in setting up the project in the state to help its own people as it would generate more than 10,000 jobs.
Not just the land deal, but Videocon’s option to buy back Cidco’s equity for Rs 910 crore is also undervalued, especially because a time-frame has not been given, said a senior government official, requesting anonymity.
“Once the Rs 8,000-crore project starts operating, Cidco’s 26 per cent stake in the company would have a much higher valuation.”
Union president Nilesh Tandel told Hindustan Times that the union would move court if Cidco went ahead with the land deal. “I made a presentation to the Cidco board and it was agreed that our objections would be included in the resolution and forwarded to the state government.”
Tandel said Cidco must get something concrete from Videocon, especially on the Central government subsidy of Rs 2,000 crore that has been applied for under the semiconductor policy before signing any agreement. “Cidco must also sell the land at the market price prevailing in 2010. This price could be anywhere between Rs 3,000-4,000 cr.”
Videocon chairman and managing director, Venugopal Dhoot, said, “We had applied for a semiconductor subsidy and will get it soon. We are very serious about this project and it’s time India gets this project for the first time on its soil, as the LCD TV market is booming. Videocon has not only gained market share in the last five years but has also gained and taken a leading role in LCD TVs and semiconductor products. The agreement has been done with Cidco.”
He said Italy and China had approved support to the projects, and in India, states like Andhra Pradesh, Tamil Nadu, and West Bengal had asked him set up a semiconductor business.