State agrees to transfer agency share holdings Green signal for Tellapur township

Hurdles for the long-pending Tellapur integrated township appeared to have been cleared with the decade-old case resolved. The state government agreed to transfer of share holdings of the private agency which had bagged the project contract.

Tishman signed a memorandum of understanding (MoU) in 2007 and paid `446 crore to the government for 100 acres at the rate of `4.46 crore per acre. The township was to have been completed in eight years with a built-up area of 30 million sq.ft. The entire deal was worth `1,700 crore.

The consortium members took 400 acres at the rate of `4.21 crore per acre from the HMDA. The developer paid about `420 crore, or one-fourth the total of `1,700 crore. The rest was to have been paid in six months.

But the developer did not pay the amount owing to slump in the real estate market and also 240 acres allotted was caught in law issues. The urban development authority also did not insist on the balance amount since a major part of the allotted land was in litigation.

According to HMDA official, the developer, M/S TPPL, had requested permission for its shareholders and affiliates to freely transfer their shares/securities to any person or firm willing to provide fresh funding and bring requisite investments to the project.

It had also requested the government for an alternative option to terminate the development agreement and make compensatory payment as per the agreement at 30 per cent internal rate of return till date which would amount to `4,600 crore.

The state government in return had agreed to permit the developer transfer its shareholding to an incumbent investor (developer acceptable to HMDA on one-time basis only as per the provisions of the concluded agreement).

As per the MoU, the developer had agreed to retain the revenue share of 5 per cent (without decreasing to 1.25 per cent as per the agreement) and address the conflicting clause of compensation payment common to both the parties at 13.5 per cent against 30 per cent payable. The government also deleted the provision of right of first refusal which permitted HMDA to sell/auction/transfer any land in the surrounding area.

The project included a SEZ for IT companies, offices and residential space in 400 acres close to the Outer Ring Road (ORR). It was to have come up about 5 km from Hitec city and the Financial District at Gachibowli. As per the original proposal, 30 million sqft built up area was to be provided in the township in eight years for Class A commercial, residential, recreational and mixed use. A special purpose vehicle, Tellapur Technocity Pvt Ltd, was also formed after taking over the land.