Andhra Pradesh government retrieves 4,700 acres from Krishnapatnam Infratech’s SEZ
The YSR Congress govt had earlier cancelled Navayuga group's Polavaram irrigation and Machilipatnam seaport contracts alleging irregularities in allotment of contracts by Chandrababu Naidu's govt and delays in execution.
The decision of the YSR Congress government will adversely affect interests of several banks including Axis Bank, ICICI Bank, Central Bank and Allahabad Bank that extended over Rs 2,000 crore of loans to Navayuga group against the pledge of SEZ land.
Over the last few months, the Navayuga group had lost Polavaram irrigation and hydel power and Machilipatnam seaport contracts. The YSR Congress government cancelled these projects alleging irregularities in allotment of contracts by the previous regime of Chandrababu Naidu and delays in executing the contracts.
Multi-sector conglomerate Navayuga group, which is into deep water construction, roads, and seaports, had contested decisions of the new Andhra government in the courts, which have passed interim stay orders in some cases and hearing arguments in others.
Despite interim stay orders of the Andhra Pradesh High Court, the Jaganmohan Reddy government had gone ahead with cancelling the Polavaram large irrigation and hydel power contracts worth over Rs 3,200 crore awarded to Navayuga group. Later, the government announced allotting them to Megha Engineering and Infrastructures (Meil) in a reverse tendering process, while claiming significant savings to the exchequer.
Subsequently, the Andhra government decided to cancel the Machilipatnam seaport project awarded to Navayuga group by the previous regime of Telugu Desam Party (TDP).
Senior TDP leaders have alleged that the Jaganmohan Reddy government was resorting to vendetta politics and was targeting industrialists suspected to have funded the previous ruling party during the recent general elections.
While Navayuga didn’t respond to ET’s queries, sources close to the company said the management is looking at legal recourse to protect its interests.
The Krishnapatnam Infratech SEZ land of 4,731.15 acres now being cancelled is adjacent to Krishnapatnam port on India’s east coast. It was originally allotted to Navayuga group in February 2008 by Jaganmohan Reddy’s late father and then chief minister of united Andhra, YS Rajasekhara Reddy.
After obtaining the approvals from the central government in March 2010, Navayuga group proposed to set up units for automobile ancillary, chemicals, cold storage, container freight station, food processing, heavy machinery, IT/ ITES, leather, pharmaceuticals, refineries, warehousing, textile parks, residential complexes, and educational, commercial and recreational facilities.
Accusing Navayuga group of failing to utilise the land allotted, execute the project and create jobs as assured, the new Andhra government also alleged that Navayuga had raised funds by mortgaging the lands without its consent. In its orders on Saturday, the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the nodal agency, said it has decided to cancel “the allotment of 4731.15 acres of land and resumes the entire land without encumbrances and forfeits the consideration received in public interest.”
Quoting clauses of agreement entered into, the APIIC said it was the responsibility of Krishnapatnam Infratech “to repay all the financial loans raised by mortgaging this land and therefore KPIL has to resume all the financial obligations and encumbrances on this property and it is hereby notified that APIIC resumes the land free of all encumbrances.”
ET has seen a copy of the APIIC’s orders dated October 19.
While deciding to forfeit the amount paid to it by Krishnapatnam Infratech, the APIIC, however, said it was “willing to refund the cost of administrative building and school building” built on the SEZ lands if Krishnapatnam Infratech “provides the audited expenses incurred for the construction of these buildings after due verification and deduction of depreciation costs.”
The Navayuga group has been over the last decade seeking additional land promised by the state government to proceed with the proposed SEZ project and that the central government had raised objection regarding Buckingham Canal cutting through the land mass.