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Singapore cartel, Tatas raise stake in IT park

With additional equity of Rs 1400 million each, the Singaporean and Tata stakes will rise from 40 per cent each to 46.5 per cent each, while the Karnataka Industrial Area Development Board will see its stake lowered from 20 to 7 per cent.

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This is because, according to the original agreement, the Karnataka government's contribution is envisaged to be merely the provision of land for the project.

However, the state government has now agreed to also inject cash equity of Rs 130 million.

Despite its reduced share in the project, the government will not lose seats on the board, and, in fact, has been given a place in the executive committee.

Originally meant to be a three-phase project, the viability of the park, touted as Singapore's flagship investment in India, was questioned last year amidst complaints that it was too futuristic for India, overpriced and poorly marketed.

With take-up rates slow, there is bickering among the joint venture partners over marketing strategies and complaints that the Karnataka government has been slow in keeping its promises such as building of a road connecting the city to the site and in providing utilities to the park.

Troubles over the park and the inexplicable failure to get approval for a joint venture airline, also with the Tatas, had contributed to what continues to be a sense of dismay and disdain in Singapore and the surrounding region for investment prospects in India.

This has cost India dear as it missed the opportunity to present itself to the world as an oasis of economic stability and growth compared to the flagging Southeast Asian economies.

The fresh equity injection is meant to alleviate a huge interest payment burden and even the debt-equity ratio.

But, it could also signal improving ties between the Singapore Consortium, which is led by Arcasia Land and the Tatas as well as appreciation for the Karnataka government's fulfilment of its promise to build the road.

Arcasia Land comprises Sembawang Industrial, L&M Group Investment, Singapore Technologies, RSP Architects and Parmeswara Holdings, the investment subsidiary of the Singapore Indian Chamber of Commerce and Industry.

"With the Tatas, we work on a long-time business plan. That they have agreed to inject more equity is proof of this," Jurong Town Corporation International Managing Director Dominic Ng said, brushing aside rumours of differences among the partners.

He insisted that ties with the Tatas could not have been better.

JTCI is the overseas wing of JTC, Singapore's top industrial landlord entrusted with marketing and operating the country's overseas parks.

Ng said that 50 per cent of the office space in the Rs 5.6 billion Phase I of the Bangalore project has been taken up, most of it by about 25 multinationals, including majors like Sony, Hitachi and Siemens.

Big homegrown names like Wipro have also signed into the park and by the end of 1999 the entire Phase I would be filled up, Ng predicted.

He added that had the park been overpriced, as alleged, there would have been no incentive for Indian companies to occupy it.

While Phase I would not see much profit, neither would it go into the red. The real profits would come if the joint venture partners decided to build the second and third phases, he said.

Ng maintained that there is every reason to think that the entire project would be completed. Ng further said that the despite mounting competition from Hyderabad and Madras for the software pie, Bangalore looked unlikely to lose its position as the country's leading software centre anytime soon.

- Compiled from the Indian media

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