Is Reliance Group’s defence project at Mihan SEZ in doldrums?

Yet another “high-end investment drama” at MIHAN has come to the fore. The Reliance Group Chairman Anil Ambani had with great fanfare announced an investment worth Rs 6,500 crore to set up a greenfield aerospace project in 289 hectares of land in Nagpur’s ambitious Mihan SEZ on the “request” of Union Minister Nitin Gadkari. Forget the big investment, the Reliance Group has not even taken the possession of the land for the project.

In August last year, Maharashtra Chief Minister Devendra Fadnavis had handed over the land allotment letter at a ceremony in Nagpur to Anil Ambani, the Chairman of Reliance Group for its defence arm — the Reliance Aerostructure Ltd in the presence of Union Minister Nitin Gadkari. Since then even the foundation of the project has not been laid. After becoming minister in Modi Government, Gadkari had met Anil Ambani and “requested” to invest in the ambitious MIHAN SEZ.

Respecting the request, the Chairman of Anil Dhirubhai Ambani Group (ADAG) announced from ‘roof top’ to make a big investment in Mihan SEZ. Reliance Group planned to build Dhirubhai Ambani Aerospace Park (DAAP) in Mihan, a site which was selected after extensive survey of sites in various states. The group demanded 289 acres of land for the project. The State Government acted speedily and handed over the land in a “grand” function held in August 2015. The land allotment letter was handed over to Anil Ambani. The proposed project triggered hopes among large number of unemployed youths of getting lucrative jobs.

But now the entire project seems to be in doldrums as the ADAG defaulted in paying the cost of the land forcing Maharashtra Airport Development Company (MADC) to send reminders to the high-profile company. The Reliance Company has not deposited Rs 63 crore of the land till November 2016.

Surprisingly, at the actual deal to purchase the land, the ADAG told MADC that the company needed just 104 hectares of land and not 289 hectares. And for this land, Reliance Group had to deposit Rs 63 crore with MADC in three installments. Out of this the first installment of Rs 25 crore was paid. But the second installment of Rs 17 crore to be paid in July and the third installment of remaining amount to be deposited in November have not been paid. Therefore, Rs 38 crore and 15 percent penalty is pending against the ADAG. And until the Reliance Group clears the payment, possession of the land cannot be given to it. No possession of land, no project. Simple.

Defence products:
The group planned to set up assembly lines and manufacturing facilities of fixed wing aircrafts, aerostructure for commercial transport aircraft and helicopters for both defence and commercial use. The park also planned to house ancillary and component manufacturing units to support after sales requirement. Multimodal International Hub and Airport, Nagpur (Mihan) was selected over other sites because of its facilities and infrastructure like Medi city, availability of top class managers, proximity to IIM, disciplined work culture, airfield and air space for flight tests, proximity to international airport, excellent telecommunications connectivity and social infrastructure among others.