GANDHINAGAR | Dec 08, 2015: State revenue department has proposed a policy where companies, which took government land for their projects, will have to pay a hefty premium if they opt for merger, demerger, amalgamation or acquisition. The revenue department has proposed charging premium ranging from 50% to 100% of the prevalent market value of total assets of such companies.
The industry & mines department has reacted sharply after receiving draft of the proposal, calling the measure unfriendly to investors said sources.The department believes the measure would create procedural, legal and financial hurdles for concerned companies. Such businesses will now have to take state revenue department's clearance before going for business decisions like mergers and acquisitions.
The draft copy of the policy by the revenue department mentions, "It was under the department's consi deration to charge premi um on government land sold to companies, while they undergo any kind of merger, demerger, amalga mation, or acquisition. Pre mium will be charged on the total assets of the com panies."
A key source close to the development said,"The in dustry & mines department has strongly objected to the revenue department's pro posed premium policy on the ground that any inves tor will consider it as addi tional financial burden, so t will be a discouraging fac tor. Moreover, in case of dis putes, the revenue appea authority takes years to de cide on issues, so companies may lose opportunities of business through merger, de-merger, acquisition or amalgamation if the issue is stuck in revenue department."
The matter has now been referred to the chief minister's office(CMO). The CM, who heads both the revenue and the industry & mines departments is likely to take final call on the policy in next few days.
Sources in the industry & mining department said the measure can radically change the ease of doing business in Gujarat, as cost equations will change dramatically. Revenue department sources, however, hold that the measure has been taken to prevent clandestine transfer or misuse of government land under the garb of business operations and restructuring.They also said that general industry environment won't be hampered as the policy will apply only to companies that have purchased land from the government for one project or another.
(Source: http://timesofindia.indiatimes.com/)