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Emaar: third party audit likely

M.L.Melly Maitreyi

What remains unexplained in the controversy is why the stake was reduced


Third party would look into the account books since inception and valuation of the shares

State contemplating a scrutiny of arrangements and documents executed by the EHTPL


HYDERABAD: The government may seek an independent third party assessment and audit of the accounts of Emaar Hills Township Pvt. Ltd. (EHTPL) to clear the air over the raging controversy that the latter's joint venture partner, APIIC, was denied its rightful share of revenue.

The third party would look into the account books since inception and valuation of the shares, which is now a major bone of contention. The government is contemplating a scrutiny of the arrangements and documents executed by the EHTPL for major business transactions through a “competent third party agency”, highly placed sources said. EHTPL is one of the three special purpose vehicles (SPVs) constituted by the developer Emaar Properties, Dubai, through its holding company, Emaar Holdings Ltd. for execution of an integrated township, an international convention centre and a golf course at Nanakramguda in the Gachibowli area. The APIIC has a share of 26 per cent in all the SPVs.

The present row centres around the alleged dilution of APIIC's equity from 49 per cent as agreed in the MoU signed in 2002 to 26 per cent and even less (6.5 per cent) in some cases. The government now maintains that this was done with consent of the Group of Ministers (GoM) constituted by then Chief Minister Y.S. Rajasekhara Reddy in July 2004 to review the progress of the project. APIIC's land equity in all the three SPVs was valued at Rs.29 lakh an acre then.

What has remained unexplained in the four-day old controversy is why the stake was reduced. “The MoU was modified to ensure that the government would not have to shell out cash or give more land while the developer was required to infuse equity funds into the SPVs,” a top official privy to the transaction said.

On the government not getting its due share from the township project, the official said it was wrong to perceive it that way. He explained that the audited account of SPV of this project showed profit for the first time in the first quarter of the current fiscal (2010-2011) after incurring losses in the initial years. As per the agreement, it would get its dividend at the end of this financial year.

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