SemIndia’s CEO Vinod K Agarwal asserted on Wednesday that his company would stay put and execute the project at the proposed Fab City on the outskirts of the city.

Though expressing his displeasure over the delay on the government order (GO) detailing various subsidies and incentives to be offered to fab units, Agarwal said he would execute the project in the state.

“We used to get calls from other states much before we had decided on AP. Now again, owing to the allegations and the confusion over the project, some states are calling us again,” Agarwal said. “However, SemIndia would wait for the GO and execute the project here,” he said.

The government has been dragging its feet on issuing a GO, which is expected to bring more clarity into the affairs of the Fab City execution.

The subsidies and incentives that would be offered to the chip manufacturing and allied companies will become applicable only after the order is issued.

Even the land would be formally handed over to companies like SemIndia based on the GO. “The delay in the GO has disturbed project schedules. There will be some cost escalation too,” Agarwal said.

While the first project of SemIndia at Fab City — an assembly, test, marking and packaging (ATMP) facility — would be ready in 12 months from now, the core fab is expected to become operational in the last quarter of 2008-09.

The ATMP facility would cost about $100 million and the fab will incur an investment of about $3 billion in two phases. “Our investors too are not happy with the pace of execution of the project. We have already brought in experts in semiconductor operations to Hyderabad.

But, we are unable to move forward since the GO is yet to be issued,” he said.

SemIndia and the AP government formed a special purpose vehicle for developing the 300-acre Fab City. This deal has come under constant questioning from political parties.

“I know we are not good at property development. But, when we develop infrastructure for a fab, it has to be done with expertise. Since I have to do that for my fab, I have taken the responsibility of doing so for the entire project. There is no way I would make money in this,” he said.

Allegations have also been made over Agarwal’s credibility and expertise in setting up a fab. “I have 35 years of standing in the industry. I have an experienced team. The whole world trusts me, except Hyderabad,” Agarwal said.

Hyderabad, April 25 (IANS) Allaying apprehensions over Fab City, the proposed $3 billion semiconductor manufacturing hub here, its developer SemIndia Inc Wednesday said it was waiting for the transfer of land by the Andhra Pradesh government to begin the work.

With the opposition Telugu Desam Party (TDP) raising doubts about the ability of the company to build the project, SemIndia president and CEO Vinod Agarwal rushed here from the US on the direction of the state government to clarify the doubts.

Addressing a news conference, Agarwal blamed the government for the delay in launching the project work. Stating that he was keen to set up India’s first Fab manufacturing facility here, he said he was waiting for the government to issue an order, transferring land, specifying government’s equity in the Fab City Special Purpose Vehicle and fixing electricity and water tariff.

Claiming that SemIndia and its partners had already spent millions of rupees in fencing the land even without a formal transfer from the government to get the Special Economic Zone (SEZ) status and to seek environmental approval, Agarwal said his company was sincere in taking up the project.

Stating that apprehensions expressed about SemIndia and the project had sent wrong signals to investors, Agarwal said other states had approached him in the wake of recent developments. ‘Many states wanted us to set up similar facilities but we came here. They are calling us again. We want to remain here but we may have to rethink if the project does not take off,’ he said.

Agwaral, who met Chief Minister Y.S. Rajasekhara Reddy Tuesday, said the government assured that the project would be speeded up and it will come through.

He claimed that the work on the assembly and test plant was in advance stage and the design of the building was ready. The construction of the building is expected to be completed by end of next year while the production is expected to start by end of 2009.

The state government had announced allotment of 1,200 acres of land for the project last year. Out of this, 300 acres of land were allotted for the first phase of Fab City. He said SemIndia planned to build assembly and test plant on 25 acres of land at a cost of $100 million. The $3 billion Fab unit will come up on 75 acres of land in two phases. The first phase will cost $1 billion while the second phase will see an investment of $2 billion.

He said though the government of India last month announced a policy for semiconductor industry, the investors were waiting for the guidelines. He said SemIndia would apply for incentives under the policy and urged the central government to take equity in the proposed Fab unit here.

Agarwal said SemIndia had already started global acquisitions for the project and claimed to have received commitments from various investors. ‘Our dream is to make Hyderabad another Taiwan and generate $32 billion of chip exports out of here,’ he said.

Denying that he was interested in land development, Agarwal said he was only keen to provide necessary infrastructure to attract investors for semiconductor manufacturing and suppliers.

‘No investor declares his net worth,’ he said in an obvious reference to the TDP’s statement questioning his net worth. He also said since investors were private holding companies, they will not share information about equity. He, however, said SemIndia was incorporated in the US on Sep 12, 2005 and he was working in the industry for last 35 years.

Agarwal said India had tremendous potential in chip manufacturing as the consumption of electronics was expected to reach $300 billion by 2015. He said if Fab City comes through the country could manufacture $40 billion worth of chips which otherwise it would be importing.

SemIndia Chairman Vinod K. Agarwal has assured Chief Minister Y.S. Rajasekhar Reddy that the proposed Fab City would come up without any hurdles. Mr Agarwal, who has the backing of Union Minister for Telecommunications Dayanidhi Maran, met the Chief Minister, Minister for Major Industries J. Geetha Reddy and senior officials as part of a damage-control exercise.

The opposition had alleged the other day that the Fab City project was in trouble and that Mr Agarwal was duping the government. It is learnt that the Chief Minister told Mr Agarwal that Fab City was a prestigious project of the State government and asked him to begin it at the earliest. Mr Agarwal reportedly told the Chief Minister that the project was delayed because of the delay in the Centre’s announcement of its semiconductor policy. He assured that it was facing no other hurdle.

Sources said that the government would issue a GO on Wednesday or Thursday for setting up Fab City. “Once the GO is issued, work will begin,” said an official who took part in the meeting. “Mr Agarwal is ready with the project blueprint.” The State government had signed a memorandum of understanding with SemIndia Inc, a US-based corporation on September 12, 2005, to launch Fab City.

Mr Agarwal brushed aside opposition allegations and assured the Chief Minister that the MoU was signed with a legitimate firm. He plans to address the media on Wednesday to clear the air.

The State government has decided to infuse more safeguards into the controversial Fab City project including reserving the right of resuming land from the promoter if he fails to perform. Though the government will give all the incentives as per the memorandum of understanding, the incentives as well as the ownership of the land would be linked to the performance of the promoter.

Official sources told this correspondent that a high level meeting chaired by chief secretary J. Harinarayana took several new decisions, which will be incorporated in the GO expected to be issued in a couple of days.

“The land will be given to the Special Purpose Vehicle and the promoter will be asked to show his performance periodically. His performance will be evaluated regularly. We have been incorporating a clause that will empower the government to resume land from either the promoter or the SPV in the event of their failure to perform as per the time schedule fixed out,” a senior official involved in the project said. “Similar is the case with incentives,” he added.

Though the government has been trying to project that the SPV would play a decisive role and three of its nominees were already on the board, the equity structure would leave the government with a limited role.

Sources said the Chief Secretary had suggested some more safeguard mechanisms to protect the government’s interests. The meeting felt that it would not be in the interest of the project to change the equity structure or re-negotiate on the incentives at this stage.

The officials suggested that the government should also play an active role in attracting companies to the Fab City instead of leaving it to the SemIndia. Meanwhile, SemIndia founder Vinod Agarwal will hold a press conference on Tuesday evening to give a rebuttal to the allegations made by Telugu Desam vis-à-vis his credibility to handle the project and irregularities in the MoU.

This is definitely troubling. Not because issues are not insurmountable, but this Govt. has never taken any speedy action on any matter. Issues take ages to resolve or almost always remain unresolved and get forgotten.

The problem with Govts. of any political color, is that they offer the moon, to lure inventors without thinking ahead and when it comes to legal implementation, they would find that they have overshot their brief or would develop cold feet. The reason is obvious. The action of luring investors is just to get brief political mileage and offcourse help people in the “know” to make money on realestate deals. Its not due to great affection towards countrymen! So the Govt. goes on offering a hundred different things /IT Parks all over the place with ridiculous terms, to so many companies and hope that no one would remember and comeback and ask, later! Its simple.

We have seen this happening in the case of Infosys, where the Govt. offered 500 Acres which it never owned. And now with Fabcity, the issue is of subsidized power / water and land ownership. We can not blame SemIndia. They would have gone ahead and structured their projected expenses over 15 years based on incentives and subsidized cost of power promised. The indicative financing terms would have been obtained on such projections. Unless good sense prevails over this lethargic Govt. and resolves the issues in close coordination with SemIndia, the project is in for trouble.

Citizens of Hyderabad, you have woken up this Tuesday to not only a new morning but to a new reality. You are now the residents of the second largest city in the country, next only to the national capital, New Delhi.

This has happened with the state government merging - through Government Order 261 issued on Monday - 12 surrounding municipalities with the Municipal Corporation of Hyderabad, thereby creating Greater Hyderabad.

The new urban agglomeration, of which you are proud citizens, sprawls across 625 square km with a population of 67 lakh. Till Monday, Hyderabad had a population of 45 lakh living in an area of 172 sq km. The erstwhile city of the Nizams has now transformed into an area greater than Mumbai, Chennai and of course Bengalooru. Mumbai, however, will have a larger population than Hyderabad.

The 12 municipalities -L B Nagar, Gaddiannaram, Uppal Kalan, Malkajgiri, Kapra, Alwal, Quthbullapur, Kukatpally, Serilingampalli, Rajendranagar, Ramachandrapuram and Patancheru - now stand abolished and merged into Greater Hyderabad which will have a single corporation. All these municipalities are in Rangareddy district.

The Telugu Desam on Saturday released documents to prove that the State government had signed the Fab City deal with a non-existent company.TD leaders K. Yerran Naidu, Dr N. Janardhana Reddy, S. Venugopala Chari and K. Rammohan Rao termed the project ‘Fraud City’ and pointed out that the company SemIndia Fab did not exist when the industries department signed a memorandum of understanding with it.

Industries Secretary Lakshmi Parthasarathi signed the MOU on February 16, 2006 with Vinod Kumar Agarwal, the supposed chief promoter of the company. However, SemIndia Fab Private Limited was incorporated only on February 20 in New Delhi, the TD leaders said. Mr Yerran Naidu said that the total paid up capital of the company was only Rs 1 lakh though it had promised $3 billion investment. “The government either did not bother to check the company’s credentials or connived with it,” he said.

The Special Economic Zone Approval Board of the Centre also gave permission to FabCity SEZ on March 17, 2006, when there was no company by that time. It was only on May 2, 2006, that the separate company for the SEZ was incorporated, the TD leaders pointed out. “The State government allotted 1,200 acres of land worth Rs 6,000 crore to a company which neither had the requisite experience nor the financial strength,” said Mr Yerran Naidu. “This is a big scam involving many people.” He further said that the the promoter Vinod Agarwal’s first venture in the United States, Logic Vision, went bankrupt.

“SemIndia has to pay Rs 480 crore for the land, but it not paid a single rupee till now,” said Mr Yerran Naidu. “No techno company has come to start its office in FabCity. Agarwal is signing MoUs with private parties to construct hotels, spas, commercial complexes and entertainment zones.” One of the promoters, Preet Pal Singh Mahal, left the company after realising that Agarwal does not have the wherewithal to run FabCity, alleged the TD leaders. “The government has learnt nothing from the Volkswagen issue,” said Mr Yerran Naidu, taking strong exception to the way the government was signing deals.

THE Andhra Pradesh government is busy finding an alternate location for the proposed Infosys campus in the city. According to a senior government official, the matter is expected to be sorted-out soon as the government is thinking of shifting some other project to accommodate the big-ticket Infosys campus. “The issue will be sorted out in 10 days. It may be difficult to find 550-acres land near the city. If the situation demands, we will also look at shifting some other projects to accommodate the Infy campus,” said the official.

IT bellwether Infosys in March last year had signed an agreement with the state government for setting up a 550-acre campus at Mamidipalli near the new international airport in Hyderabad. The company, however, shelved its plans after realising that 100 acres of the 500-acre plot was allotted to IMG Bharata. “It is only after the allotment that we realised that 100 acres are overlapping with the proposed project site of IMG, where it was planning to set up an international sports complex and academy. But the matter is now sub-judice as the state government had decided to cancel the IMG project,” said the official.

IMG case is scheduled for hearing on Monday. “We are hopeful that the verdict will be in our favour. If there is an adjournment or an adverse verdict, we will think of shifting some other project near the city to accommodate the Infy campus,” the official added. According to him, the proposed Infy campus is considered to be one of the largest IT campuses in the country. “The company was planning to invest over Rs 1,200 crore and we don’t want such a big project to slip out of the state,” he pointed out.

HYDERABAD: Stung by criticism over the slow progress in the implementation of the prestigious semi-conductor complex near the city, the State Government has initiated a series of measures to give impetus to the project.

Chief Secretary J. Harinarayan held a meeting with senior officials of the Industries and Information Technology departments to identify and remove the bottlenecks in implementing the Fab City. The Industries Department began working out details of incentives like supply of power and water at concessional rates to be offered to the project.

Sources said the Government would issue an order very soon clearing the land allotment and specifying the incentives as well as the guidelines to be followed by the promoter, SemIndia.

The Government is understood to have tentatively finalised a price of Rs. 20 lakhs an acre for alienation of 1,200 acres of Government land to the Fab City, the sources added.

However, only 300 acres would be handed over to SemIndia first for this price .

The rest of the land would be allotted, depending on the response by others to establish units in the Fab City.

Senior officials, contacted by The Hindu, insisted that Fab City was going to be reality and dismissed the criticism by political parties as baseless.

The Government signed an agreement with SemIndia on February 16 last and the company immediately registered its local arm on February 21. They attributed the delay in issuing the relevant orders to the Centre not announcing its semi-conductor policy until February 22, 2007.

They said SemIndia would invest Rs 15,000 crore for the Rs 40,000-crore mega project.

Following a message from the Government, SemIndia Chairman Vinod Agarwal is rushing here from the United States on Tuesday to respond to apprehensions being raised whether the project would come up at all and whether the company was competent enough to execute it.

NEW DELHI: Germany-based Infineon Technologies is likely to pick up an equity stake in Hindustan Semiconductor Manufacturing Corporation (HSMC), a Silicon Valley-based semiconductor company that plans to invest over $4 billion in chip foundries in India.

On March 28, it was announced that Infineon had signed an MoU with HSMC to provide technology. “Infineon will definitely have some equity in the company,” HSMC board chairman Devendra Verma told ET without disclosing the quantum of investment. He said that Infineon’s stake will be finalised when the financial closure for HSMC’s first fab foundry is in place. That might take about six weeks.

“We are already in talks with various financial institutions to raise funds for the first unit,” he said. Finalising the location for the fab has been cited as the reason for the delay in financial closure. The possible locations are Karnataka, Chennai or Hyderabad. “We are still examining the proposals of the state governments,” he said. He added that besides the incentives offered by the state governments, availability of resources like water and power is also important in deciding the location.

Infineon Technologies CEO Wolfgang Ziebart had on March 28 told ET that the semiconductor supplier does not rule out an equity participation in HSMC. A week after the semiconductor policy was announced, HSMC and Infineon signed an MoU to license its 130 nm CMOS process technology used in making integrated circuits that go into the production of mobile phones, ID cards and automotive.

HSMC plans to build a fabcity that would have a capacity for 10 foundries and HSMC itself will kick off the semiconductor project with two foundries entailing a total investment $4 billion. Its first fab would require an investment of $1 billion and would produce chips on 8-inch wafers. The second fab would be for more advanced 12-inch wafers, requiring an investment of $3.2-3.5 billion. The first products from HSMC fab are expected to roll out in the next two years.