Under the act the company cannot hold over 15 to 20 acre of land for commercial purposes. However, MIPL has already acquired 1350 acre of land under a special mandate from the state government to execute a mega private sector-funded industrial park at Maraimalainagar in the outskirts of Chennai.

All the required clearances from departments of law, finance, pollution and industry etc have been received by the company which is awaiting the final nod for the sale of plots to prospective customers. Land reforms come under the concurrent list and the state government has to take a decision on conditions imposed by the act for this project. The act specifies that while the land can be held, as is now done by MIPL, it cannot be sold to a third party. The state government has to take an administrative decision on this issue and allow the sale of land to third parties. This is now awaiting the Cabinet clearance, a top Tamilnadu government source told The Financial Express.

With Cabinet approval expected within a couple of weeks the government can move forward to create appropriate conditions for the development of 1350 acre of land for industrial purposes and if required also to build an industrial township adjacent to the proposed industrial park at Maraimalainagar.

MIPL it is learnt has achieved financial closure of the project in April this year. Nagarjuna Construction Company has been chosen as the contractor for the project. It has mobilised required manpower and equipment and has begun civil works including site levelling, roads and storm water drainage.Total project cost estimated at Rs 215 crore is to be funded with an equity of Rs 20 crore and long-term government accrual bonds of Rs 35 crore.

Promoters IL & FS holds 30 per cent equity, Mahindra & Mahindra 40 per cent and 11 per cent by Tamilnadu Industrial Development Corporation Ltd which is not subscribing to the government bonds. Term loans will account for Rs 60 crore which is given by State Bank of India and Union Bank of India (Rs 30 crore each). The balance of Rs 100 crore will be from internal accruals through the sale of developed plots.

Nearly 790 acres of land are to be developed in the first two phases. Basic amenities such as approach roads, water and power etc are to be provided. This is expected to be ready by May 2001. On the marketing front MIPL participated in the Hanover Engineering Fair held at the end of March this year. Sources say that the company elicited interesting response from several firms.