Consolidated Construction Consortium puts Rs2,500 crore SEZ on backburner

Chennai-based Consolidated Construction Consortium (CCCL) will not be very active in its special economic zone project in Tuticorin, Tamil Nadu, till there is clarity on SEZs in the Direct Taxes Code (DTC), said chief financial officer T R Seetharaman.

The company had signed a memorandum of understanding with the state government in July to set up the food processing SEZ through its subsidiary CCCL Infrastructure.

“The response from companies has been lukewarm, only one honey manufacturer has put up a unit, they all want to know how DTC will be,” Seetharaman said.

Currently, SEZs get a 100% tax exemption for the first five years, 50% for the next five years and 50% of the ploughed back export profit for the next five years, but according to the draft DTC, both SEZ developers and units will have to pay minimum alternate tax (MAT).

Revenue secretary Sunil Mitra last month said there will be no
location-specific exemptions for SEZs from MAT or dividend distribution tax. DTC is expected to come into force on April 1, 2012.

There are over 120 operational SEZs, of which 35 are in Tamil Nadu, and which reportedly had exports worth `2.2 lakh crore last fiscal. Developers have requested the government to keep SEZs out of the purview of DTC.

CCCL has acquired about 900 acres for the SEZ and invested about Rs17 crore of its initial investment of `40-50 crore. “We have to invest in amenities such road, water and electricity but we will do it when companies come onboard,” Seetharaman said.

The SEZ is tipped to see a total investment of Rs2,500 crore by firms establishing units there.

For the quarter ended September 30, CCCL’s operating income rose 8.5% to Rs489.52 crore.