I was analyzing Emmar MGF IPO, when I realized this line.
Emmar has 13,024 acres of land of which 80% is agricultural land.
That means that a privately held company had 10,419 Acres of farmland. Now as per my understanding, most states in India have implemented Land reforms. They put a limit of 25 to 40 acres of land that a single individual can hold. The only exceptions to this rule were
a) Plantations. (which needs size to get economies of scale)
b) Privately Held forests (Seizing this land would not have resulted in any benefit to the government, as the only way govt could reuse this land was by cutting down trees. And that does not go really well with the environmentalists.)
Now I know Emmar is just like any other Real Estate development company that has amassed a huge landbank and intends to get it converted to residential/commercial property and develop it. But my question is under what laws was it allowed to purchase such large tracts of agricultural property?
And don’t tell me that the company seized over 10,000 acres of land and is just waiting for the government approval to pour concrete over it. Most of the land must be fertile and the company must be growing some crops/vegetables on it to generate some revenue. If so, isn’t it return of Zamidari System?
On a lighter note, I liked this cartoon on Premature Ejaculation