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Tue 5 Nov 2019 10:33 AM

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New Andhra govt scraps land allotment for LuLu Group's mega project

The $311 ml project involved construction of a mega commercial complex, convention centre-cum-exhibition hall with 7,000 seating capacity and a 5-star hotel

New Andhra govt scraps land allotment for LuLu Group's mega project

The LuLu Group, which had aimed to make the project a global destination for meetings, incentives, conferencing and exhibitions (MICE) tourism, had promised to provide over 5,000 direct and 5,000 indirect jobs in the largest integrated project.


The government of southern Indian state of Andhra Pradesh (AP) has decided to cancel the land allotted to LuLu Group International for a shopping mall and convention centre project in the coastal city of Visakhapatnam.

Besides being a major setback to the Abu Dhabi-based Indian business group, the decision by the recently installed state government is seen by industry circles as a bad precedent that could pose serious questions about the sanctity of administrative decisions on foreign and NRI investments in India when a change of government happens in a state.

The 13.83 acre land plot was allotted to LuLu Group by the previous Chandra Babu Naidu-led Telugu Desam Party (TDP) government in Andhra Pradesh for a $311 million (Rs 22 billion) project at Harbor Park with a beachfront view.

The M A Yusuffali-promoted LuLu Group laid foundation stone for the Visakhapatnam project in February last year at an event attended by, among others, India’s vice president M Venkaiah Naidu.

The project, under the public-private-partnership (PPP) model, included the construction of a mega commercial complex, convention centre-cum-exhibition hall with 7,000 seating capacity, a 5-star hotel with 220 rooms and other supporting facilities.

The state government scrapped the allotment to LuLu Group on the grounds that there was only one bidder for the land.

“While the market value of the land was $7.07 million (Rs 500 million), it was allegedly given at a meagre cost of $5,657 (Rs 0.4 million) per acre,” said Perni Venkatramiah, Information & Public Relations Minister of AP.

“The State Cabinet has taken the decision [to cancel allotment of land], as the previous government had allotted the prime land to the sole bidder, LuLu Group, though global tenders were floated for the purpose,” the minister said.

“Central vigilance commission guidelines stipulate that if there is a single bidder, the tender should be cancelled,” the minister alleged, adding that “therefore, we have decided to revoke the allotment”.

The LuLu Group, which had aimed to make the project a global destination for meetings, incentives, conferencing and exhibitions (MICE) tourism, had promised to provide over 5,000 direct and 5,000 indirect jobs in the largest integrated project.

The mall in the proposed project was to have more than 200 national and international brands, a hypermarket, 11 screens multiplex, family entertainment center, food courts with 2500 seats and more than 20 F&B outlets.

Arabian Business has contacted LuLu Group for comment.

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