Government auditor CAG has rapped the state-owned HSIIDC for accepting the undervalued rate of land which was sold to real estate giant DLF Ltd for setting up a recreational project in Gurgaon leading to a financial loss of Rs 438.91 crore.

In its latest report on Haryana's PSUs for the year 2011-12, CAG while auditing Haryana State Industrial and Infrastructure Development Corporation Ltd (HSIIDC) observed that the valuation of the property which was to be developed for recreation and leisure activities in Gurgaon was wrong.

ILFS Infrastructure Development Corporation, which was appointed as consultant for assessment of land cost (in March 2008), valued the land cost by using a mixed approach which means multiplying average market rate of land with average District Collector (DC) rate.

"The value of property was worked out at Rs 1,683.58 crore (by consultant) whereas the valuation of the property by considering average factors of 2.79 times for residential area and 3.105 times for commercial plots works out to Rs 2,142.11

crore," CAG said.

However, HSIIDC approved the reserve price at Rs 1,700 crore for bidding on the basis of the consultant's valuation while the government accepted the DLF's bid at Rs 1,703.20 crore.

"The company (HSIIDC) by accepting the consultant valuation without any analysis and study suffered a loss of Rs 438.91 crore," CAG noted.

HSIIDC invited bids for sale of 350.715 acres of land in Gurgaon in January 2009 for setting up recreational and leisure project. DLF Limited submitted the bid at Rs 12,000 per square meter, though it sought clearance of legal and procedural complexities.

The bids were again advertised in July 2009 for the same project. Then Haryana's Town and Country Planning Department decided that additional Floor Area Ratio (FAR) at the rate of 20 per cent of area should be allowed to the successful bidder.

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