In This GIFT City Story, One More Example of How IL&FS Used Its Partners & Made Them Scapegoats
Now that the Gujarat International Finance Tec-City (GIFT City) is out of the shadows of the beleaguered Infrastructure Leasing and Financial Services (IL&FS), it is finally on its way to achieve a part of the promise showcased at Vibrant Gujarat in 2007, just before the global financial crisis. Financial institutions and banks are making a beeline for the City spread over 886 acres in Gandhinagar with a multi-service SEZ (special economic zone) that houses the International Financial Services Center (IFSC) and a domestic tariff area. The prime minister (PM) recently launched the international bullion exchange. With powerful support at the state and Centre, GIFT City seems make a mark and reverse the enormous damage wrought by IL&FS.
However, one sticky problem left behind by the discredited former management remains unresolved. It is the role of Fairwood Consultants Pvt Ltd (Fairwood) which had put together a global consortium to build what was to have been the most ambitious new city, to rival global financial centres. Sometime in 2011, Fairwood found its contract unceremoniously terminated and all its work called into question, while substantial dues remained unclaimed. The dispute was to be settled by arbitration; but, for over a decade, IL&FS as well as GIFT City have been dragging their feet over conducting hearings.
A decade later, one hearing was held at the end of last month in Gujarat. This was also cut short when Ramakant Jha, who joined GIFT City as chief executive officer (CEO) in 2009 and was being cross-examined, suddenly left for Mumbai. From the documents submitted in various legal proceedings, it appears that Fairwood was more sinned against than sinning. Ranbir Saran Das, chairman and managing director (CMD) of the Fairwood group provides a fascinating insight into the bizarre manner in which IL&FS used to operate and how it used and arm-twisted smaller companies and consultants who were eager to have the giant, 300+ company conglomerate as a client.
GIFT City was, indeed, a victim of the global financial crisis. Most of the memoranda of understanding (MOUs) signed at the Vibrant Gujarat summit in 2007 failed to materialise, leaving a massive white elephant of a project that could only be salvaged by scaling it down substantially. This meant that everything that was designed by Fairwood on a grand scale was unworkable and no longer needed. Typical of the IL&FS playbook that has been repeated in other projects, Fairwood was unceremoniously sacked and the consequent dispute was pushed into arbitration, which was conveniently delayed.
This was done knowing full well that Fairwood was in on the project right from the first day that the Gujarat government approached IL&FS to help develop a financial SEZ outside Ahmedabad. Mr Das says that IL&FS, despite its name, has not bothered to create an internal expert team for designing large-scale projects and always sub-contracted the work to specialised firms. When GIFT City happened, Fairwood had already done a dozen projects with the IL&FS in Assam, Bengal and other states.
“We were like their ‘closet consultants’, if you will,” says Mr Das. He and his team were even given IL&FS visiting cards in order to meet senior state bureaucrats. He recollects going for a meeting with the chief secretary of Karnataka and senior officials on the Bengaluru development plan as part of IL&FS. Not a single IL&FS officer have bothered to accompany the Fairwood team.
IL&FS had created such an aura of being a super-successful, public sector giant (while being a secretive and privately-controlled group), that state governments used to chase it for business. At the conception of GIFT City, a team of officials led by Sudhir Mankad, who remains the chairman, was to visit IL&FS for a discussion. They wanted help to develop a new financial SEZ outside Ahmedabad. Hari Sankaran, former vice-chairman of IL&FS, asked Mr Das to attend as part of the IL&FS team. 
Mr Das was then working with East China Architectural Design and Research Institution Company Ltd (ECADI) on projects in Vietnam. ECADI had done most of the work on building Shanghai. So, when the group broke for lunch, Mr Das suggested to Hari that, instead of an SEZ, which is rather limiting, why not build a world-class new city like Shanghai or Songdo in South Korea. Hari liked the idea and proposed it to the Gujarat team. They also liked the idea and agreed.
After the Gujarat team left, Hari admitted that he had no clue on how to go about building a new city, even though he had just committed to a huge involvement in the project. Mr Das then took him to Shanghai. From the 88th floor of Jin Mao Towers, the ECADI team showed him a bird’s eye view of the sprawling city and discussed what aspects of it could be adopted in Gujarat. They then went to Seoul to study the planning and construction of Songo, a smart city that was built from scratch on reclaimed land. Suitably impressed, Hari Sankaran asked Mr Das to build a consortium to work on GIFT City. Accordingly, Fairwood and ECADI led the consortium with another 9-10 top companies such as ABB-Europe, British Telecom, Louis Berger, Hewitt, etc. Things were moving rapidly, since the chief minister (CM) of Gujarat was very keen on laying the foundation stone of the project in June 2007.
It meant that IL&FS needed to deliver and there was no time to waste. So, Fairwood was asked to start working on the master plan, without even a formal contract, but only a letter—that too on Mr Das’s insistence. While Fairwood began work without signed agreements, IL&FS had apparently created paperwork to suggest it has looked at four consultants with elaborate evaluation criteria, where Fairwood was shown to have scored the highest! 
Again, typical of IL&FS, Hari Sankaran kept exhorting Mr Das to plan ‘bigger, make it bigger’. In Mr Das’s telling, if the electricity requirement was 720MW, Mr Sankaran wanted it hiked to 1,000MW. If the water requirement was 12MGD (million gallons a day, he said make it 20MGD. “When I said do you want underground basements of 1-2 or 3 levels, he said make it 3 levels.” 
Then came Vibrant Gujarat where the GIFT City Stall was built by ECADI and the Chinese, Americans and Korean consortium members had speaking slots at the event. The GIFT City plan attracted so much interest that they ended up signing MOUs planned for 200mnsqft (million square feet) against the planned construction of 144mnsqft. So IL&FS began to see dreams of raking in big money through direct investment and from partners by funding the project. As I have written earlier, the land came free from the Gujarat government. But Ravi Parthasarathy had planned to sell units of built-up area to be rebuilt on per sqft basis. The development rights would be the unit per sqft foot and could be traded on the exchange. A proposal was made to the Securities and Exchange Board of India (SEBI) which refused to approve the plan. Similarly, it failed to get height approvals for the bigger and taller buildings from the Union government.
So, the maverick funding plan failed and then the grand dream itself crashed, with the crisis that followed the 2008 global financial crash. None of the MOUs signed at Vibrant Gujarat materialised and, suddenly, there was pressure to scale down plans. The model seemed to be Navi Mumbai, rather than Shanghai and Songdo, says Mr Das. Typically, IL&FS began to look for scapegoats. It stopped paying Fairwood’s bills even as it kept making assurances and calling for additional explanations and changes, says Mr Das.
Finally, at a one-to-one meeting at Gurgaon, K Ramchand, an IL&FS director on GIFT City, openly accused Mr Das of cheating and claimed that Fairwood had increased the floor area because the consulting fee was based on the number of units. According to Mr Das, this brazen allegation, despite documentation showing that IL&FS had, at each stage, been given three options and had chosen one. He also says that Mr Ramchand demanded a 25% cut in Fairwood’s fees and reported this to the board as an agreed position. Things went downhill very quickly after that and IL&FS filed a case against Fairwood for Rs5,800 crore (allegedly without any back-up or details). As part of the arbitration and various court papers, it is now clear that Fairwood was used as a scapegoat when the project had become unviable.
Minutes of the 31st meeting of the board of directors of GIFT City clearly confirm this. The minutes note that the project has undergone considerable changes. GIFT City, or rather IL&FS, no longer planned to develop and sell the buildings, because it no longer looked as lucrative as earlier. Under the changed scenario, private developers would do the building and GIFT City would only provide detailed planning guides. The minutes also confirm Mr Das’s claim that all their work, based on the original plan, had gone waste and ‘considerable changes’ were required in the master plan; thismeant re-designing. Despite its very close relationship with the firm, by ditching Fairwood and making a series of allegations, IL&FS had found a way to avoid paying for the changed plans.
Mr Das’s story is plausible, since I have reported a similar modus operandi with other partners as well. He insists that he has plenty of documents, evidence and photographs, to prove his case in any fair arbitration. (Read our in-depth coverage of IL&FS here: (
Even as I write this stunning story, regular readers may recall that DC Anjaria, a former board member who fell out with GIFT City had a completely different take on matters and even filed a public interest litigation (PIL) alleging widespread mismanagement of the project.
Given that GIFT City continues to have the same chairman in Sudhir Mankad, one would have expected him to clarify matters and close the dispute. But, with Gujarat government officials failing to ensure proper oversight over its 50% partner, IL&FS, there is little incentive for them to speak while enjoying the perks of a high-profile post-retirement assignment. If anything, an advertorial interview  by Ajay Pandey, a former CMD of GIFT City, only establishes how Gujarat bureaucrats swayed to the IL&FS tune until it crash-landed. Things are different now. But, unless the arbitration is allowed to gather speed, the real truth about this project and IL&FS’s role will not emerge.
3 months ago
The article provides an insightful look into the operations of the Gujarat International Finance Tec-City (GIFT City) and the role of Infrastructure Leasing and Financial Services (IL&FS). It's interesting to see how GIFT City has emerged from the shadows of IL&FS and is now on its way to fulfilling part of the promise showcased at Vibrant Gujarat in 2007. Kunvarji Realty provides consultancy services for GIFT city commercial and luxury residential projects.
1 year ago
Great research on this eye opener article !
it is still a question that why such facts are not getting recorded and found by SFIO (and now CBI, ED etc) who are investigating in IL&FS since years and thier second charge sheet is awaited since long... not only the top but middle management like Mr bhatiya, etc alongwith thier rejoined team of old IL&FS employees are deeply involved in corrupt practices till now and still enjoying moratorium, the left outs assets and present ongoing projects of IL&FS, ESML (Gujarat), CNTL (J&K) and what not .. please write something on that too
Sudhir Mankodi
2 years ago
This appears to be one sided story on the basis of the interview with Mr. Das. Obviously, he would love to make it spicy as he feels his Company is at a receiving end. Has any interview been done with the Gift City\'s Authority to seek their counter? Unless that\'s done, the article remains one sided spicy & juicy story.
Replied to Sudhir Mankodi comment 2 years ago
I am rather surprised at the ease with which you have cast aspersions in this day and age, where every article has back links to other stories on the subject. As the article says -- if you have bothered to read it -- other versions to this story have been extensively covered in the past and links are provided in the article. On the assumption that you do not understand how this works, click on the words in blue in the last two paragraphs and elsewhere in the article -- it will open to other stories. Feel free to apologise.
2 years ago
GIFT is a non-starter to attract foreign firms. They want entertainment which is absent in India. It’s more for of a real estate land project for Indian companies
2 years ago
lot of skeletons coming out
Kamal Garg
Replied to r_ashok41 comment 2 years ago
As always in these types of cases.
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