The City that Mahindra built

Source : BL : Vinay kamath : Nov 24,2011

Mahindra Lifespaces dreamt of turning a bare piece of land into a bustling, self-contained city. The journey so far ...

As we were the first one to start in the Mahindra World City (MWC), we struggled a lot in the beginning. But now we really enjoy all the facilities like its infrastructure, internal transport, security and so on. Working with MWC makes us happy. In fact, we started in a small way with 180 machines with a workforce of 435 and we have expanded three times in the span of six years and now our capacity is around 550 machines with a workforce of 950.

-M.P. Nagarajan, Vice-President, Srinivasa Fashions

Living in Mahindra World City, I don't have to commute to work, nor do my children. It saves me two hours of time a day which I can spend productively. Saves me the stress too. The work-life balance is pleasant, though I miss the city and the weekend movies. But, then, it's more convenient for me to 'commute' to Puducherry, an hour's drive from here, for my shopping than spend two hours to get into the city.

- Nirmala Krishnan, Mahindra World School

Disparate voices, but they would warm the cockles of Arun Nanda's heart. It's been some journey for Mahindra World City but ten years on, what was a barren but picturesque piece of land on the banks of the vast lake Kolavai in Kancheepuram district 35 km from Chennai, has transformed into a bustling industrial and residential hub where 25,000 people and 180 families 'work, live and play'.

And, today, nothing gives Nanda, Chairman of Mahindra Lifespaces, more pleasure than standing at the Paranur railway station, which Mahindra helped develop along with the Railways, and seeing scores of young men and women, backpacks in tow, MP3 players plugged into their ears, getting off the trains and heading to work in the many IT companies, including Infosys, that have sprung up in the City. Says he: "It's immensely satisfying to see that we've created jobs for the next generation. I strongly believe that this is the way of the future. The Planning Commission has been talking of cluster development, and this is working; this is the only way you can improve the quality of life of younger people."

Now that the city, conceived by the Mahindra & Mahindra group, among the first such by the private sector, has many businesses from Infosys to BMW humming, it is going to focus on other aspects of developing the city: Plans are afoot to open a full-fledged hospital, a four-star 120-room Holiday Inn Express will spring up in two years' time, and the next couple of years will see 1,500 apartments coming up to accommodate some of the 25,000 people who work in the city. The Mahindra World School is home to 420 children who study there. Nanda talks of setting up a full-fledged club house for those who live there and also intends a waterfront promenade along the Kolavai. At present, the plug-and-play business zone, whose roads to sanitation are maintained by the Mahindras, has attracted 60 companies, 35 operational and the rest coming up. The exports from the three sector-specific SEZs were Rs 3,500 crore in FY 2011, and collectively, according to Sangeeta Prasad, CEO of MWC, the companies have invested approximately Rs 3,000 crore. In seven to ten years, investments are expected to be Rs 5,000 crore and employment at 80,000 people.

It wasn't always this way. In a lengthy interaction with BrandLine on the occasion of the tenth anniversary of the City, Nanda, along with Sangeeta Prasad and Anita Arjundas, Managing Director & CEO, Mahindra Lifespace Developers (which has promoted MWC, in which the Tamil Nadu Government's TIDCO has an 11 per cent stake) dwelt on the trials and tribulations the project went through before it took off with Infosys plumping for an investment here in 2004.

Nanda recalls that the 1,300 acres of land acquired in the late Nineties was registered as Mahindra Industrial Park and was meant to be an auto components park. It is just down the road from the Mahindra Ford project and given Chennai's strengths in auto components, this project was thought to have a nice fit. However, the global downturn in auto and the government decision to allow private investment in special economic zones spurred the decision to set up an SEZ.

The project had its fair share of sceptics, from bankers and financiers, about its viability. But, Nanda went ahead and developed, to begin with, 800 acres of the 1,300 it had acquired initially. Drainage and sanitation were developed, plots marked, roads laid. The team had looked at similar parks in China and the Philippines to model the MWC on. But almost three years after developing the park, MWC was yet to bag its first big client and uncomfortable questions began to be asked, recall Nanda and Anita.

Two events marked a turning point for the project. (See box below) "The man I want to give credit is Deepak Parekh (HDFC Bank), I asked him to see this place. And we made a presentation; he gave us a 10-year loan with a five-year moratorium," says Nanda. Meanwhile, Anita and her team made presentations to Infosys' former HR head T.V. Mohandas Pai and his team. Also, Mahindra invested upfront in the school, knowing that people would move in only then to live at MWC. A real estate player would have looked to build and sell the property and move on but MWC, says Nanda, is there for the long term. "Earlier, all this was in the domain of the public sector so you had to convince people. When you have core infra ready and running for a significant part, that the roads are up there and things like the water treatment plant is running, some amount of confidence comes in," says Anita. L

IFCI, while rejecting MWC's proposal for Developers Ltd, financing, gave the team a sane piece of advice: Do not displace the locals. which is why the MWC property is in an odd shape, winding around villages; there is no boundary wall and it's quite common to see goats CEO, and grazing placidly beside a hi-tech facility. CEO Prasad says employees of all the con- Prasad, CEO, tractors and sub-contractors are all from these villages. "It has changed the lives of Mahindra people; the local community has benefited. World City Intermixing is making the place more Developers at tolerant."

Srinivasa Fashions' Vice-President Nagarajan talks about the transformational impact MWC has had on local communities. Around 90 per cent of the company's workers come from areas nearby. Nagarajan says most of the women workers are from villages. "They never thought that they will work in a company like ours as normally when they finish their 10th standard, the villagers do not send their girls to work in the city.

"Since we are nearby, and seeing neighbours working with us, other girls are also tempted to work. We employ raw hands and train them. They are happy that they have become skilled tailors, plus the family gets an additional income. This has changed their lifestyle and they are sending their children to English medium schools as well."

More companies followed later: MNCs such as Timken, BMW and Tesa Tapes. MWC has acquired more land to expand its domestic tariff area as well as the SEZ. And, Mahindra Lifespaces itself expanded its footprint to Jaipur where it acquired 3,000 acres for a similar SEZ, and one more is planned for North Chennai. Some customers from Chennai, such as Infosys and Wipro, have also set up a facility in Jaipur.

The flipside of working in MWC, says Nagarajan, is that Srinivasa Fashions has to spend more on transporting its staff from the city. A few young employees BrandLine spoke to say that commuting can be a grind. Moreover, power supply can be a problem and the facilities have to depend on gen sets. MWC CEO Prasad says they are in dialogue with the Railways and state transport has got the train and bus services stepped up. Power is something the Government has to deliver on, she says, and it's a reality that confronts the whole state for now.

Some such as Pradip Sachan, Managing Director of Tesa Tapes, are happy MWC has not let the facility decay, though he would like to see more social infrastructure developed. "We started commercial production in less than nine months from the ground-breaking. I suppose, if we had to do a similar project elsewhere, it would have taken us more than 12 months. A clear benefit of getting land which is already levelled, graded and with supporting infrastructure."

MWC made its first profit in 2006-07, in its seventh year. "It's not given us windfall results, but in large projects like these, you make windfall gains only much later," says Nanda.

The expansion in MWC is fuelled by more multinational companies investing in the domestic tariff area to cater to the Indian market, says CEO Prasad. With industry accepting the MWC concept well, now the focus will also be on other aspects of living there.

The Canopy, a mini-mall in the campus, will have solar panels, in partnership with Mahindra Solar, to bring down energy costs. Common area lighting will use LEDs.

Soon Mahindra's entire automotive research facility will be housed in MWC and nearly 660 families are expected to relocate to the campus. As quick as industry is rolling out at the City, MWC will need to roll out the + apartment complexes and the new set of villas it is constructing to take in the influx.

Prasad says in MWC's pursuit to impart the multi-faceted characteristic of a city, they are focusing on the residential and social aspects. Says Prasad, "We will continue providing homes for all segments, for both ownership and rentals, making this a holistic yet heterogeneous ecosystem, a city in reality. Aqualily and Iris Courts, the current residential offerings, thus cater to the different needs of the customer." In a few years' time, MWC expects the campus to buzz even more and hopes are by then it will truly be the place to 'live, work and play'

.

The turning point

Mohandas Pai's team at Infosys was not connvinced about MWC as the IT highway was developing on another corridor outside of Chennai city.

"We landed up at Narayana Murthy's office, and told him of our dream and asked him, as a visionary, if we were on the right path or barking up the wrong tree," recalls Nanda.

One day, Narayana Murthy got off an international flight and visited the site at 6 a.m. with no Mahindra officials and only the Infy facilities head. "He saw this and said this is the future and that we should be part of the future," adds N anda. Infosys signed up to take 129 acres and expects to eventually employ 25,000 engineers at this facility from the 17,000 it has now.

Some of the moves made by the team in the early part of the decade paid off. As Anita Arjundas says, the fact that they had developed a large tract of land helped Infy's decision to locate its project in the MWC. And, once it had a large anchor client in Infy, other software companies such as Wipro and Mindtree followed. "We did a few things right, we later realised. We took 800 acres in the first phase and common wisdom would have said do modular, do 200 acres to start with, but then Infy would not have taken it, because it wanted a large tract of land itself," elaborates Nanda.