9,000 apartments in Magarpatta City handle 400 tonnes of garbage every month, with the CMD acting as ‘civic chief’
Mr.Satish Magar
It has won many awards for its innovative initiatives, but few know that the popular Magarpatta City has a ‘City Council’ that acts like a municipal corporation and that the CMD functions as a municipal commissioner.
A unique township just outside Pune spread over 430 acres of original farm land, it houses 40,000 residents and hosts 60,000 professionals who work at the IT park in the complex.
The “City Council”, among other things, handles the garbage (about 400 tonnes is generated and processed in-house every month) and the sewage lines and conducts other civic functions. Sewage water is treated and used for landscaping, in air conditioning units and for raising the ground water level.
Every house in Magarpatta City has a solar water heating system. With 9,000 apartments, this means a very large installation of solar water collectors. Further, there is an extensive network for rainwater harvesting. Both water and power supplies are also managed by the “City Council”.
In other words, all civic activities in Magarpatta City are decentralised and handled by the private sector. This revolution came about because the Pune Municipal Corporation could not look after civic services and told the promoters quite clearly, “If you want to do it, do it; otherwise, we will do it but (we will do it only) when we want to do it”.
And so the management of Magarpatta Township Development and Construction Co. Ltd. decided that rather than depend on the monolithic (Pune) Municipal Corporation which was managing a large area and “doing absolutely nothing”, it would be better to divide the township into small wards and manage it on its own.
One of the biggest problems in housing societies was the collection of monthly maintenance charges. To overcome this, the “City Council” collected a one-time fee from all 9,000 apartments. The money was invested and generated income which helped maintain the entire city, thus making it a unique, cost-subsidized township.
Mr. Satish Magar, the Chairman and Managing Director of Magarpatta Township Development and Construction Co. Ltd., made the above revelations at the last meeting when he spoke about the genesis of Magarpatta City and how it had evolved over the last two decades.
Manojj Patodia, who introduced him, said that he was the brain behind the project that involved the families of 123 farmers (who were the landowners) and getting together as shareholders in a company that was giving them rich benefits.
Now a powerful brand, it offered fine living, smart buildings, broad avenues, modern health care, schools, an IT park, a green and eco-friendly environment and the biggest park in Pune.
Wharton Business School had prepared a case study on Magarpatta for inclusive capitalism. A similar exercise had been undertaken for the 9th World Congress of Metropolises in Sydney, Australia. Former President A.P.J. Abdul Kalam had lauded the project.
Mr. Magar started by pointing out that the name Magarpatta was derived from his family name. His surname was Magar and “patta” meant a belt of land.Thus, contiguous belts of land owned by people whose family name was Magar were together called Magarpatta. The origins of the family in that area had been traced back to about 350 years.
He had a special word of praise for four persons without whom his dream city would not have been possible. First of all, he mentioned Mr. Sharad Pawar,whom he had met in his capacity as Chief Minister in 1993/94. Next, there was the late Mr. Bal Thackeray who presided over the State government that followed the one headed by Mr. Pawar.
The third person who had rendered great help was the late Mr. D.M. Harish, the father of Anil Harish, who had given him professional help to make his dream come true. And finally, Mr. Deepak Parekh, Honorary member of the Club and the chief of HDFC, whom he had approached after he had received all permissions but did not have money to start construction.
Mr. Magar recalled that he had explained the plan under which the farmers would form a company and develop their land to Mr. Pawar. The farmers were worried that as the land had been classified as urban land, it would fall under the purview of the Urban Land Ceiling Act (since repealed). It was also possible that the farmers would sell their strips of land and blow up the money before they
reached home.
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?”It was his greatness and his graciousness that he (Mr. Pawar) accepted the proposal on behalf of the government. And then the government changed… I would also like to pay my respects to the late Mr. Balasaheb Thackeray who, against all odds, ordered that the project be approved and it was done in his tenure”.
Hailing from a farmer’s family, Mr. Magar said, he was a first-generation entrepreneur who did not know much about the world (he was not street savvy) and had few friends in Bombay. But he was advised to meet Mr. D.M. Harish, who was called the “Boss” in income tax matters.
When he told Mr. Harish that he knew nothing about income tax, he gave
him some books, such as “D.M. Harish on Income Tax”, which he cherished and still possessed after so many years. There was another lawyer, one
Mr. Soli Dastur, who ultimately drew up an agreement and more than 850
farmers signed on that single document, without any consideration.
As for Mr. Deepak Parekh, the project would not have taken off without his assistance. He had confidence in the team behind it and believed that the concept would work even though everyone else was sceptical.
“MAGARPATTA HAS CREATED ENTREPRENEURS OUT OF SECOND-GENERATION LANDOWNERS – WHO ARE ALWAYS A PROBLEM”
But what was so special about the plan? Mr. Magar explained that for the world Magarpatta was an integrated township but for its shareholders it represented a change of attitude.
Most farmers, after selling their land normally spent the money the way they wished to; they knew nothing about savings, investments or income tax and one fine day the tax department took away everything that remained after blowing up money on non-productive activities (some also resorted to vices).
Magarpatta converted landowners into developers. The land that the farmers owned was used as the raw material to prepare a fine product homes, parks and an entire infrastructure that would benefit the proposed city and the original farmers and landowners, too.
“The best thing is that Magarpatta created entrepreneurs out of landowners. Second-generation landowners are always a problem. We read in newspapers that wherever land has been taken away (sold, grabbed or acquired), there is a problem. People with empty minds, sitting idle, not knowing what to do, can be a great problem.
“We took the opportunity to create entrepreneurs. Construction is not exactly rocket science. What you need is good supervision. We adopted the backward
integration process, manufactured sand out of stone, went for fabrication and construction work, everything. The idea was that they (the second generation landowners) should not waste their money doing nothing. They should become entrepreneurs and their money should be invested for their coming generations.
“The land offered a one-time opportunity. It had been inherited from our forefathers. We had to create a new kind of entrepreneur and keep them occupied. The idea was to bring about a change of mindset; a farmer only knew how to work on his farm”.
Mr. Magar said the fact that there were about 800 beneficiary families owning over 400 acres meant that the individual family holdings were small. All the shareholders of the company were farmers, there was no outsider, no outside funding, no rich investor.
But the experiment paid off. Today, more than 75% of the population had turned into entrepreneurs and was on its own. A few had gone back to agriculture, but it was a side business for them, not their mainstay.
As far as the outside world was concerned, Magarpatta City offered 430
acres of infrastructure, 9,000 apartments and more than six million square feet of IT space. Forty thousand people lived and 60,000 people worked there. There were hospitals, playgrounds, gymnasia, different types of recreation centres, a shopping mall all in one compound and all of it creating wealth.
Mr. Harish and Mr. Dastur had suggested a revenue-sharing formula. As per the agreement signed in 1998-99, a percentage of the sales proceeds would go towards the land cost as and when it accrued. This ensured that the shareholders enjoyed the fruits of appreciation of land.
When the project was launched, initial sales rates ranged between Rs. 1,000 and Rs. 1,500. Now that it had been completed (in 2012), the price was nearly Rs. 10,000. Thus, the proportionate amount, the cost of land which the farmers received, had kept on increasing. It was appreciation for the land and there was a continuous stream of income.
The IT park of about six million square feet was owned by the company. It was leased out and the lease rentals went back to the farmers by way of dividend on a perpetual basis.
Another point to note was that all the farmers stayed within the community, in 7,000 out of the 9,000 apartments. They had neither separate buildings nor separate localities but were dispersed all over in the middle-class community. In Magarpatta City the population was middle class.
“One of our aims, along with financial security, was social engineering. The farmer, who was not educated, who did not know the urban way of living even though his land lay in an urban area, was now living in an urban agglomeration along with the upwardly mobile middle-class. Most of them (other residents) work in the IT industry, where knowledge is equity.
“So they (the farmers) started sending their children to good schools. All the children are either studying in an ICSE school inside Magarpatta or in a nearby IB school. We needed to bring this change in order to upgrade the entire social scene, because money itself is not everything”.
Mr. Magar said that once the construction process started and people started living there from 2002, the concept of city management was also introduced, thanks to the Pune Municipal Corporation which did not appear keen to immediately provide the township with civic services.
Turning to medical services, Mr. Magar said when it was observed that the nearest hospitals were about seven or eight km. away, it was decided to have a hospital within the township. Some of the doctors practising in the neighbourhood were approached and got together to form their own company.
They set up a private limited company which established a 275-bed hospital that was constructed at cost. Magarpatta City had a stake in it but it was the doctors who ran it. The hospital was not only serving the community but also doing a lot of charity work for those living outside. It was well-equipped and was doing quite well.
The next question was managing the community and its social and cultural
infrastructure. That was when the concept of the “City Council’ came up. One representative was elected to it from every 75 apartments and 33% of
the seats were reserved for women.
“We feel that they can do a better job in management and maintenance, because they are more vocal and stronger”.
(It was at this stage that Mr. Magar described how Magarpatta had its own “City Council” that looked after all services and he acted as its Municipal Commissioner, as described at the beginning of this report.)
One of the functions of the “City Council” was to decide on what needed to be done to upgrade the lifestyle, to help cultural interaction and to create a community out of the unique combination of people living there.
“About 60% of them are less than 40 years of age. So you can imagine our Friday and Saturday nights… But 20% of the population is more than 65 or 70 years old. We have a very young population and also a very old population. Most of these (the aged) are those whose children are not in India.
“For their sake, all the buildings and footpaths have ramps and there is a doctor on call as also security on call. We started it as a marketing gimmick but through the “City Council” we launched the system of hospitality which has become a great success. The young, whose parents are not here, spend time at the weekend with the elders whose children are not there. Thus the right balance is managed”.
“Mr. Magar said elections to the “City Council” were held every three years and everyone wanted to be on it. It needed a lot of money because every festival of every religion was celebrated together, right from January 26 to December 25. At the time of Diwali, 40,000 lamps were lit all over the area in a matter of a few minutes by all the residents”.
All this required money. In the initial stages, the company spent the money but that was not sustainable.
Rajnikanth paid a huge amount to shoot his film and suddenly the goddess of wealth started smiling on Magarpatta
Suddenly, Rajnikanth, the superstar, arrived on the scene with a request to shoot in Magarpatta City for 15 days for his film Shivaji. In the normal course he would not have been entertained. To say no in a polite way, the township quoted a very high figure of Rs. 20 lakhs as charges to allow him to shoot.
Rajnikanth agreed and that opened the door for substantial revenue. Today, Magarpatta City earned between Rs. 1.75 and Rs. 2 crores every year from film shootings. The money went to the “City Council” which spent it on cultural activities and also on the celebrations for Diwali, Holi, Christmas, sports and so on.
“It has become a good community and creates no problem for the developer,
because we have the obligation of maintaining it and they are able to live in harmony. The idea of public participation in city management has been put to the test and the various models we adopted came out of that”.
“Originally, we wanted to value-add, then wealth creation came up, then came city management, public participation and so on and all these came together to make Magarpatta City what it is,?” Mr. Magar added.
When the floor was thrown open for questions, Ashwin Ramesh wanted to know whether there was any attempt by politicians to hijack the project in which 800 farmers were getting together.
No politician tried to hijack the project, said Mr. Magar, because two of the most powerful persons in Maharashtra (Mr. Bal Thackeray and Mr. Sharad Pawar) were with him. However, there was a lot of speculation about the success or failure of the project. After all, 430 acres of land within city limits was a massive chunk.
Secondly, farmers ‘getting together in this manner was unheard of and was being attempted for the first time, therefore there was a lot of speculation. However, the fact that farmers were coming together put pressure on the politicians not to interfere. It took seven years from the time the project was started in 1993 till the time the first permission was received in 2000.
At that time, there were no rules regarding townships, but now there was a township policy based on the Magarpatta City experience. Therefore, the government was also quite sceptical. But at that time everyone was looking at new ideas. In 1991, when liberalisation was launched, everybody, including the government, thought of doing something different. Of course, the government was very cautious and wanted to do it at somebody else’s expense.
Shyyamniwas Somani wondered whether the co-operation between over 800 farmers that Mr. Magar had been able to ensure could be attempted in the case of farmers who were committing suicide in Vidarbha and Andhra Pradesh. Could he support them or guide them?
Mr. Magar said he would certainly like to help because he came from the same background. He was a graduate in agriculture and actually wanted to do farming. But all his land was inside city limits and there was little scope for farming.
He had visited many places, including NOIDA, to study the land acquisition problems and the farmers’ problems. He had observed that in most cases the landholding was very small, about 500 metres, and if one person was successful with one crop, everyone wanted to do the same; it was a herd mentality.
In this connection, he recalled the Israeli kibbutz system. He spoke quite often on this subject, but the local politicians offered no support for it.
Ashok Jatia asked how he raised the money to start the construction. Secondly, if his model was successfully attempted all over India, there would be no agricultural land left!
Mr. Magar replied that the initial finance was indeed a major problem. No bank was ready to finance it because it was a company owned by farmers. Some even suggested that a portion of the land be sold to raise money.
It was then that Mr. Deepak Parekh appreciated the idea after witnessing a presentation. He told them to start with a small number of buildings, market them and sell them and “if you need support, we are there”. HDFC
offices were used to market the project in the Middle East and in the cities of Bombay and Pune.
As for the second part of the question, Mr. Magar said that India was a very populous country. It had 3% of the world’s landmass and 7% of the world’?s population.Therefore it was necessary to build millions of houses. How one did that, whether by going vertical or remaining horizontal, was a question of debate. But it was necessary to house the people.
There was a shortage of 18 million houses in the country. But “we only
keep talking all the time. Agriculture can be maintained if we use the maximum potential of the land and go vertical so that more people can be fit into less space”.
While designing the township, all the existing rules and regulations were
followed, including those under the Maharashtra Regional Town Planning Act, a comprehensive act that was enacted in 1961.
The well-known architect, Mr. Hafeez Contractor, had been involved with the project in the initial stages, but since he lacked the time to take it further, it was given to Pune-based architects who completed it. All open spaces as required under the law were provided and not a single law was bent.
PP Arun Sanghi asked how many acres of land did his own family own. And how did he persuade so many people to form a co-operative?
Mr. Magar said his family, his father and his father?s brothers, owned about 30% of the land.
Such was the geographical location of the area that there was a highway on one side, a railway line on the second, a canal on the third side and an internal road on the fourth. Thus, it was more like an island area where people were doing agriculture together.
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When fragmentation of agricultural land took place in a family, it was always done perpendicular to the road. When the project was started, most of the people had land that measured 20 feet by 500 or 600 feet. Every brother who separated from the family needed access. Fragmentation perpendicular to the road resulted in most of them having strips of land; thus, there wasno choice other than coming together.
PP Kalpana Munshi said that the Rotary Club was going to build 150 houses for adivasis in Thane district. Would his idea of a co-operative township work there?
It was possible to an extent, said Mr. Magar, but apart from houses the adivasis also had to have other support services.
“The basic problem in India is that nobody wants to give away their land. Here (in Magarpatta) we got people together on a land-pooling basis because it depended on the location of the land. If you can achieve that, then you can have a settlement in one area and the balance area can be utilised for other purposes to generate income,”Mr. Magar concluded.