Magarpatta City | Pune, India

Course of Project Development Management

Wim Wambecq | Bruno De Meulder

Submitted by
Parul Jain
Masters of Urbanism and Strategic Planning
 Methodology

0.0 Abstract …………. Pg. 3

1.0 Introduction: Project brief and context………. Pg. 3-5

2.0 The Process……………………Pg. 6-13

2.1 Formation of the MTDCCL and division of share

2.2 Government approval and Conceptualisation

2.3 Self Financing model

2.4 Design and Development

2.5 Shifting Vocations: From Farmers to Entrepreneurs

3.0 Reflection………………Pg. 14

4.0 Bibliography……………. Pg. 15

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0.0 ABSTRACT

This paper is a critical reflection on the unique development of the award winning and
strategic SEZ1 or “Special Economic Zones”, the Magarpatta City, located in the district of
Pune, in the state of Maharashtra, India. This socially equitable form of urban development is a
unique model of land pooling, that challenged the existing Town Planning Schemes of the
country, and carved its way into the transforming landscapes of Pune. A Former agrarian land
co-owned by a group of farmers, was redeveloped into a completely sustainable and profitable
housing complex creating a new model of land pooling, that emerged as a profitable and
empowering solution to the constant demand of housing in the case of growing cities in the
developing context.
In this paper, I shall be discussing the conceptualisation and development of a seemingly
impossible project, and how it overcame the many hurdles in its development by supplanting
the coercive Land Acquisition scheme through innovative approaches and amendments in the
town planning schemes of the state. The paper also focuses on how the project was realised
through “self-financing schemes” and inclusive incentives for previous occupants, that were
developed during the process.

1.INTRODUCTION: Project brief and context

Cities in India are constantly expanding post the colonial era. The city of Pune is currently the
second largest city in the western state of Maharashtra. From a mere 5 sq.km the city has expanded to a
700 skims in a span of 18 decades [817-1997]. Over the past few years, due to rise of the IT sector and
employment opportunities, the city has witnessed huge number of migrants in the form of both blue
collar and white collar workers, expanding the population of the city from 1,64,00 to about 3.1 million
[source: census 2011], making it one among the largest and the most populous metropolises of the
nation.

Figure 1 Chronological Development of Pune from 1820 -2011,

Image source: Town planning department, Pune 2011

1
A special economic zone (SEZ) is an area in which business and trade laws differ from the rest of the country.
SEZs are located within a country's national borders, and their aims include: increased trade, increased investment,
job creation and effective administration.

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Due to the spurring urbanisation and expanding population of the city, in 1960 the farming
lands of Hadapsar on the eastern fringes of Pune were marked for Urban Development.
It is important to understand here that the Land Acquisition Act2 of 1894 and Urban Ceiling
Land Act3 of 1976 were pivotal moments for the farming community in India. It only
exacerbated the issues of unemployment and migration due to shift from an agricultural
economy to a service class economy.
In the 1982 Draft of Development for Pune Municipal Corporation [PMC from here onwards],
marked the lands of the Magar farming community for development, which meant that these
farmers would have to sell their lands to the government at a rate lower than market prices
owing to the Land Acquisition Act. The pressure of displacement and loss of source of income
was the genesis of an idea called “The Magarpatta city”. Lead by Satish Magar, the head of the
farming community and the largest landholder, this group of 120 farmers collectively decided to
pool their lands of 430 acres and develop it themselves into a township that would feed to the
growing demands of the city.

Figure 2: Pune-Pimpri Chinwad plan. The extended city Image source: Rising in the east. Page 280

2
Land Acquisition Act, 1894: As per the Act, the union or state governments can acquire lands for its own use,
hold and control, including for public sector undertakings and for "public purpose"
3
Urban Land ceiling act , 1976 : To provide for the imposition of a ceiling on vacant land in urban
agglomerations, for the acquisition of such land in excess of the ceiling limit, to regulate the construction of
buildings on such land and for matters connected therewith, with a view to preventing the concentration of
urban land in the hands of a few persons and speculation and profiteering therein and with a view to bringing
about an equitable distribution of land in urban agglomerations to subserve the common good.

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Magarpatta township, thus “is an attempt to valorise their property in a holistic manner, that
also gave them beneficial returns in perpetuity. In the constant struggle of displacement, loss of
agricultural jobs and the rising need of decentralization, Magarpatta city is a harbinger towards
many firsts.” (Jain, 2016)

Magarpatta city was conceived as an SEZ which now is home not only to residential,
commercial and IT development, but is also inclusive of a central park, a school, a multi-
specialty hospital, fitness, recreation and security services, required to form a neighborhood.
The model has attained success in various aspects of sustainability, by implementing an onsite
waste management system, solar energy system [ registered in Limca book of records], storm
water mitigation and innovative planning by the establishment of a walk to work and school
concept. Though the project holds its uniqueness in establishing each former farmer as the
stakeholder of the project with 800 beneficiaries and generating constant income through
revenue sharing. The project has been regarded and applauded as one of the top successful
stories in the state, it was not an easy task. The project had to overcome multiple issues in
terms of finance, resources and planning restrictions. This shall be elaborated in the further
sections.

Figure 3: The IT Park at Magarpatta City image source: www.magarpattacity.com

Figure 4:The cyber city looking toward Aditi Gardens Image Source: www.magarpattacity.com

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Figure 5:Magarpatta city, Aerial view Image source: www.magarpattacity.com

2.0 THE PROCESS

The project included many actors, but MTDCCL, the company formed by Satish Magar, claims
the most important role in the shaping of the project. Secondly, Project Designer Prakash
Deshmukh of Space Design architects played a keen role in development of the project,
starting from approvals till execution. NICMAR, the nonprofit organization of Pune were
involved in vocational training required for the success of this project. HDFC was the only
source of outside funding and promotors for this project. The roles of all these important
actors have been elaborated in the following sections

HDFC
[part finance]

NICMAR
[non profit research
organisation]

SPACE DESIGN
ARCHITECTS [design team]

MTDCCL [owner+developer]

2.1 FORMATION OF THE MTDCCL AND DIVISION OF SHARE

Satish Magar owned 100 acres of land out of 430 acres, and came from a political family,
hence was appointed as the Directing Manager of the company. At first they thought forming a
co-operative company, but learning from the failure of the sugar co-operative movement in
Maharashtra, and the fact that each farmer family owned different sizes of land parcels. The
company resolution was to safeguard land ownership and provide a continuous source of
income to all the shareholders. And since co-operatives are based on equality rather than
equity, the idea was ruled out, and the community decided to opt for a private limited
company.

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Two types of shares were created in the company
 Preferential shares: these are short term shares where rights of owners could be
redeemed at the end of the term. This type of share was later removed.
 Equity shares: these were the long term shares that endowed landowners with
permanent rights in the company and their lands.
The peasants pooled in their individual landholding under Joint Development Agreement
(JDA)4 to the project Special Purpose Vehicle (SPV)5.In addition to share in revenue, the
peasants held equal portion in the project SPV- hence, had also a share in the upside of the
entire development. (Dhere, 2012) Due to lack of liquid assets, the only form of initial
investment was made by pooling in their shares of land, which was at that point of time valued
at 2,145 INR. Thus, together the entity was formed and named as MTDCCL [ Magarpatta City
Township Development and Construction Company limited]

2.2 GOVERNMENT APPROVAL AND CONCEPTUALISATION

The Managing director of the company Satish Magar’s first step was to approach
renowned architect Hafeez Contractor in order to get the plan of action drafted. The concept
of township was very new to India then, and the farmers had the least knowledge on how to
go about with this plan. Mr. Satish, along with Architect Hafeez Contractor and few others,
visited residential localities in San Jose and Santa Clara in USA, from where the idea of walk to
work was adopted as the key to the design of Magarpatta city. A research on the traditional
community housing typology was also carried out, and the courtyard concept was translated to
the need of a large central open space for the community. Space design Architects, Prakash
Deshmukh’s firm from pune was appointed as the design team for the project.

Next, the entire team with Mr. Magar approached the then Chief Minister of the State, Mr.
Sharad Pawar and the secretary of Urban planning, Mr. D.T Joseph. Both of them were sceptical
in the beginning regarding the feasibility of the project due to lack of any existing policy or
documentation supporting such a development.

The first hurdle was the Urban Land Ceiling Act that prevented any development company
from owning a land larger than one thousand sq.m. This means that if challenged by the public
in the court, they would be in trouble. In order to convince the state, and the authorities a
report was demanded to be produced by the team, which would then follow a public hearing.
In order to obtain a waiver from the Urban Land Ceiling Act, the company went through an
entire political procedure. The entire team got together to form a detailed report of the visions
and plan of action for this development. The peasants were visited by the Urban Planning
secretary and the company entered lots of negotiations with the government in order to garner
support for the project, simultaneously while the political processes were being carried out.

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The Joint Development Agreement (JDA) is singed in between the land holder native peasants and
Magarpatta City Township and Construction Company Ltd(MTDCC). JDA gives authority of MTDCC to obtain
the permission, approval, lunching, marketing as well as look the financial and administrative duties for new
township
5
SPV also referred to as a "bankruptcy-remote entity" whose operations are limited to the acquisition and
financing of specific assets. The SPV is usually a subsidiary company with an asset/liability structure and legal
status that makes its obligations secure, even if the parent company goes bankrupt. A subsidiary corporation
designed to serve as a counterparty for swaps and other credit sensitive derivative instruments. Also called a
"derivatives product company." (SPV is also called as Special purpose entity may be owned by one or more
other entities and certain jurisdictions may require ownership by certain parties in specific percentages.)

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Not only did they receive a waiver from the Urban Land Ceilings Act, the project also led to
addition of special legislative provisions to the Maharashtra Regional and Town Planning Act of
1972, called the Special Townships Notification of 2006, that laid down the norms for amenities
and infrastructure, and planning standards for its development, simultaneously incentivizing the
developer and its citizens with various procedural and FSI benefits to promote a good, sustainable
development. (Dhere, 2012)

Creation of a Detailed Negotiation with the A notification was

Report of the Project government and the created of the
company development

•Submitted to the •Project report •This was followed by

State Town Planning received clearance a public hearing that
Department and granted waiver in the
Pune Municipal end.
Corporation [PMC]

Figure 6: Process of government approval devised by author

2.3 THE SELF FINANCING MODEL

The second hurdle the company faced was that of finance. Since the landowners
themselves were to be the developers, there was no land acquisition money to initiate the
project. The regulatory controls on the lending system to real estate companies, did not
support the project model. Besides, the project in the financial market was looked at as a non-
feasible idea. A group of inexperienced and hardly educated farmers, coming together to build
a new typology of housing was not convincing for the lenders. The project faced several
dejections from the market. This led to Mr. Magar finally pulling the strings of his former political
family’s social network, and approach the director of HDFC [Housing Development Finance
Corporation] the leading finance development institute of India.

The company approached HDFC Bank with a loan request for 1000 million INR in order to
start the project, but the bank was able to pass a loan of only 20 million INR. 4 million of this
money was required to get the plan passed by the municipality and the remaining 16 million
were used to start the construction.
The managing director of the Finance company, being on friendly terms with Mr. Magar offered
him an advice for revenue stream regeneration through phasing and marketing of the project.
The company then devised a strategy for the development of the project into various phases,
beginning with the villas and larger apartments, and using the money from advertising and pre-
bookings to continue with the other phases.

Since the company was based on equity, each shareholder received part of the money from
the sales and the rest of the money went to the company. This way a constant source of
revenue was created. This revenue model was not enough; a lot of project cost was cut down
by using sustainable construction methods that cut down the project cost. A lot of construction
works were carried out by the farmers themselves, making use of the available resources first.
Though required consultants were hired for all kinds of professional works.
For marketing of the first phase of the project, the team couldn’t find anyone from Pune who
was ready to promote the project. Mr. Magar had to again, approach a start up being run by
some of his university friends in Hyderabad.

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 FLOWS
part of Revenue MONEY
collected was HDFC sanctioned
reinvested in loan for inittial
building next infrastructure
phases of the investment
project

REVENUE
GENERATION
A part of the project was
built, and sold in the
market, generating
revenue

Figure 7: How a constant flow of finance was created [devised by author]

The project made use of a lot of Vastu Shastra Elements and derived concepts of
neighborhood from the traditional housing typology of Maharashtra. To make the project
lucrative about 26,000 trees were planted to create a large open green park that all the
buildings would face. Through new participatory building processes, new forms of
entrepreneurships were generated and the project was made viable. The details of this are
discussed in the following sections.
Once the initial sales kicked up, and the project gained popularity, the remaining phases
received most of their funding, up to 65% from HDFC, and HDFC was the only promotor of
the project during its initial phases.
This model turned out to be an extremely profitable one for the farmers, since it was based on
revenue sharing, all the shareholders were entitled to a percentage of the sales as dividends in
proportion to their land holdings, and that accumulated through sales. Each landowner
according to the Joint Development Agreement signed was the owner of that percentage in
the FSI as per the master plan.

PHASE I PHASE II PHASE III PHASE IV

• Erica (2/3bhk • Iris (2 bhk • Cyber city - • Trillium
Row houses) homes) IT Park (2/3bhk flats)
• Grevillia • Mulberry • Mega Mall- • Slyvania
(2/3bhk Flats) Gardens Retail (2/3bhk flats)
• Heliconia(1b
(Bungalows)
• Pentagon- • Laburnum
hk homes) • Jasminium Office park (3/4bhk
(2/3 bhk flats) flats)
• Roystone (2- Spaces
• Zinia (1bhk
3bhk flats) flats)
• Acacia
Gardens(bun
aglows)
• Daffodils
(2/3bhk flats)

Figure 8: Phases of the project Source: slide share

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 •Start up finace of 20 million INR received by HDFC bank
1 against a request of 2000 million INR.

•Setting up of revenue sharing system whereby project was

constructed and sold in phases to generate income for the
2 next phase

•The cyber city was Leased instead of selling space in order

3 to generate more revenue.

•After initial sucess of the project , following finace was

provided by HDFC [65%]
4

Figure 9 : Finance Management Chart devised by author

This ensured equity returns. It was collectively decided that 30% of sale proceedings would be
shared between everyone and the rest was invested in the company funds

In the beginning during Phase I, property was sold at 1000INR per sq. ft., which increased to
5000 INR in 2011. Hence the lands pooled in received a huge appreciation. The cost of land in
the year 2000 was 3-3.5 million rupees, and by 2011, the valuation of the same land was
around 35 million, hence in 11 years there was an appreciation of more than 900 percent in
just land value.

2.4 DESIGN AND DEVELOPMENT

Figure 10:Magarpatta city, Masterplan Image source: www.architecturelive.in

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How was sustainability achieved in the project through Project management? The project
includes a lot of sustainable features like it is home to the largest open garden in Pune which is
a 25-acre garden in the centre of the township. As we already know, the plan adapts the “walk
to work school” concept by including the ‘The Magarpatta City Public School’ and the state of
the art “Cyber city”. Besides the Cyber city and the SEZ, Metacentre and Pentagon were two
other commercial centres that offered office areas for businesses. About 1200 students study in
this school, and the cyber city employs around 80,000 people.
Some of the more elaborate features of the sustainable concepts adapted in the township are:

 To mitigate flooding and water shortage issues, the entire township was designed for
rainwater harvesting. The farmers used their knowledge of top soils and climate to
formulate rainwater collection and storage in the site. There are about 8 natural wells,
515 recharge bores. An artificial lake now harvest rainwater from terraces to recharge
groundwater levels. Waste water is entirely recycled in the 3 sewage treatment plants
of 5 million litres capacity, and through systems of drip irrigation and sprinkler
distribution, it is used for gardening purposes in the site.
 The township is one of India’s largest solar panel installation. Each residential complex
has been installed with solar panels, and is used for water heating. With around 1
million litre of water that is heated every day, about 15,498 tons of carbon emission is
reduced.
 All the bricks used in the construction were made out of fly ash, which is a waste
material produced by the thermal power plants. This helped in reduction of greenhouse
gas emission. For each tonne of fly ash used in construction 1 tonne of CO2 emission
was reduced. Around 130,000 tonnes of fly ash was used in the project, hence saving
the same amount of CO2 emissions.
 Instead of transporting river sand, stone crushed sand was used in construction. The
finance for this came from the banks
 Household and commercial waste generated in the site is completely managed by the
solid waste management in the township through open vermicomposting and organic
waste convertors, that also educate people. The biogas produced from the plant is used
to generate power for the garden pumps, and fertilisers made from the
vermicomposting were used to feed the plants in the township’s own nursery.

Apart from these facilities, the township also houses several shopping stores, restaurants, library,
petrol Station and power substations that make it a complete city within itself, cutting down on
a lot of travel time and saving of fuel for citizens.

Figure 11: Waste management and water management in Magarpatta city. Image source www.magarpattacity.com

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2.5 SHIFTING VOCATIONS: From Farmers to Entrepreneurs

Figure 12:The Magarpatta community that formed MTDCCL Image source:www.magarpattacity.com

One of the most important thing to achieve in this process of consolidated land
redevelopment was to ensure that all the peasants, who were the shareholders remain a part
of the company throughout the process, and that landownership could be maintained. Due to
loss of income on the closing of agriculture, the farmers also had to find a new source of
income. It was a psychological and social problem for the farmer that he could not become an
entrepreneur, but the call of the hour was to upgrade their skills and potentials in an adaptive
fashion that explored their existing qualities and personalities. Through a series of aptitude tests
conducted, the entrepreneurs were sorted out depending on individual strengths and were
given training in for capacity enhancement.
It was organised in such a way that one person from each family was involved in the
construction and drew a constant source of income from the project, not as an employee but
as an entrepreneur. The high technology management jobs like handling cement plants and
aluminium extrusion plants, that were not related to their skills was of course outsourced.

People volunteered for activities of their choice, be it landscaping, road development etc. And
not just the younger population of under 35 as expected, but also people above the retirement
age of 55 were also intrigued by the revenue and opportunities available, and were willing to be
recruited in the construction jobs. The National Institute of Construction Management and
Research, which is a non-profit management Institute in Pune, or NICMAR as it is better
known, played a pivotal role in helping the company achieve this. All the people interested in
construction jobs were sent to study here. 250 entrepreneurs were trained at NICMAR in
various fields of manufacturing of building material, landscaping, electrical and services and other
infrastructural development jobs.
A lot of construction work in the project was carried out by the farmers themselves. For
example, the tractors that were formerly used for farming were being used for shifting of sands
within the site. “When we started doing the actual work, the farmer who moved soil with his
tractor was getting Rs.750 a day. As a farmer, he had never made that kind of money. Today 90
per cent of these entrepreneurs are liable for tax audits because they are engaged in a business
that earns them more than Rs.40 lakhs per year. So they are no longer dependent on the
money that came from the land, they are earning their own money. This has naturally enhanced
their self-esteem levels as they have become self-sustaining entrepreneurs.” (Magar, 29 July
2011)
Magarpatta city has been heralded as a successful model, and the company was approached by
more farmer families, to emulate a similar project for their property. They are now developing
a similar project called the Nanded city, also in Pune.

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Figure 13: Flowchart of Development of Magarpatta SEZ image source (Dhere, 2012)

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3.0 REFLECTION

In the given context of rapidly urbanising cities of India, with the urban population
imploding, cities are put under constant pressure of providing housing and employment. Also
the shift from an agricultural economy to that of a service class has been the root cause for the
displacement of many poor families, and the alarming rate of farmer suicides in the country.
Land consolidation, or land readjustment, consists of putting together inadequately organized
proximate plots of land in order to restructure an area. Hence it becomes very important to
explore alternative ways of mobilizing land to serve public advantage and to develop “inclusive
models” that reduce the social evils of displacements in growing economies. The Magarpatta
Project, is the first project in such a case, which dodges a top down process of land acquisition,
and instead opts for land pooling and redevelopment, as a bottom up measure to cater to the
needs of the ever expanding cities.

The project as discussed, had to go through a lot of struggles, first through approvals and then
in terms of financing the project, but with a good [project] manager [Mr Magar] and a
determined team, they could manage to sail through all these hurdles to come up with a
successful model of project development. This project gives benefits not just to the city, but
also to the former landowners, the farmers. Not only does the project ensured financial
security to the farmers, it upgraded their standards of living and ensured returns in perpetuity. It
is a continuous profit model that ensures financial security. Not only did the formers
landowners retain their landownership, but they became primary stakeholders of the
redevelopment of it. They also underwent vocational shifts to aid the management of the
project, and to in return it ensured them a secure livelihood and future. The Term Foreign
Direct Investment, thus in the case of Magarpatta gained a new definition as “Farmer’s Direct
Investment” in this case. (Jain, 2016).

The modern concept of “suburbia” globally leads to an unsustainable lifestyle that is majorly car
dependent. Not only is this unsustainable, but in bigger cities, it takes away from people the
everyday time and strength of socialising, since most of the time is spent in traveling from home
to work and vice versa. Magarpatta model tries to break this down by creating a “walk to
work” and “walk to school” model. As discussed in the previous sections of this paper, the
various sustainable concepts that were used during the construction of the project not only
helped them save a lot of energy and money, but are a good example of making the most of
available resources and manpower. In a more romantic narrative, the project is an ardent
example of fighting against the odds of the society.

The project not only provides housing for a population of 40,000 residents and another floating
population of 30,000 blue collar workers. The cyber city in the township generated 80,000 new
jobs in the neighborhood and houses the headquarters of some of the country’s biggest
software and IT companies.

In my opinion, the Magarpatta model, though unique in its own context and time, and despite
of being replicated as a model nearby, is probably not a prototype that can be adapted
everywhere. But the project offers multitudes of learnings from its inception to realisation.
The project proves to be a harbinger for “inclusiveness” in rapidly growing cities, it may not
cater to everyone at the same time, but it acknowledges the presence of multiple actors in city
lives, of different age, gender, physical and economic capacities and involves them in the
planning process, giving a user generated final product. This could be the premise of a new
form of designing our cities.

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4.0 BIBLIOGRAPHY

Basu, D. & Dalal, S., 2007. The amazing story of Magarpatta City [Interview] (11th January

2007).

Chiaravalli, L., 2012. Centre for Public Policy Research. [Online]

Available at: www.cppr.in

Dhere, A., 2012. Study of special economic zone in Pune city. Pune: s.n.

Jain, P., 2016. Human Settlements : Magarpatta city. Leuven: s.n.

Johnson, C., 2011. Indian cities : Managing urban Growth. Metropolis, pp. 88-95.

Keeton, R., 2011. Economic cities : Magarpatta , India. In: M. provoost, ed. Rising in the

east. Amsterdam: Sun, pp. 280-302.

Magar, S., 2011. Magarpatta Story: Farmers Building Sustainable Cities. IIC, 29 July.

Magar, S., 29 July 2011. Magarpatta Story: Farmers Building Sustainable Cities, BCF CSR.

Delhi, IIC.

Sami, N., n.d. FROM FARMING TO DEVELOPMENT:AN ALTERNATIVE APPROACH TO

REAL ESTATE DEVELOPMENT IN PUNE, INDIA. Michigan: University of Michigan.

Unknown, n.d. Magarpatta city : an inclusive model. [Online]

Available at: http://www.architecturelive.in/

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