PRESENTATION: LIVE CASE ON LAVASA CITY

SUBMITTED TO: PROF.ANISH PATEL

PREPARED BY: PURVA PITRE

Introduction Key people and organizations involved Key issues and problems Governmental actions Questions-Answers Conclusion

Lavasa is a private,planned city being built near Pune. Lavasa Corporation was originally registered as Pearly Blue Lake Resorts Pvt Ltd on February 11, 2000, with Aniruddha Deshpande, Vitthal Maniyar, and Aniruddha Seolekar as its first directors. The firm changed its name to The Lake City Corporation Pvt Ltd on December 12, 2000, and around 2004 to Lavasa Corporation. Towns : Lavasa is to be built over four or five towns on seven hills. Health: A 200 acre health and wellness center is planned. Sports facilities: Planned sports facilities include a Nick Faldodesigned golf course, a Manchester-branded football academy, and a Hockey Australia hockey academy. Theme park : A theme park over 65 acres (260,000 m2) in size is planned. University : Lavasa will host at least one university. While it was initially to be Oxford-branded, by 2010 this British institution had removed itself from the project.

On October 3, 2002, Supriya Sule, daughter of Sharad Pawar and a member of Lok Sabha, was allotted 12.48 lakh equity shares and 26.64 lakh (6%) redeemable preference shares by The Lake City Corporation Pvt Ltd. The other shareholders included Aniruddha Deshpande, Vinay Vitthal Maniyar, Jyoti Bhale, Arvind Bhale, Hindustan Finvest Ltd, Srivenk Investments Ltd, Venkateshwara Hatcheries Ltd and Janpath Investment and Holdings Ltd. Billed as India's first hill station since independence, the Lavasa project is being constructed by Lavasa Corporation, in which Hindustan Construction Company (64.99%), Avantha Group (16.25%), Venkateshwara Hatcheries (12.8%), and individual investor Vinay Vithal Maniar (6%) have controlling interests. The HCC board approved the Lavasa Corp IPO in Jul 2010. The Draft Red Herring Prospectus for the Lavasa Corp IPO was filed on 13Sep-2010 with SEBI (Securities Exchange Board of India) seeking to raise Rs. 20000 million through an initial public offer (IPO).

The project is linked with Sharad Pawar in three distinct ways:

Stakeholder: The shareholding in Lavasa Corporation in the period 2002 2004 included daughter and son-in-law of Sharad Pawar. Shareholders also included known close associates of the Sharad Pawar such as Aniruddha Deshpande and Vitthal Maniyar. Allegedly, the family's stake was sold for INR 20 billion. Clearances: Lavasa corporation got most of clearances from the state government during times when Sharad Pawar and/or his kin were in relevant positions. Lavasa Coproration signed lease agreements and agreements to store water and build dams with the MKVDC (Maharashtra Krishna Valley Development Corporation) when Ajit Pawar (nephew of Sharad Pawar) was the chairman of MKVDC at the time of granting permissions and signing of agreements. Mentoring: Sharad Pawar himself had conceptualized the project when he took Gulabchand to the present site and presented the idea. This was also while Ajit Pawar was in MKVDC and hence in position to grant necessary permissions. The construction at Lavasa started after Sharad Pawar had assumed the position of Minister of Agriculture (India).

This as-yet incomplete city has been controversial for multiple reasons including: procurement of land, harm to the environment, and loans acquired through political corruption. On 18 January 2011 the Indian Environment Ministry requested that construction cease because the project violated environmental laws. The Varasgaon Dam is an important dam for water supply to Pune city. The reservoir very nearly dries up in the hot summer months leading up to the monsoon. There are claims that water from Varasgaon is diverted to Lavasa and will result in problems in water supply to Pune city. Lavasa corporation is under Central Bureau of Investigation scrutiny for misappropriation of funds through illegally granted loans from LIC Housing. The Central Bureau of Investigation found that an employee of LIC Housing, a housing finance division of India's largest insurer, received INR 3 million from a third party for providing undue favours to Lavasa Corporation.

In November 2010, the Union Ministry of Environment and Forest (MoEF) ordered Lavasa Corporation to stop further construction owing to violation of environmental norms and unauthorised structures erected by it without any clearance during the period 15 March 2003 to 12 September 2006. The notice came shortly after Lavasa Corporation was also named in a bribes-for-loans corruption scandal in which "Money Matters Financial Services" allegedly offered bribes on behalf of several companies in exchange for large corporate loans. Stock prices of Hindustan Construction Company, which holds majority stake in Lavasa Corporation, fell sharply following the controversies. Further, the $436 Million (Rs 20000 Million) Initial Public Offering by Lavasa Corporation has been temporarily put on hold as per Ajit Gulabchand, Chairman of Hindustan Construction Company .

In the third week of December 2010, the Mumbai High Court rejected a petition filed by the Lavasa Corporation and refused to stay the order by the MoEF. In January 2011, the MoEF issued another order alongwith an annexed report of a visit by its "Central Environmental Impact Assessment Committee" as directed by the Bombay High Court. The order/report suggests that there have been gross violations which would make it difficult for the Ministry to approve the project. The Indian ministry of environment and forest ruled Lavasa hill-city as illegal on January 19, 2011 stating the city under construction is going to result at a potential threat to environment Lavasa Corporation Limited, the authority behind construction hailing its 25,000 acres project being the 'first planned hill-city' and 'the largest urban infrastructure development project' in India, responded at this ban saying the ministry overestimated minor points to justify the ban. However the construction came to halt at the ministry ruling.

QUE. How can such well developed infrastructure be utilized?

ANS. The city is now been a well developed one. Crores of investments have been already made. There is no other choice than to continue with the city and start to earn out of it. There are plenty of flats that are not sold yet. The infrastructure that is designed is so very beautiful that people do come to hang out at that place. Strange but true that there is no TOLL NAKA placed there and the entry is totally free. The water sports are opened recently and other sports courts are opened. Its like a big city with all the facilities available, the only thing left is to make the optimum utilisation of it so that whatever huge black money is involved in it can be recovered. The city is specially made for high profile and luxurious class people, and so the marketing strategy has to be made accordingly taking into consideration the kind of services they expect.

QUE. What are the future prospects of it? Wether it should be continued or should be reconstructed for something else?

ANS. The Indian ministry of environment and forest ruled Lavasa hill-city as illegal on January 19, 2011 stating the city under construction is going to result at a potential threat to environment Lavasa Corporation Limited, the authority behind construction hailing its 25,000 acres project being the 'first planned hill-city' and 'the largest urban infrastructure development project' in India, responded at this ban saying the ministry overestimated minor points to justify the ban. However the construction came to halt at the ministry ruling. The decision came in less than 48 hours after the same ministry ordered demolition of a block of flats in Mumbai over rampant corruption. Lavsasa Corp claimed that this order/report misrepresented state of affairs at the site by amplifying minor faults and ignoring the environmental work done. Lavasa Corp however agreed that the report is bound to have a negative bearing on the final decision of government authorities.

Whole of the city is already been constructed so there doesnt exist and option of destruction of whole city, rather government should look forward towards such activities that are taking place in Maharashtra. Be it the case of funds used in the construction of Tamini ghat or other hill stations. All they can do is to properly utilise the area that is being constructed and the facilities being provided for the people those who will be staying there after its completion. The population according to them after completion of construction can be 2,00,000

QUE. What precautions can be taken so that such incidence will not be repeated in future?
ANS. Since this scam has already given its results in the form of heavy loss of funds, corruption, loss for the natural resources, loan problems, problems in water supply and so on, the government should learn a lesson out of it that it should be alert from next time so that this thing doesnt get repeated. For this the govt. should study each and every aspect, its pros and cons as well as its future prospects before starting up new projects. It should also look forward towards the stoppage of any illegal activities that are taking place in the state before it gets too late like in the case of LAVASA. Its the responsibility of govt. to look after that, none is taking their powers for granted and in some illegal issues. This is the live example of SHARAD PAWAR in front of govt. and other members of jurisdiction.

The area that is demarcated for Lavasa is located in the Western Ghats of India, on the banks of the Baji Pasalkar Reservoir behind the Varasgaon Dam which is the primary source of water for nearby city of Pune. The city is coming up on eight large hillocks that surround the elongated Varasgaon Dam Reservoir. Since 1996, the area had been under the care of Maharashtra Krishna Valley Development Corporation (MKVDC) primarily for agrarian developments related to efficient usage of water from the many rivers and tributaries in the region. The most powerful man in Maharashtra, Sharad Pawar & his family were always said to be the benefactors & promoters of Lavasa. Having said that, the way things are in Pune, for half the new projects, the rumour mill says that the Pawars are the real players behind the project.

Many of our top banks are heavily invested in Lavasa. So if Lavasa goes down it will take with it a lot of public money via the banks. The mighty politicos might have already got the gains they desired. A section of the protest seems to have no interest in resolving the matter. They just want to finish off Lavasa & proclaim victory. What if each farmer was given twice the current compensation? Is there a way for Lavasa to exist without environmental damage & water woes for Pune?

LAVASA CITY- DEVELOPMENT OR SCAM?????

At the end there is one question in everybodys mine..