MIDC: a large provider of industrial infrastructure

THE MAHARASHTRA Industrial Development Corporation (MIDC) pulled off a coup of sorts last month by getting the prestigious MIT Media Lab to set up office at the MIDC-developed Samruddhi Venture Park in Mumbai. This is just one of the many projects that MIDC has executed over the last few years in the information technology sector.

The Samruddhi Park is located opposite SEEPZ (Santa Cruz Electronic Export Processing Zone) which is an advantage and is a one lakh sq. ft. building. According to Mr. Jayant Kawale, CEO, MIDC, ``MIDC Media Lab is going to direct all its operational research projects throughout India from Mumbai. You also have offices of TiE and Nasscom in this building. Since that is going to be the hub of all research based activity in IT and new technology, this place is going to be very attractive. They will take up 5,000 sq. ft. and may have a laboratory in the Millennium Business Park (also developed by MIDC), Navi Mumbai.''

MIDC is the nodal agency of the Maharashtra Government for industrial development and has successfully developed more than 200 industrial parks of which 18 have been dedicated to IT. The IT projects include Hinjawadi (Pune Infotech Park), Navi Mumbai (Millennium Business Park), SEEPZ ++ and Samruddhi Venture Park at Andheri. An IT Tower 2000 at SEEPZ is also coming up`. It is also working to set up parks in other sectors.

The slowdown in the IT sector, however, has taken its toll and in the last six months, enquiries and sales have reduced. But this was compensated by sale of land in places like Pune. ``Bigger companies are investing in land with a view to expanding later. So their long term plans are not affected and the bigger companies are at least bullish.'' said Mr. Kawale.

There are obvious comparisons made between MIDC and TIDEL (in Tamil Nadu), Hi-Tech City, Hyderabad, and other similar parks. Mr. Kawale said, ``The other parks, TIDEL, ITPL Bangalore, Hi- Tech city have all been one building parks while MBP is a 32 building colony. We score on ambience and the second factor is the price. We were selling MBP at Rs. 1,300 per sq. ft. against Rs. 4,200 for ITBL, Rs. 2,700 for Hi-Tech and Rs. 3,200 for TIDEL. We believe that if we sell cheap initially, we can expand later.''

MIDC started with developing industrial land in a small way and in 40 years has developed almost 50,000 hectares (1.5 lakh acres). Today, it is the largest industrial infrastructure provider with Gujarat coming next with only a fraction of MIDC's scale of operations.

Over the years, MIDC's developments have grown. ``Initially it was about 100 acres; today our biggest notified area has been Sinnar - 7000 hectares which will be a huge township with its own airport'', said Mr. Kawale.

Land development costs MIDC Rs. 150-200 per sq. m. and sells at Rs. 1,200 per sq. m. While it seems a profitable activity, according to Mr. Kawale, it is not and ``it is ploughed back into development of new areas. So, for the last 30 years, we have not resorted to any borrowing or government support for cash. Only this year, we borrowed because of our deferred payment scheme in the Millennium Park where we sank Rs. 250 crores payable over seven years. But we have already got post-dated cheques of more than Rs. 100 crores.''

MIDC has two revenue streams - land and water. Land around Mumbai was acquired over 30 years ago and appreciated considerably. Water has been profitable because MIDC's supply is reliable having invested in a couple of dams 20-25 years ago. So the cost of water is among the cheapest in all states - SIPCOT in Tamil Nadu charges Rs. 15 for untreated water for 1,000 litres and MIDC charges around Rs. 11 for treated water. Andhra Pradesh and Karnataka charge Rs. 30. ``In spite of our water being cheap, we are still able to make good profits. The entire infrastructure from construction of the dam, pipeline, water treatment and distribution is done by us,'' said Mr. Kawale.

MIDC sells water worth around Rs. 280 crores annually and land development fluctuates depending on the scenario from Rs. 250-300 crores earlier to Rs. 50-60 crores now.

So far, MIDC has avoided getting into airport projects having only set up air-strips meant for operational flights. ``We have been trying to convert these into regular airports and are getting some success in Kolhapur. Jet Airways has agreed to start regular air service there. The airport will be upgraded as per DGCA and Airport Authority standards. The revenues may not justify our expenditure, but the industrial area close by will sell better if there is a regular airport. Many of these things cannot be calculated in terms of actual benefit.''

MIDC is now expanding its activity having zoomed in on newer areas including biotechnology (BT), wine-making, floriculture and food processing - ``We have a lot of strength in BT with some of the biggest players located in Maharashtra like Serum Institute of India and MAHYCO,'' said Mr. Kawale.

MIDC is talking to MAHYCO who have a facility near Jalna to set up a Ag-Biotech Park there. This would enable smaller players to use their facilities. MIDC is also planning to set up a park in Pune for pharmaceutical biotechnology-life sciences and has set apart 150 acres in Phase II of its Hinjawadi IT Park for this. In fact, some land is set aside for a BT institute which could come up with Pune University in collaboration with a Swedish University. Also, in the offing is a central GMP (good manufacturing practices) facility - to be used by smaller players.

The Phase II of the Hinjawadi IT Park will cost Rs. 100 crores of which the BT park will occupy 150 acres and the IT park about 600 acres.

Wine park

MIDC is setting up a wine park near Nashik and Sangli - both large table grape growing areas. ``The farmers there are adaptable and approached us on their own. A joint stock company will provide a common facility for crushing, labelling and bottling,'' said Mr. Kawale. The wine park will house a mother unit and the individual plots with farmers using the common facilities for storage.

A floriculture park near Pune - a major floriculture centre - is also on the anvil. MIDC's land at Talegaon is one of the major locations where this activity is taking place.

For the floriculture park, MIDC is contemplating a JV with a company and will set up common facilities for post harvest - sorting, grading, cold storage and reefer vans. But farmers will set up their own greenhouses.

MIDC's project to set up of an orange processing food park at Butibori near Nagpur has already been approved by the Ministry of Food Processing (MoFP) which has given assistance of Rs. 5 crores. Similar parks are planned in western Maharashtra which are being developed with MAIDC (Maharashtra Agro Industries Development Corporation) which is piloting it.

Ramnath Subbu

in Mumbai

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