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MUMBAI

THE HINDU ● BUSINESS LINEMONDAY, JUNE 21, 2010�2

Pune is one of themost industrially vi-brant cities and a majorinvestment destinationfor domestic and globalcompanies. It has beenable to attract big ticketinvestments in bothmanufacturing and ser-vices industries. Thecity’s intrinsic strengthis, however, embeddedin the strong institutionsincluding educational,research, cultural and

social that are located here. These have contributed in ithaving become a crucible for high quality, multifacetedtalent and knowledge resources. With rapid scaling up ofthe city’s physical infrastructure which is presently un-der way, I am confident that Pune will soon become amodern metropolis and a showpiece of India in the 21stCentury.

- Mr Baba Kalyani, CMD, Bharat Forge Ltd

Pune is a city of great stability, especially in its middleclass population. The workers are well educated andmost are locally available,which gives the industrytremendous scope forgrowth. Being aneducational hub, is a cityof young people withmany old and reputedinstitutions like College ofEngineering Pune whichis the second oldestengineering college of thecountry. Apart from beinga leading engineering,automobile & ITdestination, it also has asuitable weather which isa major reason for industries and people to settle downcomfortably. There a tremendous amount of supportfrom the society. The new Pune has also been a result ofdecongestion of industries in Mumbai.

- Mr Sanjay Kirloskar, CMD, Kirloskar Brothers Ltd

� WHAT THEY SAY

Alka Kshirsagar

With the presence of auto majorssuch as Tata Motors and BajajAuto for over four decades,

forgings maker Bharat Forge and certifi-cation and testing facility the Automo-tive Research Association of India(ARAI), the city is certainly no strangerto the auto industry.

With a basic supply chain in place,combined with factors that support theproliferation of industry, and supple-mented by efforts by the State govern-ment to attract leading internationalauto companies, it is no surprise that thecity is fast emerging as a global auto hub.

HOW IT BEGANThough Mercedes Benz was the first for-eign original equipment manufacturer(OEM) to set up base here in the midnineties, the tipping pointthat heraldedthe new avatar Pune, came almost a dec-ade later when in quick succession, threeglobal majors – General Motors, Volks-wagen and Fiat – announced plans to setup manufacturing units in the region.

Close on their heels, Mahindra andMahindra bought out a huge tract of landto establish a greenfield unit to make arange of vehicles, including trucks, un-der a joint venture with Navistar. Tocomplete the circle, Mercedes too decid-ed to move out from its rented premisesin the Tata Motors campus and set up anew factory to make its range of cars,trucks, and now, buses.

In the five-year span beginning 2007,the Chakan-Talegaon-Ranjangaon beltwill have seen investments of some Rs16,000 crore in greenfield car makingunits alone.

IN FULL STEAMAll the plants have begun production,the latest to go on stream being Ma-hindra Navistar Automotives Ltd whichbegan production of the 25-tonne trucklast week. At the installed capacity cur-rently planned, the area has the capa-

bility to churn out close to 15 lakh four-wheelers, almost half a million enginesand nearly three million two and three-wheelers annually.

VW’s plant has an installed capacity of110,000 units annually, and currentlyproduces its first hatchback Polo andGroup company Skoda’s car, Fabia, here.The Vento, the sedan specially devel-oped for the Indian market, is also due tocome out from here by September.

GM’s plant at Talegaon has a capacityof 140,000 units and it is where the com-

pany makes Spark and the Beat. Therange of vehicles under its alliance withChina-based SAIC will also be madehere for which additional expansion for300,000 vehicles is on the cards.

Mercedes produces its range of C, Eand S-Class cars at Chakan, the Actrostruck and has recently begun productionof buses. It is also setting up a unit tobuild the body for the intra-city bussoon. Italian auto maker Fiat, whichmade its second entry in the Indian mar-ket in association with Tata Motors(which itself makes over half a millionpassenger cars, multi-utility vehiclesand a range of commercial vehicles at itsPimpri plant) has its shared manufactur-ing facility at Ranjangaon. Built with aninvestment of over Rs 4,000 crore, theplant can make 200,000 cars and300,000 engines annually. Here is whereFiat began the production of the Palio inmid-2007 and has since rolled out theLinea and the Grande Punto, and alsoFiat’s 1.3 litre Multijet diesel engines and1.2 & 1.4 litre Fire gasoline engine.

In the two-wheeler segment, BajajAuto has two plants in the region, thethird in Aurangabad, and is slated tobuild the fourth at Chakan for the smallcar it is building in association with Re-nault.

COMPONENT INDUSTRYWith so many OEMs in the region, manyof whom have dedicated vendor parks,can the auto component industry be far

behind? Tyre major Bridgestone has saidit will set up its second plant in India atChakan with an investment of Rs 2,600crore to make radial tyres for commer-cial vehicles. Apollo Tyres, the MindaGroup, Lumax, Autoline India Ltd,Bosch Chassis Systems and KalyaniLemmerz are amongst those who al-ready have manufacturing facilitieshere.

In recent times, the business potentialboth for domestic consumption as wellglobal supplies has lured several interna-

tional players to the region as well. Ital-ian brake discs systems maker Brembo,German manufacturers Norma and theZF Group, have established plants herein the last year or so.

More recently, Spanish company Ges-tamp Automotive began operations withthe supply of press parts to VW, whileEgyptian company MCV is also slated toset up a bus body building facility at theMercedes Benz premises.

From all indications, more will bearriving!

Auto majors on the fast lane

The Skoda plant of Volkswagen in Chakan, Pune. — Paul Noronha Bajaj Auto plant in Chakan. — Paul Noronha

Anil Pharande

No doubt, the developmentof a well-planned satellitetown adjoining an over-

crowded city like Pune will help de-congest the parent city. However, amore interesting fact is that real es-tate corridors such as the Pimpri-Chinchwad Municipal Corporation(PCMC) actually have higher realestate appreciation potential thanthe central city. This is because theyare growth areas where demand ris-es steadily and quality supply is stillpossible.

In such growth corridors, thegreatest advantage to the investor isthe relatively lower entry cost, evenwhile the potential growth in pricesis much higher. Self-use buyers dofactor in the property investmentpotential of satellite towns such asPCMC; however, what attractsthem is its superior infrastructure,planned development and higherdegree of natural ambiance.

The Pimpri-Chinchwad NewTownship Development Authority(PCNTDA), popularly known asPradhikaran, has been a major cata-lyst in the planned development ofthe area, transforming this once ex-clusively industrial zone into one ofthe finest residential and industrialdestinations in country.

Over the last three decades sever-al thousand acres have been ac-quired, developed, zoned, broughtinto the jurisdiction of the PCMCand PCNTDA, and made availablefor residential and commercial pur-poses.

The development of Pimpri-Chinchwad spans the entire gamutof Urban Town Planning. These in-clude multi-lane roads including theSpine Road, strategically located fly-

overs, public parks and urban fores-tation, residential zones includingMIG and LIG Housing on a publicprivate partnership basis, ample po-table water supply and drainagenetwork.

Simultaneously, other servicesectors have also grown rapidly,

particularly schools and colleges.There are now over 25 colleges inthe area, offering graduate and post-graduate education in virtually ev-ery discipline.

These developments have attract-ed to Pimpri - Chinchwad some ofthe world’s largest companies in the

automobile, IT and engineering sec-tors.

It will also become home to one ofIndia’s largest International Con-vention Centres, on a 200-acre plotat Moshi, just off the Pune-Nashikhighway. The PCMC and similarmodern satellite towns have superi-

or real estate appreciation potentialfor a variety of reasons. Just likeeverywhere else, Pune propertyrates respond primarily to the com-mon denominator of demand andsupply.

Residential real estate demand iscreated when an area has the rightmix of employment opportunities,good infrastructure and the poten-tial for an ambient, stress-free life-style.

CONNECTIVITYAn additional prerequisite for de-mand is connectivity to the centralcity, without which residents in thesatellite town would be, for mostpurposes, cut off from familiar areasand resources in the main city.

• The PCMC offers ample con-nectivity to Pune via road and rail

• Its industrial and business zonesgenerate countless jobs each year

• Infrastructure is vastly superiorto what it is in central Pune

• Unlike central Pune, areas likePradhikaran offer modern townshipproperties, which are now widelyrecognised and accepted as the newresidential property paradigm

The Pimpri-Chinchwad Munici-pal Corporation is an example ofhow a satellite town can surpass theparent city in terms of property in-vestment potential as well as resi-dential lifestyle-quotient.

In Pradhikaran as well as the restof PCMC, the commercial, retail andresidential property markets worksymbiotically to create a winningproposition for both real estate in-vestors and end users from Pune andbeyond.

(The writer is President, Credai(PCMC) and Chairman, PharandeSpaces)

The lure of a model town

A view of the artificial lake in the verdant Tata Motors’ facility at Pimpri-Chinchwad, Pune. — Paul Noronha

Ritu Harish Goyal

When one of theworld’s leadingprinting machine

manufacturers launched itseco-friendly wide formatprinter in mid-2009, the firstmachine it sold in WesternIndia was not in Mumbai aswould have been expected,but in Pune.

Going by the company’s fig-ures, the rest of the Maha-rashtra region has purchasedmore machines than any oth-er State in the country, withPune at the forefront in theadoption of the high-end GoGreen (Latex) technologypromulgated by the printers.

Since 2009, six machines(costing between Rs 40 lakhand Rs 75 lakh) have beensold to printers in Pune alonewhile only two have been soldin Mumbai, leading companyheads to call Pune the ‘Capitalof Latex Technology’.

Though there are no con-firmed figures as the localprinting industry is largelyunorganised, it is believedthat there are over 3,000printers in the city alone,most servicing the large cor-porate base for indoor andoutdoor print needs, includ-ing wide format.

The next question then is,“Is Pune the emerging large

format printing hub of thecountry?”

According to Mr PrashantKhomne, Director, Glob-al5Technologies and businesspartner of the company forthese machines, Pune haswhat it takes to be the toplarge-format printing hub.

“The proximity to Mumbai,the improved infrastructure,lower manpower cost and soon, are reasons why Pune’sprinting industry has grownby 100 per cent, especially inthe last two years,” he says.

SMALLER CITIESHe also believes that im-provements in printing tech-nology have allowed tier-IIcities to participate in the dig-ital printing revolution.

“Digital Printing ServiceProviders (DPSPs) from hereare servicing clients in Mum-bai and other parts of Mah-arashtra thanks to the speedof the equipment and thequality,” he says, a point sup-ported by Mr Amit Bhide,partner at K.C. Bhide Tech-nologies, a digital printinghouse located in Pune.

Apart from serving localclients, they also service cli-ents from nearby districts. MrBhide recalls an incidentwhen a client from Chiplunwanted a print on priority.

He got the design on his PCby 7 p.m., and two hours later,the completed material wasloaded on an overnight bus toChiplun.

Early next morning, the cli-ent received his material. “Hestill cannot believe that theprinting was done in Puneand delivered to him,” smilesMr Bhide.

GRADUAL GROWTHMr Sunil Phadke, Director,SuAn Digital Images, saysgrowth to the status of an in-dustry has been gradual.

“The growth of digitalprinting, especially wide for-mat, has been due to the riseof the industrial sector inPune over the past seven-eight years,” he says. Cost isalso a big factor in bringingbusiness to Pune.

“Our prices are certainlylower than other parts due tolower cost of setting up in-frastructure and manpower,”he says.

Some of the top printers (interms of quality and quantumof work) boast of a multiplecorporate client base rangingfrom Kirloskar Industries,Cummins, to Mercedes Benzand Wipro and so on.

“All the clients are servicedfrom Pune,” Mr Phadkeiterates.

Success in print and beyond Ritu Goyal Harish

It is an acknowledged fact that inthe last one decade Pune has seenan enviable escalation in realty.

The rise in construction activity hasbeen widely attributed to Pune’s newface as the emerging IT hub of Indiafollowing at the heels of ‘over crowd-ed Bangalore’ and beating Hyderabadthat has recently been overwhelmedwith the Telengana issue.

“Pune is the safest, most stable andmost rapidly progressing realty mar-ket,” says Mr Shashank Paranjape,Managing Director of ParanjapeSchemes, a city-based developer.

“From 2001 onwards, the city wit-nessed a phenomenal growth. But itwas only in 2003-04 that the Punerealty market actually took off,” ex-plains Mr Satish Magar, promoter ofmega township Magarpatta andChairman, Pune chapter of Confeder-ation of Real Estate Developers’ Asso-ciations of India.

“While IT is still the major drivingforce behind the real estate market,the demand and growth has also beenfuelled by other industries. Pune alsohas more favourable conditions forliving as Mumbai and Navi Mumbaiare now largely unaffordable and sat-urated,” he says. According to Mr Ma-gar, Pune has four growth engines —IT, auto, educational and migration.“Migration to Pune from rural Mah-arashtra is on the rise due to the excel-lent demand for skilled and unskilledlabour, leading to the growth of thecity,” he emphasises.

While the global economic slow-down of 2008-09 had some impact onthe Indian economy, Pune’s realtymarket remained virtually unscathed.

According to a study commissionedby PropEquity on ‘The Performanceof the Indian Residential Market’,Pune’s real estate market remainedsteady throughout the period fromthe second quarter of 2008 till thefourth quarter of 2009.

RECESSION LEADS TO RE-INVENTIONMr Magar attributes this to the es-sence of the market. “Pune is not aninvestor driven market. The priceshad never escalated beyond compre-hension that is why the correctionwas also minimal, only about 10-15 percent.”

According to Mr K.P. Baney, Ma-naging Director, Devi ConstructionCompany, the deeper impact of therecession was felt by the commercialsector. “Demand dropped down byabout 90 per cent in this sector,” hesays. As a result of the recession, how-ever, most developers and builders

across the city re-invented their pro-jects to suit the lowered ‘affordability’index of the buyer who was the ubiq-uitous IT professional who felt thedeepest impact of the global economicslowdown.

During the peak of real estategrowth, aspirations were for a largerhouse. Two-bedroom apartmentswere from 1200-1500 sq ft in someareas. During recession, many build-ers cut prices of apartments by of-fering smaller sized tenements.

“Small affordable houses were andare more in demand. Pune real estateprices are always at 13-16 per cent ofprices in Mumbai. So Mumbai build-ers suffered more, money wise, thanPune builders. However, Pune build-ers are used to working on lower mar-gins,” admits Mr Baney.

The mantra became ‘affordable’apartments, smaller, more compactand devoid of frills.

According to PropEquity’s report,the affordable range of apartments(under Rs 30 lakh) went up in thesecond quarter of of 2009 by about5,000 units while the mid-segment(Rs 30-75 lakh) grew marginally. Thestudy also states that the prices ofaffordable housing have stabilisedfrom Rs 2,600 per square foot to ap-proximately Rs 2,300/sq ft during therecessionary period.

GROWTH TRAJECTORYAccording to a recent study, it is esti-mated that Pune will host a popula-tion of one crore in 20 years, and willbe the sixth largest city in India. ItsGDP will be third in the country afterNCR (National Capital Region) andBangalore.

“With such an optimistic growthtrajectory, Pune’s realty market ispoised for growth,” opines Mr Magar.

According to him, almost 40,000dwelling units will be added to thecity’s landscape in this financial year,but demand will be higher than thesupply.

While PropEquity’s study reveals adrastic rise in unsold inventory in thefirst quarter of 2010, Mr Paranjape isquick to respond. “Most unabsorbedstock belongs to unrealistic sites ordevelopers of disrepute. Most of usdon’t have any unsold stock,” he clar-ifies. Mr Baney opines: “In city, and inreasonably good locations, thereseems to be no unsold stock of resi-dential accommodation. May be, flatsbeing constructed in outskirts, orwhere infrastructure facilities arelacking, there may be unsold stocks.But generally the conditions are notthat bad.”

Scaling new heights

Pune’s Magarpatta Cybercity

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