MWC featured by Chosun Ilba, Korea

June, 2016

Chosun Ilbo, June 20th, 2016: Mahindra World City is a 35km-drive southwest of the airport in Chennai, the capital of India’s South Tamil Nadu state. The first impression of Mahindra World City, designed by India’s large company Mahindra which is well known in Korea for its acquisition of Ssangyong Motor, is unusual. There is a capacious 6-lane road, not the narrow and rough roads of downtown. The car ride that had been bouncing became quiet and smooth all of a sudden. There were LED streetlights on the sides, not heaps of rubbish, cows and pigs that can be easily found in cities of India.

Mahindra World City is the first of India’s corporate cities created by a company, not the local government. The city is about 6.2㎢ in area, twice as big as Yeouido and comprises not only an industrial complex, but also various infrastructure including houses, retailers, school, hospital and train station.

India’s first company-designed city

In the industrial complex, that takes up about 45% (2.8㎢) of the entire area, are various multinational companies including India’s global IT company Infosys as well as BMW, Timken and WABCO, that are auto making and auto component manufacturing companies; 60 companies, 95% of the 64 resident companies are multinationals. A ten-minute drive away from industrial complex is a housing area with 800 houses with 3,000 residents. There was construction going on for more apartments. Mahindra official said, “Four apartment complexes with capacity for 2500 houses to live in, are in the final stage of construction.” Mahijeet Mischura(41)(Insight Romanization) who is currently working at American enterprise Armstrong International said, “Due to shortened commuting hours, I get to find balance between work and life.”

Around the streets of Mahindra World City, there are three kinds of recycling bins colored red, blue and green. The red one is for plastic, steel, wood, glass; green is for grass, food and drink; and the blue one is for paper only. Food garbage is made into biogas at a factory and used as fuel for shuttle buses. Recycled water from the sewage process is used for gardening within the city.

State government entrusts Mahindra with development.

The construction of Mahindra World City started way back in the 1990s. A port city, Chennai, near the Bay of Bengal, was rising as "India’s Detroit." From 1995, global auto companies such as Ford, Hyundai Motors, BMW, Mitsubishi Motors, Mercedes Benz, and Nissan moved to Chennai. The Tamil Nadu state government planned to build a manufacturing base of auto components to support global automakers. However, after a while when the local economy grew fast, the plan to make only a components manufacturing base became much bigger - to build another huge independent industrial complex.

However, the state government back then did not have any expertize nor finances to build infrastructure. It decided to take an 11% of the World City share and gave the rest, 89%, to Mahindra Group to have them develop the city.

Mahindra invested Rs.2700 crores (about KRW 471 billion) to build the infrastructure, and also began to attract investment in 2002. For the first two years, there were no resident companies that decided to invest and move in, but the city saw a turning point when Infosys moved in in 2004. With its good residential conditions and environment becoming known, global companies moved in too.

Mahindra World City’ in Chennai, the state capital of Tamil Nadu, South India. Students are coming home from school within the World City (large photo, top).

Mahindra Word City was created by Indian company Mahindra, and comprises an industrial complex, residential and commercial areas, school, hospital and train station. (small photo, at bottom) Industrial complex within the city; there are 64 companies including BMW (small photo, above)

Mahindra Group· Local government· Resident companies: All win-win

COO of Mahindra World City, S Chandru said, “Mahindra World City is a win-win model for the company who developed the city, the state government, and the resident companies.”

The local government is seeing profits in terms of tax revenue and employment without making much effort in infrastructure. Current employment reaches 38,000. C.V. Sankar, Principal Secretary of Industries Department for the Government of Tamil Nadu said, “Our aim was to attract the investment of global companies to increase tax revenue and employment, and this goal came true.” The state government of Tamil Nadu appointed Mahindra World City as a SEZ (Special Economic Zone) and a DTA (Domestic Tax Area) that can benefit from tax cuts.

Mahindra have managed to fund the building of basic infrastructure by selling 99-year land use rights at KRW 500,000 for 3.3㎥ each. Also, they profit from selling houses within the city, renting stores and managing facilities (lighting, cleaning and securities). Mahindra Group said, “Compared to the investment, annual income has increased to 15% ...4~5 years from now, we will be able to pay our debt and distribute profits to stockholders.”

For resident companies, it is beneficial to own lands with infrastructure already facilitated such as water supply, electricity and gas. In India, usually land ownership is unclear, and alterations of land use are difficult. Mahindra Group is currently constructing a new Mahindra World City in the state of Rajasthan that will be twice as big as the current Mahindra World City.

Source: Chosun Ilbo