LAVASA

LAVASA CASE-A HILL CITY OR A GARGANTUAN MESS??

THE CREATORS- HCC & LCL

Hindustan Construction Company Ltd

HCC is an integrated group spanning Engineering & Construction, Real Estate, Infrastructure and Urban development & Management. The HCC group of companies comprises HCC Ltd (Engg & Construction), and its subsidiaries HCC Real Estate Ltd, HCC Infrastructure Ltd, Lavasa Corporation Ltd. and Karl Steiner AG, a recent acquisition in Switzerland. It was founded by Industrialist Seth Walchand Hirachand in 1926

AJIT GULABCHAND-PRESENT MD OF HCC & CHAIRMAN OF LCL

LCL: LAVASA CORPORATION LIMITED

Lavasa is a private hill city being developed by HCC.

It is located in the western region of India in the picturesque landscape of the Sahayadri Mountains.

The master plan is done by internationally renowned design consultant HOK, USA. The master plan is based on the principles of New Urbanism & Biomimicry.

LAVASA CITY MODEL!

ACCOLADES:

VISION STATEMENT

The HCC vision. Seeing into the future "To be the Industry Leader and a

Market - Driven Engineering Construction Company renowned for excellence, quality, performance and reliability in all types of construction“

http://www.hccindia.com/mission.php?page=about_us&id=1

THE LAVASA VISION- LIVE,WORK,LEARN & PLAY IN HARMONY WITH NATURE

“So we at Lavasa thought, as India accelerates we should take a moment to pause and question how this nation will live. It is an unchangeable fact that the India of tomorrow will find expression in its cities. We can question and change the future that will be lived… Its time we started this new conversation now!” http://www.lavasa.com/high/vision.aspx

MISSION STATEMENT To be a leading construction company in the global market. To become the customers’ most preferred choice by attaining excellence

in quality and timely completed value added projects. To continually innovate, develop and adopt state-of-the-art technology in

methods and materials to enhance productivity and cost effectiveness. To continually improve the competence of our people and make them

proud to work at HCC. To build a safety culture aimed at continually reducing the frequency

severity rate towards achieving zero accidents. To identify and mitigate all the environmental impacts arising from our

activities and comply with applicable environmental norms. To develop and adopt eco-friendly concrete technology to reduce one

million tons of greenhouse gas (GHG) emissions in the next 10 years. To contribute to the development of the local community and society at

large as a part of our corporate social responsibility.

http://www.hccindia.com/mission.php?page=about_us&id=1

CORE VALUES You can take a person out of HCC but you can

never take HCC out of the person. Such is the strength of spirit instilled into every

HCC employee. Bold, determined, committed and quality conscious at all times - these values are the driving force behind this organization, defining them and guiding them every step of the way.

 Quality is a beacon that inspires them in everything they do, and a facet which is carefully nurtured at HCC throughout. Their quality management systems ensure that deadlines, budgets and construction standards are met.

They believe that their people are the backbone of the organization and knowledge assets. They are serious about their corporate and environmental responsibilities and always keep in mind to safeguard their employees.

SO WHAT IS THE LAVASA CASE?? Thousands of displaced and affected people of various

dams and projects from across Maharashtra; adivasis, dalits, farmers, fish workers, farm labourers, unorganized workers, hawkers and basti dwellers have been raising their demands for justice and rehabilitation and questioning the current paradigm of destruction and displacement, in the name of development. There are various controversies which have taken place due to this project such as land acquisition, potential conflict of interest, environmental impact,water resources, loan scam, illegal quarrying and so on.

However, Company officials term these allegations “baseless.

PROBLEMS AND ETHICAL ISSUES:

1) Unlawful Acquisiton of Private Land: A report by the Maharashtra environment department claims 600 hectares (6.0 km2) of land bought by LCL was purchased from farmers who had been granted it by the Indian State. Because of the way in which the farmers obtained the land, three fourths of the purchase price should have been paid to the State. The report states LCL only paid 2%.

I had over 18 hectares. I sold it to a private agent in 2002 against

five cheques totalling Rs 580,000. All of them bounced and I

haven’t received a single penny for my land which is now in the

name of the company. I now work as a chowkidar in Pune

—GYANESHWAR VISHNU SHEDGE,

a 60-year-old-villager of Mugaon

I have somehow managed to hold onto my 19 hectares. I

won’t part with it. Some representatives of the company

came to survey my land but I took away their survey machinery. I have three

daughters and one son to support

—LEELABAI BHADU MARGALE,

a 33-year-old widow of Mugaon

I have about seven hectares, which I refused to sell to local agents. They threatened to get

me killed and I had to run away and stay in the forests for six

months

—DAGDU BHAVDANI, a 65-year-old villager of

Mugaon

VICTIMS

SPEAK

PROBLEMS CONTD…2) Allocation of Maharashtra Krishna Valley Dam

Corporation(mkvdc) land: Ajit Pawar, the then chairperson of mkvdc, sanctioned 141.15 hectares of mkvdc’s land to the company to build 4 private dams. Lavasa also bought 98 hectares (0.98 km2) of land without license.

3) Political support & easy sanctions:According to ‘Annual Return of Lavasa Corporation Ltd’ acquired under RTI, as on 2004, Sule Bhalchandra Sadananad and Surpiya Sadananad, son-in-law and daughter of Union agriculture minister Sharad Pawar, jointly held 749,000 equity shares and 2.9 million redeemable preference shares of LCL. Various departments of the Maharashtra government gave 31 no objection certificates to the Lavasa project within a year.

PROBLEMS CONTD…4) Project has not taken Environmental Impact

Assessment from union MoEF: During the period from March 15,2003 to September 12,2006 LCL did not obtain any clearance. The construction activity is unauthorized, as the project had violated the EIA notification of 1994, 2004 and 2006. MoEF has described the operations of Lavasa as “hill cutting” and “quarrying”.

5) Depletion of water resources: LCL has constructed 1 private mini dam on Warasgaon dam. Experts warn that water scarcity will not remain limited to downstream villages; it will also hit Pune city.

PROBLEMS CONTD….

6) Displacement of the locals: There is no proper plan of action for the displaced locals. Those who have been displaced to the upper hilly regions are facing a shortage of even basic amenities like water. Further these localites have not been compensated. There is no rehabilitation plan of action in order.

7) Indulgence in bribery: There have been reports that Lavasa Corporation have been benefiting from loans obtained through bribery. Lavasa however has rubbished these reports too by denying them.

ANALYSIS OF VALUE STATEMENTS

VALUE SYSTEM

TERMINAL VALUE:A lifelong goal or objective that an

individual or an organization seeks to achieve

INSTRUMENTAL VALUE:A mode of conduct that an individual seeks to follow

TERMINAL VALUES:

Terminal Values viz-a-viz Vision statement:

i. To be the industry leader (leading construction company)

ii. Excellence

Terminal Values viz–a-viz Mission statement:

i. To become the customers’ most preferred choice.

ii. To make employees proud to work at HCC.

iii. To build a safety culture. iv. To reduce one million tons

of greenhouse gas (GHG) emissions in the next 10 years.

v. To be socially responsible as a corporate entity

INSTRUMENTAL VALUES: Integrity: We act with integrity and communicate honestly and openly and

deal with people and issues openly, directly and respectfully. Responsibility: We are accountable for all of our own actions, these include safety,

protecting the environment, and supporting our communities and act in a way that connects the company’s actions and the well-being of the community

Unity: We work together as a team and are committed to excellence and

innovation and promote teamwork among groups; discourage “we vs. they” thinking.

Respect: We respect each other and celebrate our diversity and Foster

a climate of trust and openness between people. Leadership: We develop leadership potential. We need the best leaders so

that we can continue to be number one and stay competitive. Quality: Quality is at the centre of everything we do and we set the highest

quality standards for ourselves.

ANALYSIS OF CASE: DIAMOND MODEL

This approach looks at clusters of industries, where the competitiveness of one company is related to the performance of other companies and other factors tied together in the value-added chain, in customer-client relation, or in a local or regional contexts

1. Purpose: Lavasa is a new model of city development, created by HCC in response to the Government of Maharashtra’s invitation to develop a new hill station. They wanted to build new cities that are sensitive to the environment and are intelligently planned for a fast evolving future presents.

2. Values:They believe the road for success is long and responsibility towards development is huge. They have taken it upon themselves to invest all their energies in ensuring that the fruits of their labour reach every corner of India. To become the customers’ most preferred choice by attaining excellence in quality and timely completed value added projects. They also believe that they need to continually innovate, develop and adopt state-of-the-art technology in methods and materials to enhance productivity and cost effectiveness and also continually improve the competence of their people and make them proud to work at HCC.

3. Standards and Behaviours-At HCC, they have constructed a culture that encourages people to venture beyond the brief and think big. Their work places and project sites are the most sought-after training grounds for young engineers. With strong project management capabilities and creating innovative construction solutions being their core competencies, learning on the job is a given hit.HCC gives their employees the freedom to execute their ideas and pursue the dreams that will help their career grow. They try to keep an environment that encourages learning, development and growth. The company also keeps in mind to be environmentally and socially conscious in all its undertakings and work on projects that are ecologically and socially responsible. At HCC, they share a common desire to make this world a better place to live in. 

4. Strategy and Scope- The development of Lavasa is planned across four town centers. Each town center of Lavasa has been planned not only to capture its own special charm but also to blend holistic fusion of country and cosmopolitan life experiences. The plan ensures provisions for the upwardly mobile segment of society, as well as the ever-evolving needs and demands of the entire socio-economic strata. Lavasa Future Cities is an initiative by Lavasa, in association with Times of India, borne of a vision to build new cities that are sensitive to the environment and are intelligently planned for a fast evolving future presents.

ANALYSIS OF CASE: STAKEHOLDER MANAGEMENT

STAKEHOLDER MODEL

PRIMARY STAKEHOLDERS

ACTIVE

PASSIVE

SECONDARY STAKEHOLDERS

ACTIVE

PASSIVE

STAKEHOLDER’S MODEL AT A GLANCESTAKEHOLDER

PRIMARY

SECONDARY

ACTIVE PASSIVE IMPACT

Local Community

x x -ve

Environmentalists

x x +ve

Customers x -ve

Employees x x -ve

Creditors x x -ve

Government x x both

Owners x x -ve

Media x x +ve

Shareholders x x -ve

ANALYSIS OF CASE: MENDELOW’S MATRIX

The Mendelow’s Matrix is a model used for stakeholder mapping wherein stakeholders are mapped into one of the four quadrants which are created by the x and y axes. The stakeholders’ power to influence organization’s decisions is recorded along the x-axis while the stakeholders’ level of interest in the organization is recorded along the y-axis. Moving rightwards signifies a higher power to influence organizational decisions and moving upwards signifies a higher level of interest in the organization. Thus the four quadrants formed by a combination of the level of interest in the organization versus the power to influence organizational decisions, starting clockwise are Observers, Key Players, Bystanders and Crowd.

MENDELOW’S MATRIX AT A GLANCE

Observers Key players

Local community organizationSuppliersEmployees CustomersCreditors

GovernmentMediaEnvironmentalistsSpecial interest groupsOwners

Crowd Bystanders

General citizens Consumer advocates

HIGH

Level

Of

interest

LOW Level of influence HIGH

CURRENT SCENARIO NAPM leader Medha Patkar has stated at a press conference in Pune that

the Lavasa Corporation has committed contempt of court by starting construction and development activity in the project area - violating the order of the Bombay High Court. The MoEF had issued a status quo over the project. Lavasa sought from Bombay High Court vacation of this order; however the court rejected the plea. The situation cannot be interpreted in any other way but that the construction and development activity carried out by Lavasa amounts to contempt of court.

Hit hard by the fund crunch that resulted from a stop on the construction work at its hill city project, LCL is looking at various options, including a moratorium on loan repayments, to deal with the crisis at hand. A Lavasa Corporation official, on the condition of anonymity, told Business Standard, "The company has debt of about Rs 1,100 crore, and it has raised Rs 800 crore through bonds. It is exploring the option of seeking a moratorium from lenders on the repayment of loans. Besides, the company may consider pledging a portion of 12,000 acre of land.” The official said the board would take a call on raising funds from domestic banks and financial institutions. The official ruled out a fresh issue, given the current economic situation and the fact that the company was facing criminal proceedings filed by the state pollution control board.

Angel Broking, in its analysis of HCC's second-quarter results, said the revenue had declined 6.3 per cent year-on-year to Rs 828.6cr, against an estimate of Rs 946.5cr, owing to a slowdown in execution. According to the management, the decline in revenue was due to the delay in granting approvals for environment clearances by the government, land acquisition problems and the overall slowdown in decision making. The infrastructure sector is also facing strong headwinds, including a slowdown in order activity, due to the shortfall in investments in the sector, increased commodity prices and a high interest rate scenario.

As far as the legal proceedings are concerned, Chief judicial magistrate (CJM) N T Ghadge deferred the hearing against Lavasa Corporation and 15 others in a criminal complaint filed by Maharashtra Pollution Control Board (MPCB) alleging environment violations till March 17,2012. Nine Lavasa officials filed a plea for seeking personal exemption for not remaining present before the court through their lawyers which was considered by the court. The court also considered the plea of MPCB lawyers Sadanand Deshmukh and S G Gawli for re-issuing process against five Lavasa officials as the same could not be served on them for various reasons. The lawyers said one of the suspects had obtained a stay order from the Bombay High Court restraining the court from conducting trial against him, as he had challenged the order of issue process. The lawyers made a statement that Lavasa will also challenge the issue process order before the high court. They pleaded to stay the proceedings before the court till the final decision of the various petitions.

SOLUTIONS & SALVAGING ACTIONS EXECUTED BY LCL: As a responsible corporate citizen Lavasa has taken

steps to increase the literacy rate. Efforts include a well-equipped school that has been handed over to the Zilla Parishad. To equip these schools, Lavasa has also instituted a teachers' development program with the Government of Maharashtra.

Lavasa has also taken it upon itself to distribute uniforms. Other initiatives include conducting Personality Development Activities and Aptitude Tests for students.

As a step towards integrating the villagers with nature and sustainability and empowering them to manage the natural resources at their disposal in a better way, the Nisarg Shala concept has been introduced to empower the locals to managing the natural resources at their disposal in a better way.

PRESS CONFERENCE STATEMENTS MADE BY AJIT GULABCHAND:

“Lavasa is the need of this country. It is one of the models of developing future hill cities. Mistakes happen in all big projects, but we are open to correction of environmental mistakes in Lavasa and evolve the model further,” he said. “The Government of Maharashtra wanted this project; we came forward and invested Rs 4,000 crore in Lavasa. Environment and its effect on civilisation is a fairly new science and going by that, no project can be called 100 per cent perfect.”

STATEMENT IN RESPONSE TO ALLEGATION THAT LAVASA WILL REDUCE PUNE’S WATER SUPPLY: He denied allegations that Pune was getting less water due to Lavasa. “Pune city already gets 1,100 cubic feet water per day, which comes to almost 1,100 litres per head. Not only is it the highest for any city but is also much more than the specified standards. Lavasa would require just one per cent of what Pune consumes.”

STATEMENT IN RESPONSE TO ALLEGATION REGARDING THE INVOLVEMENT OF POLITICIANS: “Sharad Pawar had identified the landscape from the point of a potential lake city and not as a developer. There is nothing political about Lavasa.”

STATEMENT AFTER INSPECTION OF FORESTS : Wrapping up its three-day visit to the Lavasa Lake City near here, the Central team deputed to look into alleged violations in the project said no large-scale destruction of forest had taken place at the controversial site."Prima facie there does not seem to be a large-scale destruction of forest," Ministry of Environment and Forest Committee Chairman Naresh Dayal told reporters at the end of the visit of the 11-member team to the site which has been in the eye of a controversy over violation of green norms.

CONCLUSION:

LCL has greatly suffered because of the negative publicity. Share prices have plunged downwards by nearly 70% with the work coming to a halt. The company has a debt of 1100 crore and cannot even consider a fresh issue again with criminal proceedings against it and discontent among existing shareholders. It is thus exploring other avenues to meet the present financial crisis looming over it. Customers who earlier booked villas in the urban city of Lavasa are now apprehensive and withdrawing orders on seeing that LCL has not only breached several legal requisites but also sabotaged the regular lives of the tribe living there under the name of “sustainable development” in the region. Ironically LCL, which adopted unethical practices to boost its bottom line has turned out to lose and suffer the most.

The first step in the evolution of ethics is a sense of solidarity with other human beings. -Albert Schweitzer

GRACIAS!

PRESENTERS: GROUP I

ANMOL AGARWAL(AOO1) NATASHA AGARWAL(A002) VIJEETA BALASUNDARAM(A005) JATIN BAWA(A006) DEVIN BHATIA(A007)