Makkaji Chowk another BMICP? It is reported that both State govt and MCC are committed to hand over the prime land at Makkaji Chowk to the Bangalore based promoter Maverick Holdings and Private limited by this month end. According to the agreement the land is given on lease for 40 years and the promoters will in turn pay an annual rent of Rs.3.24 crore to MCC. After the end of lease period it will be handed over to MCC. Estimated at Rs.40 crore the project envisages construcion of multi-storeyed commercial complex. However the truck owners who have been using the place for parking their trucks have vehemently protested MCC's move to vacate the land forcibly. More over there is some problem of some land owners not being paid. Apart from this M. Lakshmana, Convenor of ACICM has shown with facts and figures how the promoters are fianancially benefited enormously and in the process MCC has been cheated. What he has raised is a serious issue and smells of finacial scam.Only an enquiry will reveal how this has happened. Therefore , the govt is advised not to take any hasty decision in the matter.Even otherwise it will be inadvisible to take up any major project unless it fits in with a Master Plan for Mysore. There is no news about any such Master Plan. In the meanwhile, another major development is the fund expected under JNNRUM which has to dovetail with the Master Plan. Apart from administrative snags even the detailed project report has not been submitted. What has been submitted is only a preliminary report. Thus there is a question mark about release of funds. Moreover another serious consideration has to be bestowed on the advisibility of earmarking Makkaji Chowk for commercial complex. This has to be viewed from the explosion of vehicle population. Already, parkign has become a serious problem and with many roads leading from Bangalore Mysore would be flooded with vehicle. Hence the dire need is of finding suitalbe huge parking requirement. From vision of future, logic and pragmatic considerations Makkaji Chowk is ideal for multi-storeyed parking lot. Concurently, the Sayaji Rao Road stretch corresponding to Devaraja Urs road if made purely as for pedestrian movement, it will be a tremendous asset. It will help to restore the heritage of Devaraja Market since it will avoid noise, smoke and vibration which is caused by vehicles moving in this stretc subjecting the Devaraja market to suffer irreairable damage. It will be a huge tourist attraction and vehicle owners can park their vehicles at Makkakji Chowk which is adjascent and walk down for rest and purchase. The commerce will enormously pick up. If commercial complex is built,it would only create hellish conditions for parking not withstanding the complex provides for parking which is going to be limited. The Chief Minister is well advised to ponder over the facts mentioned and prevail upon MUDA to come out with a Master Plan in the first instance A knee-jerk reaction would be counter productive and would lead to lot of complications. In fact this kind of adhoc decisions have played havoc in Mysore and Sundara Mysore will only be a dream Definitely, BMICP situation shoudl be avoided. Will wise counsels prevail even athis late stage?
I don't know whether the Makkaji Chowk project is similar to the BMIC project in any way. But it needs investigation as to why some people want to hurry through the same and not look at de-congesting the city center. I completely agree with Mr. Bapu Satyanarayana that the Devaraja Market must be conserved as a Heritage structure and that the Sayyaji Rao Road running alongside must be made a pedestrian walkway. As mentioned sometime back, such types of places are found all over the World at the City centre and will help beautify the place as well as the other benefits the author mentions in this article.
The only thing that bothers me is about the person he has named, the convenor of ACICM or the body itself having facts and figures about the project that may help in understanding the issue and whether a scam is taking place. It may well be smelling of a scam but knowing the statements that the ACICM convenor has made in the past about Mysore Airport 7 months ago leading to my questioning his aviation source in a leter to SOM and subsequently his recent reaction in Star of Mysore, once again about the Mysore Airport project, reeks of complete misinformation of aviation and complete and utter nonsense on aviation matters. if this is the way this person collects data, claiming these are facts and figures, god help us all because reality may be some thing else and the convenor may be cooking up something else like he has cooked up so many things about aviation that are false and misinformed. This has also been debated in the other topics on this forum itself.
With respect to whether officials and politicians will wake up to doing the right thing for Mysore or whether they will once again steamroll a project into position is apparent. They don't care about public opinion because the Mysore public shows nothing but apathy and deserves to be steamrolled.
Glad to notice that Bapu has raised the issue of Makkaji Chowka and Cap. Anup has followed it up. Hope more will join the discussion. We at MGP, also known as Galata/Grahachar Parisht has taken a deatiled look and built an economic model to analyse the economics. A brief note on the subject has been given below to take this discussion to the next level. This analysis clearly shows that city fathers have sold our valuable property for a pittance. One need not be an economist to figure this out. Dear Mysoreans if we do not get up now, soon the whole city may be sold to some land sharks.
Depressing economics of Makkaji Chowka For MCC
Dr. Bhamy V. Shenoy, Convener, Mysore Grahakara Parishat
No major financial decision is taken today without developing an economic model even in the case of public sector excepting in some banana republics where modern management practices are unknown. Mysore has four reputed Management institutes where students are regularly taught techniques to assess the economic attractiveness of projects. There are several renowned CPAs in Mysore. Despite such intellectual capital, why has Mysore City Corporation failed to develop an elementary economic model to assess while negotiating with Makkaji Chowka investors? Is Mysore a banana republic ruled by ignorant politicians and incompetent bureaucrats? Or is this a case of those decision makers just taking care of their selfish interests and ignoring the public interest?
Based on publicly available data, MGP has developed a reasonably sophisticated model to study the economic attractiveness of Makkaji Chowka. This model takes into consideration the effect of inflation, land value, construction cost, rental revenues to the investors, lease value to the corporation, lease revenue escalation signed by MCC, lease escalation investors will demand while renting it out to retailers in Makkaji Chowka, escalation in property taxes, etc. No responsible management today takes an economic decision without assessing the internal rate of return (IRR) generated by the project as well as the net present value (NPV).
Even under the conservative assumptions, investors in Makkaji Chowka stand to earn at least 19% to 22% rate of return. Under the most likely case, the investors are likely to earn between 30% and 40%. These returns are based on assuming parking is provided free. If we consider parking revenues to the investors like in Bangalore, the returns will be even better. NPV, another measure to assess economic attractiveness of project is very attractive to the investors ranging between Rs. 98 crores to Rs. 257 cores whereas for MCC it is puny Rs 35 crores and 43 crores for most likely scenario.
By any standards, these are extremely attractive rates of interest. If only MCC had taken the help of a competent consultant, they would have avoided giving such attractive terms to the investors and avoided the present controversy. Of course we are not raising here the more fundamental issue of retaining Makkaji Chowka as lung space, or the detrimental impact of increasing traffic in and around K. R. Circle. Here we are dealing only with the financial issues and what MCC should have done to negotiate a good price.
Not only MCC has fixed a low lease value of Rs 3.25 crores per year, but failed to consider the impact of inflation. Incorporating a lease escalation of mere 1% per year when we have seen recently more than 10% inflation rate is being totally ignorant or doing great injustice to public interest. One need not be an economist to figure this out. Can the citizens of Mysore be mute spectators to such fiscal irresponsibility? Some smart and public spirited lawyer should be able to help MGP to file a PIL to prevent MCC from selling Makkaji Chowka at a throw away price to the investors even at this late stage.
Must thank Mr/Ms SEoMC, for putting the issue in thought-provocking perspective. Wonder if you have an alias, SEoMC, by which you are more widely known among colleagues and activists in MGP (no galata here). One would like to create a public perception that this is an open forum, with transparancy as its strength. It becomes the responsibility of everyone of us to refrain from writing anything on which we are reluctant put our names.
As to the substance of SEoMC's post, Dr.Shenoy's article reproduced in it triggers some out-of-the box ideas. His reference to involvement of local b-schools and CPAs needs taking up with the city administrators. They would find it tough to ignore an offer of help, if it comes from our b-schools and CPAs (don't they have an association that can volunteer expert services for the benefit of the city's economic betterment ?)
MGP could consider sending out copies of its economic model for experts evaluation by recognised institutions and registered professional bodies. This would in no way belittle the worth of MGP's in-parishat experts, but would only add to the weight of its advocacy. For instance the earnings projection made (in terms of percentages) in the MGP's model would gain validity with endorsement of the MGP reports by appropriate institutions and professional agencies.
In fact we were thinking of involving b-scholl students in running different scenarios of the economic model MGP has developed and students giving presentations rather than MGP professional experts. It would be great if the students refine the model further. This has many useful aspects. One the students will get the practical experience of developing economic modelling. They would get expousre to city politics which itself is extremely beneficial. There will be greater transpraency.
Any help from readers of mymysore in contacting b-schools or putting them in touch with MGP is much appreciated. MGP will be very happy to share the model. We have started to send the model to those reporters who have shown interest to play with. The model can be further refined.
Any other suggestion to expose this episode is most welcome.
It's comforting that there is convergence of ideas and an emerging concurrence among stakeholders. Sometime early last year, when I had taken along my friend Ramesh Rao, a professor of communications at Virginia University, to Bahadur Institute of Management Sciences (BIMS), he made a novel suggestion that corporates must appoint MBAs for a couple of taluks, to be selected and developed on an experimental basis. This, of course, can be part of corporates' social responsibility, which is much bandied about.
In fact, we could approach Mr. Bahadur (after whom BIMS is named), too, for getting him to show interest in backing an initiative like this that will further the interest of the city from where he hails.
I would be keen to accompany Dr. Shenoy to BIMS to proceed further on the issue. We may perhaps renew the suggestion I had earlier given that Dasara be event-managed by BIMS. I have already set up a blog for the management students of the city, with a view to bringing them together and promoting exchange of ideas not only among them but also with their counterparts around the globe. Just to get an idea of where our students stand, Ramesh was mentioning that by the time the students of Stanford Graduate School of Business pass out, they will have got to interact with some of the giants of the corporate world.
Let me also repeat the suggestion I have generally started making in private conversations. Why not have a new-look Mysore City Corporation by electing only independent public-spirited individuals of proven integrity. It is not too idealistic; it can materialise provided we approach the major political parties to keep off the ensuing civic polls and let MCC be infused with new blood. The bandicoots are not going to let go of power and pelf all that easily, and they can be pressured only from their bosses in Delhi. But, we can all work towards that, provided there are 65 such competent candidates having no party affiliations.
I talked to Bahadur management Institute and they have agreed to have me to interact with their students on the economics of Makkaji Chowka. This would be a good case study for the stdents to apply what they learn in the school.
We have tentatively scheduled the talk for the third week of July when they reopne. Viijendra, I will call you and go with you to the school.
Dear bloggers and readers of myMysore, Mysore Grahakara Parishat in association with Institute of Enegineers has organizsed a public debate on Makkaji Chowka. Please pass on this message to all your friends and invite them for an informed discussion on this important subject affecting the future of Mysore. We need to discuss the following:
1 Did MCC and elected representatives try to find out what the citizens of Mysore want at Makkaji Chowka?
2. How did they agree for a three storied shopping complex? How did a decision of such importance was moved so fast through the corridors of MCC and Vidhan Soudha and got all the approval? Was this a miracle of money power or some other hidden power? Looks like Nanjappa, the suspended MUDA chairman was right that when a private party is involved decisions are indeed made fast in our political system.
3. Did our city fathers take a comprehensive look at the investment of this magnitude by developing any economic model? What kind of consulting help did they seek or get?
4. Is constucting a shopping all the best alternative for makkaji chowka or is there a better alternative?
5. Has any one studied the impact of shopping mall on the traffic at K. R. Circle?
6. What impact it will have on other heritage sites which are surrounding makkaji chowka?
These are some of the unanswered questions. MGO hopes that at least few former corporators will particpate in the public debate. There may be some more questions. Let us discuss them here so that we can have an informed debate on July 10th at Institute of Engineers.
I too encourage mymysore forum participants to attend the meeting organized by MGP and voice your concern. it is so unfortunate that i won't be (then whats new about that?) in the Country, the US is too far to come back. People like Dr. Shenoy need our support, at least they are trying to do something for their city. Continue blogging on this issue too.
I was just walking down Bencoolen street here in Singapore this evening and came up on bencoolen link. This is an area that they have closed all traffic and made it into a walkers only street, in the heart of Singapore. I was reminded of what Bapu Satyanarayana wrote in the begining about making New sayyaji rao road next to devaraja market into a similar avenue for people to walk around. Interesting thing is that bencoolen street/link has some heritage buildings, mainly the Stamford Art center and I could think that the devaraja market couls also be made something like this.
Also notable in the same area is the Sree krishna Temple, famous here in Singapore. In a hurry to make some bucks, our politicians want to bulldoze their way through the makkaji Chowk area and put up a mall there. The CM of Karnataka ws in Singapore last week and praized the system (I wrote a reply on GVK's blog about this). He should have come to this part of vibrant Singapore and seen what theyhave done. Many of us have mentioned in the devaraja market forum that there must be a fresh thinking about what needs to be done about the market and its surroundings. Having a mall there, of all places in Mysore, is going to be a disaster and Mysore will indeed become another Bangalore, in a tearing hurry. Lets all oppose this mad plan.
Why not have a new-look Mysore City Corporation by electing only independent public-spirited individuals of proven integrity. It is not too idealistic; it can materialise Howzzat? ..........
Yes why not a shadow corporation with people of some standing and competence as members. Have regular meeting, have a shadow commissioner of retired IAS class etc.,. Yes why not.
