‘The Environment Ministry does not have measurable standards. So how do you know what and whom to deal with?’

Ajit Gulabchand: As far as we’re concerned,this is a very proud project for us. Yes,it appears like there are many controversies just now. Some of them exist and some of them are inflated because the media likes to talk about them and therefore,you get a sense of them being bigger than they are. We have challenges,sometimes more than we can handle as we are just now facing. But nevertheless,we have a serious commitment to what we are to do.

P Vaidyanathan Iyer: How far do you think the stakes that Supriya Sule and Sadanand Sule held originally in the project affected it in terms of the attention it brought to the project?

Ajit Gulabchand: Let’s first understand that Sadanand Sule,son-in-law of Sharad Pawar,had a stake in this project five or six years ago. We’ve been working on this project for 10 years,it’s only since last year that we started some return on it. Sule is not just the son-in-law of Sharad Pawar,he’s also the son of Balchandra Sule who was the former managing director of Mahindra & Mahindra. He’s also the nephew of BG Deshmukh,the former cabinet secretary of India. Balchandra Sule has been on my board for a long time,his son (Sadanand) too. Sharad Pawar’s association with the project essentially came after he was in England during the 80s and saw Lake District there. He felt that we too have four or five lakes created for irrigation and water–why couldn’t we use those to build something? So the idea was floated. But the idea was never concretised till the BJP government came to power–it is they who created the Hill Station policy. This is how it happened. There is a possibility,given the present cynical atmosphere,that Pawar’s association,his son-in-law’s,might have drawn more attention to the project. We’ve taken long to get our permissions,we’ve had long stints of trying to convince people because it’s a project that was never done before. We have a huge amount of archaic laws and some of them needed to be put into a new system of doing things–due processes have to be created. So,it has taken some time. The Maharashtra government wanted this built,it demarcated areas to build this,so it has a stake in it,to support and help such a project. Over the next 10 years,Lavasa will attract and will have an investment of Rs 40,000 crore. So,I think this project is unique. And,therefore,it already has its share of attraction,yes.

P Vaidyanathan Iyer: Recently,you met the Prime Minister. Was there any assurance by the Prime Minister on the project?

Ajit Gulabchand: In order to understand why I met the Prime Minister,we need to understand what happened to us. When we started this project,we took environment clearance from the government of Maharashtra. In fact,the Hill Station Act and policy of the government of Maharashtra actually lays down norms for the environment to be implemented. In addition to that,we had NEERI,the National Environmental Engineering Research Institute,to do an environment impact assessment. Based on that,mitigation factors were decided and on this basis we began work. In 2006,the Ministry of Environment and Forests of the Central government created a new notification. That notification said,‘Any area development of 50 hectares and more will have to come to the Central government’. Prior to that there is a notification of 1994. It states that this is a state subject. Tourism projects created under the Hill Station Act are exempt,whether they are state or central. They added two more clauses in 2004. We did not think they applied to us because we had done all that is environmentally required. Had I known this was going to happen,I would have said,‘Even if you don’t need,take it’. According to the 2006 notification,every industrial estate developed by any state,every SIDCO (Small Industries Development Corporation Limited)-type project,all these require the permission of the MoEF in order to go ahead. We were surprised when one fine day we got a notice. We answered by saying to the Maharashtra government–‘Look,they want to know this,we gave them the whole history of how this happened’. Then we got a notice soon after we got our clearance from Sebi to do an IPO. That notice was given to one journalist. It was a show-cause notice. There is another clause in 2004 which said anything above 1,000 metres requires permission and so we were asked why we didn’t take the Central government’s permission. A third clause said,‘For any other violations you may have committed,please stop work and restore status quo ante’. Which means what we’ve built for five years must be destroyed,all the roads must be uprooted,all the 800,000 trees we have planted must be cut. We had to rush to court,we got the stay on the status quo. The court allowed them to go ahead and have an interim hearing. When they did that,they had Medha Patkar and everyone join in,and they gave a list of generalities of environmental issues like air,water soil.

Coomi Kapoor: Do you feel you’ve been singled out compared to other projects with the same violations?

Ajit Gulabchand: I’m not so sure I’ve been singled out,but I’m disturbed that the project has been going on for 10 years,it has clearances of the state government…Assuming that there was a requirement of going to the Central government,the least was that you should have had a hearing,an inspection of what we’ve done to the environment first. This is not about environment,this is about jurisdiction.

Sunil Jain: How much have you built so far?

Ajit Gulabchand: Less than 1,000 hectares. But the issue is they have to have objective,measurable standards for what is to be done. They have appointed a state-level committee which has visited the site. They have to give terms of reference for environmental impact,which is exactly what the Maharashtra government did. We had no reason to presume that there was a problem. Let us assume that,yes,we are wrong and we did have to take their permission. That’s not a crime if we’ve addressed their environmental issues. We should have been given a hearing.

Sunil Jain: Is there any sort of objective norm that says if you cut a thousand trees,you have to plant 2,000 of a different variety?

Ajit Gulabchand: No. The MoEF does not have laid-down objectives and measurable standards. We asked for the norms so that we could compare whether we had committed any violations. They did not give us any. So we gave our own norms which the state government hill station policy lays down,which the environment impact assessment study lays down,and the ones we have created for ourselves.

Coomi Kapoor: Isn’t height a specific point?

Ajit Gulabchand: Height is not a standard,height is jurisdiction. MoEF says,‘Above 1,000 metres if you are constructing anything,please come to us’,provided it is more than Rs 5 crore. We have filed our total acreage with the government. We have said we have 46 hectares above 1,000 metres with one arch and that we are not going to build on it,and it’ll just remain. That structure does not constitute a violation of anything because it’s just an arch. So fundamentally,they claimed it only from the point of view of jurisdiction,not because it’s environmentally wrong.

Rakesh Sinha: Is it as frustrating dealing the bureaucracy now?

Ajit Gulabchand: To some extent this is a bit Kafkaesque. I would like to work with the MoEF to create replicable models for other townships. There are various new standards that can be created,and those have to be created because if you don’t want a set of slums all round the country then we’ll have to build standards. The problem is because there is nothing there,how do you know what to deal with,whom to deal with? That’s the problem. Now,I don’t know what we’re going to do,there is no agenda,nothing. Not that they shouldn’t ask,not that they shouldn’t do these things. What we feel is environment is a very sensitive,wonderful issue. We must espouse it. And there are many other issues of environment–chemical factories,carbon footprints,etc that need to be addressed.

Coomi Kapoor: There is a feeling that a large number of political heavyweights from Maharashtra have bought property in Lavasa.

Ajit Gulabchand: No,I don’t think so. We have a very clean and open system of CRM (customer relationship management). You apply,you get it and you move forward. Politicians tomorrow may have a place there–why not? But if you think they’ve been given (properties) for any favours,no.

P Vaidyanathan Iyer: What about local resentment? You’re drawing water from a dam that will affect water availability for people in Pune. How far does this lead to an escalation of the issue?

Ajit Gulabchand: Pune gets 11 trillion cubic feet of water per day which makes it the highest consumption per capita of water in the world. Pune was supposed to recycle water and send it down to Indapur,which they haven’t. As far as Lavasa is concerned,it would require less that 1 per cent of the water that Pune gets. Secondly,the lake,Varasgaon,doesn’t not meet Pune’s water needs; it’s an irrigation lake. Under the law,10 per cent of water from the lake is the entitlement of the people of the villages in Lavasa. As for local support,all the 18 gram panchayats have signed a unanimous resolution to support Lavasa. Ninety per cent of the villagers have actually come out in support,written letters.

P Vaidyanathan Iyer: The clearances which Lavasa got was when Ajit Pawar,Sharad Pawar’s nephew,was a minister and the entity under his administrative purview gave the clearances. So could you have avoided,first,getting shareholders like the Sules…

Ajit Gulabchand: Why should I avoid it? This is an unfair question. How was I supposed to know what would happen in the future? This is immaterial. There are so many things wrong with this country,do we go forward or not? Indira Gandhiused to own shares in our holding company. So should HCC never have got a contract in this country?

Amitabh Sinha: With POSCO,Vedanta and now you,there seems to be an attempt to make an example of high-profile projects. Do you share that view?

Ajit Gulabchand: I don’t share that view,but it has so happened. But to the extent to which the environment minister wants environment to be on everybody’s agenda,I couldn’t agree with him more. If you look at the promotional videos of Lavasa,be it one year ago or five years,you will see we talk of inclusiveness as well as environment all the time. No government was dictating it to us. So we are on the same side,the question is how do we go about it?

Smita Aggarwal: You operate in the critical space of infrastructure. And lobbying is part of this corporate culture. So when do you think lobbying becomes a dirty word?

Ajit Gulabchand: I have a right to lobby for my cause. Just as I have a right to lobby,I have a right to deploy the best to lobby for me. So there is nothing wrong with outsourcing lobbying. The question is,what does the lobbying do? As in all cases,there are Laxman rekhas. I am not prescribing one right now,but when it gets crossed,it becomes a problem. At the same time,those who are in public office need to know when it’s crossed. Why is the onus only on the (one) lobbying?

Sunil Jain: With all projects above 50 hectares having to be cleared by the MoEF,are you rethinking some of your projects like,say,Dhulera (Gujarat)?

Ajit Gulabchand: If you ask me whether I wake up in the morning asking,‘When am I going to add Dhulera? When am I going to do this?’,my answer is not in the last one month,no. But I think,if this (Lavasa issue) is over,I will. Listen,just to do this you need to be an optimist.

P Vaidyanathan Iyer: Tell us about your meeting with the PM.

Ajit Gulabchand: The PM said he would look into this matter and that he would like to solve this issue. He understood the importance of what we are doing,he understood that such things would be needed.

P Vaidyanathan Iyer: In the interim,did you get in touch with the minister,Jairam Ramesh?

Ajit Gulabchand: The last time I tried to contact him,he did not allow me to reach him.

Ambreen Khan: What’s your take on the corruption that’s happening nowadays?

Ajit Gulabchand: I avoid trying to be moralistic about these issues. If we can create more transparent systems,lay down rules of business and engagement,you are likely to get a far less corrupt society. Corruption has one downside that it causes you to lose the public’s trust. And a whole lot has to be done to restore it.

P Vaidyanathan Iyer:What have been your losses now at Lavasa?

Ajit Gulabchand: We’re losing Rs 2 crore a day. The ‘stop work’ order has been implemented. Construction work is on hold. Of the 10,000 workers there,9,000 have been asked to go home and they’ve gone.

Sunil Jain: Is it your understanding that the amount of work going on in the NHAI (National Highways Authority of India) is actually declining? Do you think it’s becoming more difficult to work there?

Ajit Gulabchand: When NHAI began,they (government) laid down some very brilliant processes. They also came up with a really new idea that you can work on a public-private partnership basis. But the fact is that there are problems in our country. And there is a cynical atmosphere even among the decision makers. Today,since most of the NHAI programme is dependent on actual private investment coming into roads,you are going to have a problem. The investment climate needs to improve. In India,the fundamentals are weakening and so is sentiment. I’ve gone around the world saying,‘invest in India,it’s an emerging market so it will have some problems’. Now,what will I tell them? I’m already feeling guilty that on my assurance peoplehave invested,even in Lavasa.

Vaidyanathan Iyer: You were talking about investors raising questions. Do you think this year India will have a tough time at Davos (World EconomicForum)?

Ajit Gulabchand: I have a different speech…I’ll say you’ll have to have double theoptimism to invest in India. But I am hoping that this is an aberration andthat with all that has happened,the intention was not really to block andthat things will fall into place.

Transcribed by Sanjeev Menon

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