State Of The Economy 2012

Losing the edge

Maharashtra loses out on investments to other states owing to lack of political will and proactive business policies

Photographs by Amit Haralkar/ Outlook

If you are not expecting too many people on the early morning flight to Aurangabad from Mumbai, you will be in for a surprise. Not only is the flight fully booked, the passengers are not tourists headed for Ajanta — they are corporate executives Blackberrying, arranging schedules and talking deals in unmistakable corporate lingo. More than a handful look like foreigners on business. The flight stewardess says it’s not a one-off phenomenon — it’s been like this every day for the last 2-3 years. She adds that tourists tend to take the later flights while the early morning flights are full of business travellers.  

The transformation of sleepy Aurangabad began in the early 80s when the Maharashtra Industrial Development Corporation (MIDC) set up industrial parks here. When Bajaj Auto arrived, local vendors like Sanjeev Auto, the Varroc Group and Endurance Systems sprang up to serve its component needs. Government sops also attracted companies like Wockhardt, Colgate Palmolive, Johnson & Johnson, Lupin, Orchid Chemicals, Sab Miller and Audi. Now, the turnover of the 30-odd vendors in Aurangabad’s auto ancillary industry alone is estimated at above ₹10,500 crore with an annual growth of 10-12%. 

Based on the growth momentum created till now, Aurangabad’s progress has been steady but slow. Now it needs a push. “We need another OEM (original equipment manufacturer) like Bajaj Auto to invest in Aurangabad and take it to the next growth orbit,” says SD Tambolkar, MD of the ₹275 crore Sanjeev Auto. “Without government intervention, this will be tough.” 

Companies like Varroc and Sanjeev Auto follow OEMs. Varroc, for instance, is now starting a plant in Bangalore as Honda Motors and Scooters India (HMSI) has started a plant there. 

In Aurangabad, many feel that the state government is not doing enough to court investments. “I had a top Mahindra executive in Aurangabad and he was amazed at the factories and infrastructure we have,” says MP Sharma, group vice president of Varroc’s ₹2,600 crore auto components business. “He said no one had approached him to set up an industry here.” 

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