The State of Business 2013

Path to prosperity

Bhiwadi-based industrial unites are hoping for a new elevated road to lift their fortunes

Amit Kumar

See this. Read to whom this letter is addressed and CC-ed,” says Rajveer Chaudhary, chief operating officer, Kajaria Ceramics, as he pulls out a sheet and slaps it on the table in front of him. The letter, written to prime minister Manmohan Singh, is about Bhiwadi’s terrible connectivity to National Highway 8 (NH8)and the unrealised potential of the industrial cluster, as a result. A copy is marked to Congress president Sonia Gandhi, and signed by Chaudhary as the ‘sincere applicant’.

Chaudhary has reason to be miffed. “Seven years ago, it used to take me 45 minutes to reach my home in Gurgaon [40 km away]. Now, at times, it takes three hours. Buses carrying our workers get late, and so do trucks carrying raw material and tiles,” he says. With almost 900 employees, the Gailpur facility near Bhiwadi is Kajaria’s largest, accounting for half of its 41 million sq m production capacity across its plants in India. “I have raised this issue at the highest level. Yet nothing has happened,” Chaudhary laments. 

The NH8 from Delhi to Mumbai through Jaipur is lined with major industrial hubs such as Gurgaon, Manesar and Dharuhera in the National Capital Region (NCR). A 5-km narrow stretch of road near Dharuhera (in Haryana) leads to the Bhiwadi industrial cluster in Rajasthan’s Alwar district. Spread over 6,500 acres, the state’s oldest industrial area is teeming with 2,700 units of all sizes that make almost everything from car engines to cables to footwear and ceramic tiles. Yet, despite playing host to big names such as Honda (cars and motorcycles), Gillette, Kajaria Ceramics, Lakhani Footwear and Shree Cement, Bhiwadi’s successful 30-year run is being threatened by poor connectivity and patchy government support. 

Bumpy ride

If there’s one refrain that unites everyone in Bhiwadi, it’s the worsening conditions of the road link between the city and NH8. The severe bottlenecks on this road throw everything — from employee commutes to logistical schedules of goods — out of gear. The absence of a ‘transport nagar’ — a paid parking facility for transport truckers developed and maintained by the government — in Bhiwadi and its vicinity, compounds the problem. “Trucks park on the state highway and on NH8, causing traffic jams and revenue loss to government,” points out Ram Prakash, director, Ratan Engineering, which makes steel castings for engineering goods manufacturers such as Bhel. 

All of this leaves senior executives like Chaudhary fuming. For many others, it could be even worse. Some eight kilometres away in Tapukeda, a few Japanese and Indian workers hurriedly finish their meal at the Honda cafeteria. It’s 1 o’clock in the afternoon, and the lights are already being switched off and food is being taken off the buffet shelf. “Workers start pretty early, at 7 am. So, lunch time is early as well. Only those who commute from nearby areas are preferred here,” explains a company official, referring to the role connectivity plays in the company’s hiring choices. 

Bhiwadi’s industrial occupants have for long been demanding an elevated road to NH8. “That will be a ₹150-200 crore project. All land on the way belongs to Haryana, so funds and land acquisition will be major problems,” argues DP Jatav, senior deputy general manager, Rajasthan State Industrial Development & Investment Corporation (Riico), Bhiwadi. The government hasn’t completely overlooked this demand, Jatav adds, “We spent ₹6 crore to built an alternative link road to NH8, passing through Haryana.” But this single lane road hardly serves the growing needs of a cluster that’s bursting at the seams. In any case, roads hardly seem to be on the list of priorities for Riico.

After Bhiwadi, it got busy developing seven more clusters in nearby areas — Tapukeda, Khushkhera, Chopanki, Pathreda, Sarekhurd, Kehrani and Bhiwadi Extension. “All these are saturated too. Now we are developing 1,000 acres more as Khushkhera and Tapukeda extension. The acquisition award has been declared and we are awaiting clearance from the ministry of environment and forests,” says Jatav, who adds that he gets 20-25 new inquiries each day for space in the cluster. Among them are French glass maker Saint Gobain, which has invested ₹1,000 crore for setting up one of the world’s largest float glass manufacturing lines over 140 acres of land here. German foods company Dr Oetker, too, is reportedly investing ₹150 crore for its new facility here. 

With reliable power supply Bhiwadi scores comfortably over Gurgaon, Manesar, and Dharuhera. But water is a problem. Not so much the supply of it, but its discharge, treatment, and drainage. Satinder Singh Chauhan, president of the Bhiwadi Manufacturing Association (BMA), points out, “The natural flow is towards Haryana. So treated or untreated effluents go there. But Haryana refuses to accept it.” The effluent treatment plant run by the BMA is capable of handling 6 MLD (million litres per day) but discharge is twice that at 12 million litres a day. Some point to the dearth of funds and manpower to run it efficiently. “There is a need to put up a high capacity reverse osmosis system for recycling water,” explains Jatav.

Firms like Orient Syntex, which produces dyed blended yarn, are among the major users of water in Bhiwadi. “We are the second largest employer in this area,” says Hari Ram Sharma, executive director, Orient Syntex. With 2,500 workers and ₹300 crore in sales last year, Sharma has had a few defaults in payments from some EU countries. But he’s grateful that exports form only 5% of his total sales. “The other 35 mills in Rajasthan may not be so lucky,” he points out. 

But there are other pressures on business, and he has dealt with them by diversifying his product range. “We make five types of yarn now — weaving, shirting, furnishing, knitting and technical textile yarns. If there is less demand for one, the other can compensate,” he says. Orient Syntex has had a dyeing facility for many years, and Sharma is planning to acquire a polyester fibre factory this year. It will be a ₹35 crore investment but the backward linkages will ensure it will pay for itself soon, Sharma calculates, “It will save us about ₹25 lakh every month.”  

Room for more

Bhiwadi has an estimated 100,000 regular workers and an equal number of temporary workers, and business owners admit they’re feeling the pinch of rising labour costs. “However, we have never faced a major unrest like in neighbouring Manesar. The local administration has also supported us in this,” says Prakash. Property prices at ₹5,000 a sq m are far cheaper here than Manesar’s ₹15,000 per sq m. No wonder, majors like Honda flocked to Bhiwadi, when it came to expanding operations beyond clusters in Greater Noida and Manesar.

Along the Bhiwadi-Alwar highway, many farms have been turned into high-rise apartments and luxurious villas, with more coming up. Adorned with massive gates and fancy names, they are signs that a housing glut is on its way here as well. Only some windows in the newly-built flats have ACs or clothes drying in their balconies. Evidently, few people have chosen to relocate and live here. It shows up in the large billboards advertising housing projects in the area — “Invest in Bhiwadi”, they say, not “Live in Bhiwadi”. Some like Aashiana Homes are among a handful of well-occupied housing societies. “Most of us commute from Gurgaon. This place doesn’t have many facilities,” says a company executive. 

“Had there been better connectivity with NH8, Bhiwadi would been much more developed,” rues Sunil Pahwa who runs Hotel Pahal in Bhiwadi. Started 26 years ago, his was among the first few hotels in the area to cater to business travellers. Pahwa has little reason to complain, though. “As the area progressed, our clientele has also improved from supervisory level people to managerial level people coming to our hotel,” he says. He knows he has a lot of catching up to do. New, more modern properties have come up to cater to the upmarket corporate customer such as Treehouse, a luxury hotel where rooms are rented for ₹5,800 and above. At ₹1,400 a night, Pahal caters to the budget traveller and in order to cash in, he is now adding 20 higher priced luxury rooms to the existing 30 rooms. 

In nearby Gailpur, a large number of trucks are lined up inside the Kajaria Ceramics campus. But the shopfloor inside the newly built unit — the size of three football grounds — has very few workers. Tile making, cutting, heating, glazing, printing and packing are all done automatically. Robotic trolleys move around on the floor shifting tiles, at the end and beginning of the conveyer belt. The company’s revenues last year were ₹950 crore, though growth has slowed a little this year. “We grew by 40% last year, this year it will be around 25%,” says Chaudhary. But he isn’t worried. “Our business is directly linked with real estate and housing. In India, there will be demand in housing sector for many years to come,” he says. The spectre of Chinese imports, too, is gone, after anti-dumping duty was imposed and Chinese companies are no longer allowed to import small sized tiles, which are most demanded in India. 

Industrialists in Bhiwadi acknowledge there is some amountof slowdown in business. “Our biggest folly is that we are 80% dependent on Bhel for orders,” regrets Prakash of Ratan Engineering, which clocked ₹10 crore in revenues last year. 

The much talked about policy paralysis at the top is affecting smaller businessmen like Prakash.  “Today Bhel itself is in doldrums. It had a five-year order book a year ago, now it has orders for only two years. The government is not moving ahead with proposed power plants. There is also a coal crunch,” he points out. Jatav admits he too hears the word “slump” every other day. “But my revenue numbers don’t support such sentiment. In the last financial year we recovered ₹160 crore through sale of land, and this financial year we have already recovered ₹150 crore by January. Where is the slowdown?” he smiles. Industrialists in Bhiwadi would like to see him build a bridge to NH8 with such money. If that happens, they’ll have much to cheer for.


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