Guindy Estate All Set To Change Its Industrial Slum Image

Updated: Mar 25 2004, 05:30am hrs
The Guindy industrial estate, known as Thiru-Vi-Ka Industrial Estate, Chennai, named after the noted Tamil writer, Thiru V Kalyanasundaram, was born in 1956. It was Indias first industrial estate.

The industrial estate was part of Jawaharlal Nehrus ambitious industrial growth-oriented programmes for banishing poverty, eliminating unemployment, increasing production capacity, breeding a new class of entrepreneurs and broad-basing industrial infrastructure. Guindy stands testimony to Nehrus vision.

The Nehruvian concept in Tamil Nadu, then Madras State, was nurtured to a reality by several important persons like the then industries minister of the Madras State, R Venkataraman, who later became President of india, T T Krishnamachari, the then Union finance minister and P C Alexander, who was then the development commissioner, small-scale industries, in New Delhi.

There were 30, mostly engineering, units in the first phase. The second phase was inaugurated in 1959 by the then Union minister of industry, Lal Bahadur Sastri.

Guindy was the realisation of a national concept and forerunner of hundreds of industrial estates in the country. It remained a model industrial estate in the country till 1975.

Now with about 700 units in the large, medium, small and tiny sectors in a sprawling 405-acre area, this estate makes a Rs 1,500 crore turnover (Rs 1,000 crore domestic sale and Rs 500 crore exports) and employs 60,000 persons directly and 40,000 indirectly.

In the estate premises, the Union government agencies have set up a central training institute, Central Institute for Plastic Engineering and Tools, Central Footwear Training Centre, the Small Industries Service Institute and Prototype Training Centre for NSIC. The Tamil Nadu government and its agencies have also established several facilities for entrepreneurs.

Initially, auto-ancillaries, electrical and engineering units dominated the estate. But during the last decade, engineering units could not withstand the changing facets of industrialisation and market demand. This led to closure of several units. But these were replaced by new ventures from sectors, like electronics, leather products, and readymade garments.

Two functional industries complexes, one for electronics and another for readymade garments, were set up in the estate.

The estate now has a diverse product range from engineering goods to leather footwear to readymade garments. There are award winning electronic units and units that supply spares to radars and rockets.

An Industrial Slum
A drive around the estate confirms a statement made by G K Basha, secretary, Industrial Estate Manufacturers Association (IEMA), that Indias model industrial estate has deteriorated into an industrial slum. He says there are several reasons for this. Political interference and encroachments, reluctance of the tax collectors to plough back money for maintenance of the estate, damaged roads, clogged drain pipes and free-for-all parking of outsiders vehicles, dumping of garbage by hotels, and debris by builders, rearing of pigs by local residents are a few activities in this estate which make industrial operations secondary and often impossible, he says.

This repugnant state of the infrastructure in the estate scares away multinational companies, big Indian corporates and anyone who would like to place orders with the units in this estate, and in the process its growth, says K Gopalakrishnan, president, IEMA.

Among the other infrastructure problems are unscheduled power cuts, the low quality of the power and frequent fluctuation, lack of drinking water as well as industrial water, inadequate drainage facilities, water-logging in the monsoons, and absence of streetlights. This has made the area a haven of anti-social elements during the night. The Metro Water is using a part of the estate as a filling station with water tankers taking over the roads, he added.

Revival Plans On Cards
All this does not mean that Guindy is going down under the gutter. An indomitable spirit that enabled most of the entrepreneurs to struggle and succeed against all odds has led to strategies to build classy infrastructure facilities in the estate and restore its original position.

Corrective action is being planned with an outlay of Rs 8.5 crore under the industrial infrastructure upgradation scheme. The projects are to be funded through a public-private partnership arrangement. Under this, Rs 2 crore each would be contributed by the central and state governments, Rs 1 crore by the Chennai Corporation and the balance would be raised from the unitholders.

A special purpose vehicle is being formed with representation from the Small Industries Development Corporation, Tamil Nadu Industrial Investment Corporation, state finance department and officials of IEMA. This company, to be floated under Section 25A, would take up the infrastructure building works, complete them in a year and continue to maintain them, Mr Gopalakrishnan said. But these efforts will bear fruits and the estate can remain an industrial estate only if the state government enacts the Industrial Township Act which is awaiting final orders, he adds.

If these projects take off and the estate is restored to the entrepreneurs, the turnover, exports and job creation will soar to Rs 3,100 crore by 2010, Mr Gopalakrishnan said.

IEMA also plans to set up an electrical cluster with modern facilities. To cope with increasing competition and globalisation, the IEMA president said many of our units are engaged in technology upgradation, backward and forward integration. Many have obtained the ISO:9000 certification and many are working for that.

IEMA also has a technology development centre, an export cell and development wing for women entrepreneurs.

Under the aegis of the Tamil Nadu Small and Tiny Industries Association, several programmes were being organised to enable the units to face the WTO challenges, Mr Gopalkrishnan said.

WTO Opportunities
The president of the Industrial and Financial Reconstruction Association for Small and Tiny Enterprises and National Confederation of Small Industry, D E Ramakrishnan, told FE that while several quarters have been talking about the WTO challenges, very few speak about the opportunities for small and medium enterprises. The very definition of small and medium enterprises in India may be different from that in Europe or the US, or even China. Everywhere this sector is well-guided, given a helping hand and assisted on all fronts of production and marketing. But in India it appears that the small sector is left to fend for itself.

He said while each industrial estate were facing specific problems, all of them had certain generic problems. The abrupt changes in government policies, shortage and sudden spurt in prices of essential inputs, like steel and coal, poor infrastructure, undependable power supply, obsolete technology, lack of training, are some problems that are common to the SME sector in India.

However, the most important among these is lack of finance, he said. Banks had lost sight of the concept of weighing the worth of an entrepreneurs investment proposal and guiding him through and funding the project. By insisting on security and collateral outside the project, they have reduced financing to pawn-broking, he said.

Concerted action and policy initiatives are needed to address these issues for the survival of the small sector. Otherwise, in the next five years, this sector would disappear, Mr Ramakrishnan said.