Hard times at Bhopal industrial unit

With over-dependence on orders from BHEL unit, the Govindpura industrial area finds itself struggling to manage market survival and rising costs

The twin problem of declines in job orders from the anchor unit of Bharat Heavy Electricals (BHEL) and recent escalations in land prices, lease rates and maintenance charges have put the Govindpura industrial area here under a squeeze.

Set up in 1962 near the mother unit of BHEL, it had flourished till the end of the 1990s. The government had floated several investor-friendly options for sick units in its 2004 industry policy. However, pressure has been rising again since 2013.

"For two years, offloading of job orders from the BHEL unit has declined by 25-30 per cent. As a result, many units are facing a tough time," Mukesh Sachdeva, president of the Govindpura Industrial Association, told this newspaper.

SNAPSHOT

• It was set up in 1962, near mother unit of Bharat Heavy Electricals Limited (BHEL) in Bhopal
   
• The BJP-government had floated several investor-friendly options for sick units in 2004 Industry Policy. But it came under pressure again since 2013
   
• Govindpura industrial area has approximately 1100 units and of them, 250-300 are solely dependent upon BHEL
   
• The BHEL offloaded orders of Rs 316 crore in 2012-13 to Govindpura, Rs 237 crore orders in 2013-14 andRs 201 crore in 2014-15 to the industrial area

The industrial area has about 1,100 units and of these, close to 300 are solely dependent on BHEL, and employing 25-30 per cent of the 75,000-odd workforce. The micro, small and medium scale units (MSMEs) that take jobs from BHEL primarily manufacture components for traction motors used in the railways, transformer components and other machine components.

"I now have three workers against the eight I employed in my units till one and a half years ago," Shekhar Dudhande, a small-scale industrialist in Govindpura, told Business Standard. "My unit is totally dependent upon BHEL but I barely have any job now from them."BHEL gave orders of Rs 316 crore in 2012-13 to Govindpura, Rs 237 crore in 2013-14 and Rs 201 crore in 2014-15. "There is no denial in the fact that orders which BHEL used to offer to MSMEs in Govindpura have gone down. Advent of technology has created many players in the private sector. For a government entity, it takes time to develop a product," a well-placed BHEL official told Business Standard.

The Association and the Federation of Madhya Pradesh Chambers of Commerce and Industry said the state government had also recently raised land and related costs manifold.

"The existing land premium of Rs 22.30 a sq ft has gone to 1,171.51 a sq ft. Lease rent has gone from Rs 22 a sq ft to Rs 23.43 a sq ft, and maintenance charges have gone up from 44 paise to Rs 10 a sq ft. Is it possible for any small unit or start-up to survive in such tough conditions?" asked Sachdeva. "I have presence in the area for the past 30 years or so but I have not seen such tough times. We have fallen behind the rest of Indian industries in terms of cost, technology and now markets.

BHEL is losing jobs to private companies since they (the latter) supply within a few days. BHEL should improve itself in terms of faster delivery, particularly to the railways which is its biggest buyer or else we all are at peril. We are ready to go along," said Ashok Patel, another industrialist in Govindpura and a functionary of the Madhya Pradesh Laghu Udyog Sangh.