Thane: A watchman steps out of a makeshift cabin at a rundown compound in Thane’s Wagle Estate — an industrial area dominated by engineering companies and a hub for micro, small and medium enterprises (MSMEs) — and returns with two cups of cutting chai.
He and another companion are the only ones on the property. On the left is a pile of blue industrial drums and, elsewhere, the compound is dominated by overgrown shrubbery.
The large deserted unit was, until recently, a manufacturing facility for various products related to the automobile sector and ancillary industries.
“Yahaan ab koi nahi hain (There’s no one here),” the watchman says. The unit shut down in August and the owners have shifted everything to another factory.
The only company employee on the premises, other than the watchman, told ThePrint that due to “financial issues”, the firm had shut down its Thane unit and shifted everything to its other manufacturing location at Alandi in Pune district.
A stroll around Wagle Estate reveals more such vacant buildings, with gates locked from the outside and moss gathering on the decrepit walls.
Thane’s Wagle Estate was the first industrial area that the Maharashtra Industrial Development Corporation (MIDC) took up for development in 1961, primarily because it was just outside the city limits of Mumbai. Similar industrial estates came up in nearby locations such as Bhiwandi, Dombivli, Badlapur and Navi Mumbai over the next few years.
While the majority of its companies are engineering units, the Wagle Estate and its surrounding areas also have companies from the sectors of chemical engineering, food products, consumer goods, paper and plastics.
Over the last two years, an increase in the price of raw material, especially steel, a steep drop in demand, and a corresponding decline in orders, has hurt the health of these once robust estates, company representatives told ThePrint.
While companies connected with the pharmaceutical sector have sailed through, those into project engineering and consumer goods have especially taken a hit.
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‘Lost biggest customer, steel prices have squeezed profits’
Unlike a few other factories that now wear a deserted look, the only manufacturing unit of Esjay Industries, which is into metal fabrication, is still at work.
“The lockdown has had an impact on employees as well as employers. Our unit is into fabrication. Our raw material is steel and metals,” Pramod Kulkarni, the company’s manager, told ThePrint. “Prices have increased but we cannot increase customer rates beyond a point. As a result, our profit margin has dropped.”
“Orders have decreased by at least 30 per cent. We had one very strong client who made the bulk of our orders. That client’s orders vanished during the pandemic,” he added. “It has been very difficult. We naturally had to downsize our staff too. We can’t do much beyond a point.”
According to data from SteelMint, a steel research and analysis firm, the price of hot rolled coils had increased by Rs 33,100 per tonne between June 2020 and June 2021, while that of cold rolled coils increased by Rs 44,600 per tonne in the same duration. The trend has followed the international market, which, too, has seen a spurt in steel prices due to a drop in the availability of the material.
Ninad Jaywant, committee member of the Thane Small Scale Industries Association (TSSIA) and general secretary of the Chamber of Small Industries Association (COSIA), told ThePrint, “The Centre cites the increased GST (goods and services tax) revenue to claim that industries haven’t been severely affected during the pandemic, but the truth is that the GST collection has gone up only because of higher raw material prices. There is no other reason.”
Jaywant said micro industries, which depend on small- or medium-sized engineering companies for orders, have been the worst affected. He, however, added that there is no authentic data on exactly how many units exist across different categories in these estates, and to what extent they were affected.
Sirajuddin Khan, who stays in Thane with his family, works with one such small pipe cutting unit in Wagle Estate. Khan has been the only employee at the unit since 2016. Khan said the owner of the business did not pay him for two months during the first lockdown in 2020, and left Mumbai for his hometown.
“In June 2020, he told me he was not going to be back for a while, but I can open the shop for business. We weren’t technically allowed to open at that time as per state government rules, but I still opened the shop. Every time police came, I downed the shutter and ran. Somehow we managed,” Khan said. “Ghar ka chatni roti chalu tha (I was able to put food on the table at home).”
The owner eventually returned to Mumbai and has been paying Khan’s salary in full.
Khan said when he started working with the unit, he used to be very busy. “I had no respite from work. But ever since the lockdowns happened, kaam thanda ho gaya hai. (work has slowed down).”
“I mostly sit the entire day. Seth (the owner) is always stressed. The payments due to us are stuck at a lot of places,” he added. “The cost of raw materials has increased so much that a prospective client comes, asks about the price and leaves. Only people whose work is very urgent are buying our products now.”
Many government assistance schemes, but loans tough to get
Maya Waingankar, founder of Divine Clique Private Limited, a company that manufactures dehydrated food products, had to shut her business two years ago, before the pandemic struck, for personal reasons.
In May 2021, after it was evident that the second wave was ebbing away, Waingankar tried to give her venture, which she first launched at Bhiwandi in 2017, a fresh start, but the market was drastically different from the pre-pandemic days.
Her main client, who made up the bulk of Waingankar’s business, had suffered a massive drubbing during the pandemic.
“The client for whom I manufacture, that client’s final product had also been affected. Her unit was also shut. In May this year, when she tried to put that product back in the market, it had lost its recall value. Her business is down to 20 per cent of what it was in the pre-pandemic days, and that has, in turn, hurt my business too,” Waingankar told ThePrint.
She added that an increase in the cost of raw material and high labour costs have made it more difficult for her to get back on her feet.
Waingankar turned to a nationalised bank for a loan under the Union government’s Mudra scheme, which provides loans up to Rs 10 lakh to non-corporate, non-farm small and micro enterprises.
“I had availed of a loan under the Mudra scheme earlier too, and repaid and closed the account before I shut my unit in 2019. But, to my surprise, this time, I was denied a loan, saying my unit was shut for two years,” Waingankar said. “They shouldn’t have considered those two years since I had closed all my books.”
TSSIA’s Jaywant said the government’s schemes have “helped to a certain extent”, but mostly don’t percolate to the ground and many banks are hesitant to sanction loans for small and micro enterprises.
“Also, a lot of micro industries depend on cooperative banks for their banking and these are not included under the ambit of the Centre’s schemes,” he said. “The Centre has a feeling that cooperative banks either don’t know how to do banking or are controlled by politicians.”
Jaywant’s own business of fashion leather goods, Kangaroo Leather Private Limited, “collapsed”, as he describes it.
“I had two units — one in Navi Mumbai and one in Bhiwandi. The Navi Mumbai unit was a rented place. I tried to keep it alive for a year. I gave my employees half their salary, but eventually it was beyond my control and I had to shut it down in August this year,” Jaywant said, adding that it was a chain reaction. He supplied his products to large brands, whose business suffered, as a result of which his trade suffered, and so did the businesses of the smaller tanneries in Dharavi and Govandi that were dependent on businesses like his.
“You were buying ladies’ purses. But, in the last 1.5 years, did you purchase anything?” Jaywant asked. “Consumer sentiment affected by the pandemic has created a lot of problems.”
(Edited by Arun Prashanth)
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