Vatva Industrial Estate - a success story led by SMEs

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Garima Sahai | 08 Jun, 2010
While the small and medium enterprise sector in the country has been bowing to numerous infrastructural challenges and reeling under demand slump, particularly in the export front, the Vatva Industrial Estate (VIE) has set an example with an annual turnover of about Rs. 2500 crore and an export of about Rs. 1500 crore.

VIE, which was set-up in the year 1968, has always been the foreground for growth of many large national corporates, but its real strength line in the 85 percent micro and small units. However, this cluster of dyeing units has seen many ups and down, and faced many challenges since its beginning - before turning the hurdles into success.

Over a period of time, for example, the infrastructure facilities of the cluster had deteriorated considerably, affecting the service levels. But the way the SME based industrial cluster revived its status is not just awe-inspiring but also innovative.

In order to strengthen its infrastructure, Vatva Industries Association (VIA) promoted Vatva Industrial Estate Infrastructure Development Ltd. (VEL) with the sole objective of implementing infrastructure upgradation works in GIDC Vatva. It also appointed IL&FS Clusters, a leading organization in the field of infrastructure development for micro, small and medium enterprises (MSMEs), for helping in facilitation of the project. IL&FS Clusters proposed to carry out up-gradation & reconstruction of roads, construction of storm water drains, and a sewerage network, by assisting in structuring, detailed design & engineering, and financial services for the project.

As a part of this endeavor to upgrade infrastructure, VIA entered into a Memorandum of Understanding (MoU) with AMC on 18th June 2005. As per the MoU, AMC has agreed to remit 75% of the property tax collected by it from GIDC Vatva into an Escrow Account with a bank. The funds remitted to this account could be utilized by VEL for the purpose of infrastructure development in GIDC Vatva, for repayment of loan or advances received from the Bank/financial institution or to pay margin money for getting grant/aid/subsidy/loan from State/Central.

According to President of VIA, Kirit Patel and Chairman of Novel Infrastructural Ltd.(NOVEL), a Special Purpose Vehicle for up-gradation of select industrial estates in Gujarat, upgradation of the Vatva Industrial Estate is a pilot project wherein the municipal corporation is remitting a certain percentage of taxes collected from the unit owners in the cluster, actually meant for its development, to the association, for them to transparently and effectively utilize the amount for the up-gradation and maintenance of the cluster.

IL&FS Clusters, through its technical consultants, carried out a detailed road inventory in the cluster. Details regarding right of way, carriageway, shoulder width and type, street light, drainage, and utility lines were collected. Topographical surveys and soil tests were carried out, to finalize a plan for the upgradation of roads, construction of storm water drains, and a sewerage collection and disposal system. The implementation was scheduled to be done in distinct sub-projects for ease of implementation, viz. Novel Project (which will be supported by the IIUS Grant) and VEL-1 Project (which will be supported by the CIPS Grant).

Set up by the Green Environment Co-operative Services Society Ltd., which was promoted by VIA, a treatment facility benefitting over 600 polluting units by collecting their treated liquid effluent and giving it secondary treatment and proper disposal was founded. The Solid Waste Land fill site now takes care of about 80,000 tons of solid waste per year according to the internationally prescribed norms and standards.

The VIA in collaboration with the IL&FS Clusters is coming up with a skill development centre in the engineering sector, providing employment linked certified training to the workers.

"With increase in the business opportunities due to infrastructural up-gradation, prosperity can be tangibly measured with the increase in the no. of luxury cars in the estate," Patel said commenting on the infrastructure development projects, adding, "to tape the purchasing power of the owners here, car companies have organized car shows; banks have opened up their branches in the cluster to cater to the increasing borrowing needs of the unit owners for expansion of their businesses – Currently, the estates houses branches of Canara Bank, HDFC, Punjab Bank of India and State Bank of India'

Setting an example of holistic international cluster development approach, VIA has provided for a day-care medical centre in its office building along with its own police station, post office, and ESI hospital. While the Vatva Railway Station provides the perfect venue to handle rail transport and passengers, AMTS buses frequent various spots throughout the cluster for local traveling convenience.

To encourage entrepreneurs, VIA has also promoted a Vatva Young Entrepreneurs Forum for new & second generation industrialists, between 20 – 40 yrs of age, to train them and give them proper exposure of handling industrial units.

* Garima Sahai is a consultant, IFC, World Bank Group.
* The views expressed by the author in this feature are entirely her own and do not necessarily reflect the views of SME Times.