Problems of manufacturing

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problems of manufa.jpgBangalore has been a hub for Small Scale Industries (SSIs) with nearly 3,500 units employing 280,000- skilled & semi-skilled workers.

South Asia’s largest industrial suburb, Peenya, has finally recovered from its seemingly terminal illness and now is bustling with activity. This is not just the case of Peenya, but industries in Rajajinagar, Whitefield, Electronic city and other suburbs of Bangalore are also seeing a revival. This is mainly due to the export contracts that are coming into the country, giving a new lease of life to the manufaturing sector. “Confirming to international standards and proper marketing has enabled us to get a downpour of orders from abroad,” says Prithvi Raj R, General Secretary of Karnataka Small Scale Industries Association better known as KASSIA. Kassia itself is an ISO 9001 certified body.


Q: How are the smaller companies marketing their products to get the export orders?


A. These SSIs can’t afford to go abroad and get the business. So there is a major dependence on agents and representatives of large buying houses.


These buyers look for minimum requirements in these SSI units, mainly focusing on their ability to deliver the goods and adhering to established norms of quality control. Since most of the orders are LC based shipment, the pressure is enormous. The garments and leather industries have been accredited by these agents or buying houses who bring in regular business from abroad for them.


The automotive entre-preneurs on the other hand are quite market savvy and regularly travel abroad to directly meet clients and attend trade fairs.


kassialogo copy.jpgQ:Are Indian companies moving up the quality chain and getting export orders?


A. SSI entrepreneurs are taking initiatives in quality management not because it is the need of the hour, but because they realize that quality consciousness gives them added advantages. They are also cooperating in getting the certification. When we at Kassia called for an ISO certification workshop, nearly 30 industries got registered. These companies have been brought together for cluster approvals, since individually they cannot bear the cost. Soon we will be having another bigger batch of 50 companies going in for the certification course.


Q:Will clustering of related industries help in getting more export business?


A This issue is under intense debate amongst our members and also the development authorities. But the fundamental problem in cluster manufacturing is first getting the individual companies together. Right now they are all spread out in various parts of the city like Peenya, Whitefield, Kanakapura Road and Electronic City. We have discussed these issues with the development authorities like the Karnataka Industrial Area Development Board(KIADB) and Karnataka State Industrial Investment Development Corp(KSIIDC) to atleast facilitate industry clusters in their future projects.


Q: Is the recession finally fading and the sick units coming back to life?


A:Yes, there is substantial improvement in Peenya and other indsutrial suburbs. For instance, Hitech Times, run by Prahalad, the president of Peenya Industries Association who is a techno-preneur, produces 80,000 to 1,00,000 watch cases per month for Titan Industries. This business is a fluctuating one with festive seasons seriously influencing the production quantity.


The garment sector is working overtime to meet the needs of Christmas buyers in the US and European markets this year. The automotive components sector is getting business from all across the world, our President, Jayakumar was in the US and Mexico for an auto expo where he got 70 business enquiries out of which even if 20 queries fructify into actual business, it would be quite a windfall!


Business is not just coming from US and Europe but South America and Africa have also emerged as hot destinations for contract manufacturers here.


Q:Has the govt done its bit to help the industry in shipping and transportation issues?


A: Overseas shipment is quite streamlined now and we have been regularly interacting with the customs department for rectifying any issues. The commercial tax authority has established a special cell for Export Oriented Units (EOU) to facilitate the movement of consignments. Not only EOU, even the movement of goods for the domestic market is also now quite hassle free.


Q:What is the present situation on the Labour law reforms and what are the industries’ concerns?


A: There is a drastic need to simplify the labour laws. Recently, the government has introduced a draft of ‘Small Enterprises Development Bill’ which can make life easy for SSIs once it comes into force.


Q: Has the globally competitive scenario allowed better pricing from the MNCs?


A: See, these MNCs want the best quality product at the least possible price. The pricing is so low that an entrepreneur can barely manage to cover the costs leaving no margin for R&D or expansion needs. We do understand their need to cut costs, but that should not cut into our productivity. They nowadays force the exporter to hold back the inventory which locks up the scarce funds. Moreover, the payments of a small entrepreneur is many times delayed beyond the stipulated credit period.


Normally the SSI would borrow from a bank or a private financier and the interests rate can burden the SSI if there is a delay in payment. If MNCs can stick to a standard 30 day credit period, the SSI sector can automatically take care of its growth eliminating this hand-to-mouth existence. Bigger associations like the CII or FICCI should intervene and persuade MNCs to cooperate with their suppliers.


Q:Do you feel Bangalore is growing in prominence as an industrial hub?


A: Obviously Bangalore has become the preferred manufacturing base for automotive, machine tools, garments and electronic producers as it has a well-knit network of manufacturers of accessories and sub-contractors.


But unfortunately cities in the rest of Karnataka have been neglected. Recently the state government has brought in the Industrial Township Act which proposes to allow the management of industrial estates by local associations. For instance, Peenya has been suffering from infrastructure problems since it falls under two civic bodies of Bangalore City Corporation and the Dasarahalli Municipality.


KIADB has done a great job in developing the Bidadi and Jigani industrial areas. The proposed outer ring road will be soon connecting all the far flung industrial townships of Jigani, Devanahalli, Electronic City facilitating movement of industries to less congested areas.


Q:Are there any ideas for re-designing obsolete machinery to move up with the technology?


A:Yes, we have established the Kassia Technology Upgradation Cell where regular workshops are conducted to train entrepreneurs in the latest technology. Since most of our members are techno-preneurs with little management skills we give training in how to give overseas quotation and negotiate pricing. The Kassia quality complex is soon coming up where we will be gathering data on the latest technology to showcase it to the entrepreneurs here. The Department of Commerce and Industries and SIDBI have agreed to help in these management workshops.


Issue BG30 Sep03


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