A resurgence of industry

In a remarkable turnaround after being affected by liberalisation, Visakhapatnam is poised to regain its prominent status on the industrial map of the country.

AFTER being in limbo for a long period, Visakhapatnam, or Vizag, is finally coming round as the industrial hub of Andhra Pradesh and, in a new avatar, as an infrastructure base.

The city's reputation as an industrial hub had come unstuck in the changed economic situation. Liberalisation of imports and exports took the steam out of the public and private sector undertakings, such as Visakhapatnam Steel Plant (VSP), Bharat Heavy Plate and Vessels Limited, Hindustan Shipyard Limited, the zinc-lead smelter of Hindustan Zinc Limited and Coromandel Fertilizers Limited, which made up the time-honoured industrial conglomerate of the city.

The Visakhapatnam Port Trust, the Dredging Corporation of India and the Visakh Refinery of Hindustan Petroleum Corporation Limited (HPCL) were rare exceptions in this dismal scenario. Deep-sea fishing suffered as a result of the depleting shrimp grounds in the Bay of Bengal. Software units that had mushroomed overnight fell quiet after the information technology bubble burst.

In that period, Vizag had nothing concrete to boast of save the National Thermal Power Corporation's (NTPC) 1,000-MW Simhadri Thermal Power Station and the many new projects, with extended stay, on the drawing board.

Now, after what seemed to be a cathartic process involving closures, sell-offs, takeovers and the recasting of production and marketing strategies by the industry, Vizag is back in business. There have been classic cases of turnarounds - for instance, VSP put itself on the rails again after being almost finished off by fierce competition and the burden of loans and interest - and of comebacks - for instance, the Visakhapatnam Export Processing Zone (VEPZ) going in for new infrastructure projects after a hesitant start.

While VSP fought the odds to emerge as the best among the integrated steel plants in the country in terms of production, techno-economic parameters, sales turnover and labour productivity and has since started posting net profits, VEPZ scripted its own success story. From a mere export turnover of Rs.18.14 crores in 1998-99, it improved its performance to Rs.253 crores in 2001-02. It has 18 units engaged in activities as diverse as making aluminium alloy wheels for automobiles, cutting and polishing diamonds, and manufacturing contact lenses and woollen garments. Good infrastructure incorporating fully developed plots, ready-built space in the standard-design factory complexes, water, power, telecom and customs facilities, and a host of incentives from the Central and State governments make VEPZ an ideal destination for export-oriented units. VEPZ broke fresh ground by introducing high-speed datacom and the Internet facility through an earth station within its premises and soon found investment pouring in from the IT sector.

A VEPZ spokesman said: "Another attraction the zone holds for investors is its distinct advantage of being equidistant from major industrial sectors of the country and the access it gives to South-East Asian countries. Of course, the easy availability of managerial, technical, and skilled and semi-skilled workforce and the peaceful industrial relations add to it.''

For VSP, the workforce proved to be a key factor in its turnaround. The company spokesman said that besides factors such as operating practices and technological discipline, its committed workforce underscored the principle that efficient handling of the basic resources of "men, money, material and management" is crucial for the success of an industry.

Some of the new investments beginning to come through include the Rs.500-crore Vizag-Secunderabad pipeline of Gas Authority of India Limited for delivering liquefied petroleum gas (LPG) equivalent of 2.5 lakh cylinders a day to HPCL and also to other oil-marketing companies in Vijayawada and Secunderabad, and the first-of-its-kind underground mined rock cavern for the storage of LPG by South Asia LPG Company Private Limited, a joint venture of HPCL and Totalfina of France.

Vizag's destiny virtually stands redefined with the State government identifying it for the implementation of three mega infrastructure projects - Special Economic Zone, Pharma City and Gangavaram port. The projects will capitalise on the locational advantages and the resource abundance of Vizag. The government will also put in place programmes to give the sea-caressed city its due on the tourist map of the country.

Andhra Pradesh Industrial Infrastructure Corporation Limited has already set in motion the process of implementation of these ventures through public-private partnerships; the multi-purpose, deep-water Gangavaram port project has advanced to the stage of being awarded to the developer.

The SEZ will unfold with a clear focus on "infrastructure-led development" wherein world-class facilities combined with an enabling policy and procedural framework are to spur industrial investments. To be located 50 km from Vizag at Atchutapuram-Rambilli, the 9,200-acre (3,680-hectare) site of the SEZ is proposed to be developed in two phases at an estimated cost of Rs.2,000 crores; it will emerge as an industrial corridor between Vizag and Kakinada.

The proposed Pharma City, for which EOI (expression of interest) bids were recently invited on a global basis, is expected to enhance further the State's standing in the pharmaceutical industry. With the globalisation of world trade and the emerging opportunities in the pharma sector, the State government hopes that the Pharma City, to be developed on a 1,900-acre (760 ha) site at a proposed outlay of Rs.300 crores, will become an exemplary centre for locating domestic and global units manufacturing bulk drugs, drug intermediaries and formulations.

Vizag's tryst with the pharmaceutical sector has already begun with the Hyderabad-based Divi's Laboratories Limited, which is poised to launch production at its new unit using infrastructure left behind by the now-wound-up Birla Periclase on the Bhimili shore.

For ensuring reliable water supply for the new projects, the government is implementing the Visakhapatnam Industrial Water Supply Project with private sector participation. This will improve the transmission capacity of the Eluru Left Bank Canal, which currently meets the needs of VSP and also the NTPC's Simhadri power station, and subsequently augment the supply from the Godavari river. The project is to cost Rs.200 crores in the first phase and Rs.400 crores in the second.