Entrepreneurship
The Rise and Fall of ESSAI Industries | A tale of Kashmir entrepreneurship
One of the main corporations of the Industries Department is the J&K State Industries Development Corporation’ (SIDCO). The aim of the government behind setting up this corporation was to accelerate the process of industrialization in J&K in an advanced and modernistic manner. The main function of SIDCO is to promote the development of the Micro Small and Medium Enterprises (MSMEs) in J&K. It is equally responsible to undertake all the Research and Development (R&D) pertaining to viability of potential units in light of location, economy, market and other business viability conditions. The smooth functioning of the firms located within the industrial estates falling in its jurisdiction are completely the responsibility of the ‘Institutional Entrepreneur’ that SIDCO is described to be.
In light of the growing job demand and falling job availability of the people, the J&K Entrepreneurship Development Institute (EDI) was established in 1997 as a premier training institute of the DIC. The main aim behind establishing the JKEDI is to put in place, foster and uphold the growth of entrepreneurship in J&K. As such, the JKEDI has been facilitating young enthusiastic and potential entrepreneurs with training, seed capital and other resources to undertake productive activities.
And on the receiving end in one unique case are two young dynamic entrepreneurs who left their jobs in order to venture together into self-employment giving vent to their entrepreneurial spirits. Having decided to quit the 9-5 job, two of them began to research the local market and the suppliers that dominated the J&K market. One stark thing found during 2010-11 was that 98% of ‘nails’ used in the construction of all sorts across J&K are imported from the rest of the country and only 2% of the demand is met by local production. No matter the size of a nail, the fact of the matter is that the construction industry dominated J&K and ‘nails’ are a fundamental requirement in any sort of construction.
After exhaustive research, the two young men decided to start the first ‘Wall-Putty’ unit in the region. The ‘ESSAI industries’ as they named it in high hope, were facilitated by JKEDI in setting up their plant. The unit was started by employing eight people in 2013 in the Lassipora Industrial Growth Center, Pulwama falling under SICDO. The unit started off well as recalled by the duo with a market response better than their expectations.
The Flood of 2014 disrupted the production for around six months and the production was resumed in the spring of 2015. The shock of 2016 partially hampered the production process and during 2017 the production, supply, marketing and demand were as high as it could get. With this, the obvious business plan of the extension was set in the plan and the ‘No Objection Certificate’ (NoC) for the construction of ‘Plaster of Paris’ (PoP) was attained from SIDCO itself. The construction of the unit began in the March of 2018, on 4 Kanal of land in the same estate. The project cost of the PoP plant was 3.56 crore in 2018 and the trial batch was produced in the March of 2020.
Soon after the production of the trial batch the dusting issue surfaced, which was obvious given the existent technology and practices of production pan-India and ironic in light of the NoC already given to the entrepreneurs. The vicinity reported dusting issues. Queries and complaints surfaced. And given the principle of ‘greatest good of greatest number’ the production of the PoP plant was brought to a halt. The market share of the unit declined drastically. The unit failed to meet the suppliers’ demands on time. Delays became a routine and order cancellations increased. About 45 people employed in the unit lost their jobs with the shutting down of the plant. With this, the ESSAI industries and their celebrated PoP vanished from the market leaving the entrepreneurs to find non-obvious ways to pay off the debts.
The entrepreneurs approached SIDCO in order to call for help. The very genuine and obvious demands of the unitholders are to auction the closed unit and relocation of the firm so that production could be resumed. It has been observed that the authorities have failed over the past two years to undertake these two simple tasks in order to liberate the duo from the crisis they are facing. The auctioning notices (one or two) have failed to materialize. No relocation is being facilitated and no committee is being made to look deeper into the issue and no solution has been proposed to date.
At the individual level, the duo has been liquidating their household assets to repay the debts and pay the banks. During 2020-21 they have repaid Rs 32 lakh to the bank while there has been no production. Both the entrepreneurs who are in their 30s are facing hypertension and are on high medication. They have been living stressful lives all of a sudden with the halt in production and facing a downfall that is technically unjustified. While narrating their woeful story they sigh remembering the good times when they were capturing the local market and doing excellently well in business.
The most important outcomes from examples like these are the wrong market signalling. Instances like the above one make entrepreneurship look risky and non-rewarding. In the region of J&K where the job market is already constrained and the unemployment rate is 22%, the only viable solution is that of self-employment, the scope of administrative bottlenecks and callous approach is literally nil. DIC and all its affiliated corporations must revisit their mandates and understand the serious role they are charged with. While the above issue should have been sorted out in a weeks’ time, it can’t be left lingering in thin air for years at a stretch. This write-up will be followed back in three months’ time to access the latest development on the self-employment scenario in the region in light of the case just highlighted here.
The author is an industrial researcher and can be reached at dhaarmehak@gmail.com