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Set for takeoff

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With metros like Chennai and Bangalore witnessing saturation, the attention of investors is turning towards Tier-II cities like Coimbatore.

Survey in progress at the site where ETL is promoting an IT park in Coimbatore.
Survey in progress at the site where ETL is promoting an IT park in Coimbatore.

R.Y. Narayanan

Coimbatore has never had it so good. Talks of investment pouring in are thick in the air. Some have become public knowledge like the L&T planning to establish a massive engineering facility near the city; or Gangotri Textiles going for Rs 350-crore investment to ramp up capacity in weaving, processing and garment manufacture.

Others are quietly going ahead with their expansion plans but being privately owned, there is little talk of their investment decisions. According to the grapevine, new players waiting in the wings include the Rane group of Chennai and the wind energy major Suzlon. The city is on course to become a software hub with Cognizant Technology Solutions establishing its facility at the software park in the Kumaraguru College of Technology. Elnet Technologies Ltd (ETL) has begun work on its IT Park at Peelamedu. The Sate Government's ELCOT also has acquired 30 acres of land to build an IT park on the lines of Chennai's Tidel Park behind the Government Medical College. The basic infrastructure alone will cost about Rs 250 crore in these two projects.

Other big- ticket investors include Precot Mills, K.P.R. Mills and S.P. Apparels. The Coimbatore Tiny and Small Foundry Owners Association is establishing foundry parks at Arasur and Manickampalyam involving an investment of about Rs 100 crore.

The hospitality industry is also in for good times and the Tata group has begun preliminary work in building a hotel in the city. There are reports that a Chennai-based hotel group is also interested in the city.

What has suddenly made Coimbatore an investment hotspot? While many of the investment plans are still to crystallise, their impact is unmistakably felt in several spheres such as the hospitality sector, real estateand retail business. The general mood is upbeat though there is hardly any attempt by either the Centre or the State Government to hard-sell Coimbatore as a preferred alternative to Chennai or Bangalore, where the civic infrastructure seems to be cracking up.

Coimbatore is consolidating its position in the industrial map of the country in a variety of fields textiles, auto components, pump manufacture, readymade garments, textile machinery, castings and software.

The city, which was in the grip of prolonged recession in the 1990s due to the twin blows industrial recession and the serial bomb blasts that rocked Coimbatore in 1998 has in the last couple of years shaken off their crippling impact. Taking the buoyancy in retail as a yardstick one can safely conclude that Coimbatore has scripted a perfect growth story.

In the last two or three years, large textile and jewellery showrooms have been established by Alukkas and Kalyan group from Kerala, Ganapathy Silks from Sankarankovil and Shree Krishna Collections from Chennai.

Another indication of growing interest in the city is the spurt in the number of flights to and from Coimbatore. From a handful of daily flights, as many as 19 flights operate here and more airlines are eyeing the Coimbatore skies. There has been phenomenal growth in the passenger traffic in the past two years from around 24,000 in December 2003 to 41,000 in December 2004 and 60,062 in December 2005.

The growth in the number of two and four-wheelers in the last two years in a city already known for its love for automobiles is yet another proof that Coimbatore has finally arrived as an investment destination. Nandini Rangaswamy, Chairperson, CII, Coimbatore Zone, says the textile mills in the region have seized the opportunity offered by the Textile Upgradation Fund (TUF) to modernise and expand capacity. With textile mills in developed countries like the US closing down, the manufacturing activities have shifted to countries such as China and India. Some of the blue-chip textile mills of Coimbatore had regularly modernised their operations, maintained high quality and productivity and kept their costs under check. These mills were able to weather the difficult times of the 1990s. Many mills in the private sector have quietly gone for forward and backward integration.

With metros like Chennai and Bangalore witnessing saturation, the attention of investors is turning towards Tier-II cities and surveys have shown that Coimbatore figures among the top 10 cities as a potential investment destinations. She points out that L&T would have done its homework before buying a vast stretch of land near Coimbatore to establish a manufacturing unit. The availability of skilled and technically qualified manpower, pleasant climate, facilities like water and power, and quality educational institutions have catapulted the city as a top investment choice.

Nandini adds that five years ago when the CII began its promotion of Coimbatore as an IT destination, Bangalore and Chennai were still evolving as IT hotspots. At that time there was very little talk of any investor coming to Coimbatore. But in the last two years the inquiries have increased; the IT sector has started looking at Coimbatore because of saturation in tier-I cities.

"But I hope the development of Coimbatore will be sustained and widespread and we don't go the Bangalore way." While it would be premature to quantify the investment that the city will soon witness, land prices are shooting up, havingappreciated by 40-50 per cent in a year.

(This article was published in the Business Line print edition dated February 4, 2006)
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