Modinagar: Transformation, Turmoil &

The death of an Industrial Township

Introduction
At the conclusion of each work shift, a bustling exodus of workers from Modi
Spinning and Weaving Mills Co. Ltd. and other Modi Group industries marked
the streets. Comprising five distinct units—including yarn mills, a rayon and
silk mill, a thread mill, and the largest, a cloth mill—these entities collectively
employed around 20,000 workers. The township of Modinagar, situated
25km north-east of Ghaziabad along the Delhi-Mussoorie National Highway,
witnessed traffic jams of epic proportions during shift transitions, akin to a
vibrant festival atmosphere, as recalled by Naval Kishor Gupta, a
longstanding member of the Modi group.

The Economic Pinnacle

In the 1970s, the Modi Group ascended to become
India's seventh-largest conglomerate, boasting
assets worth Rs900 crore and annual sales of
Rs1,600 crore. A dominant force in the Modinagar
township, founded by the visionary Gujarmal Modi,
approximately 60% of the local population found
employment within the conglomerate. Employees
enjoyed comprehensive benefits, including three-
bedroom residences, schools, hospitals, and a self-
sufficiency that fostered a sense of familial unity,
attested by V.K. Jain, general manager at Modi
Sugar Mills.

Urban Geography and Industrial Genesis:

A.B. Mukherji's essay, "Modinagar: A Study in
Urban Geography," delineated the township's
linear grid pattern, with residential units
paralleling the rail line and factories on the
opposite side of the trunk road, forming the
town's baseline. The business core, concentrated
near the railway station, featured box-type shops
flanking both sides of the trunk road. The genesis
of this industrial town traced back to Gujarmal
Modi's dream of establishing a sugar mill.
Purchasing the village of Begumabad in 1933, he
officially inaugurated the sugar factory, and in
1945, the industrial colony received the name
Modinagar.

Trials of the Sugar Mill:

The sugar mill faced its first crisis in 1936 when
Gujarmal Modi, anticipating a glut, organized a
syndicate of sugar factory owners to control stock
flow and establish price lines. Despite facing
financial losses, the sugar mill retained its symbolic
significance as the first factory established by
Gujarmal Modi. Subsequent diversification included
the establishment of a distillery in 1959, utilizing
molasses from the sugar mill to produce alcohol.
However, the cornerstone enterprise, Modi Spinning
and Weaving Mills, inaugurated in 1949, became
emblematic of hard labor and dedication.

Family Feud and Industrial Decline:

The demise of Gujarmal in 1976 initiated a family feud, as Kedar Nath
Modi assumed leadership without a clear line of ownership. The ensuing
conflict led to neglect, labor unrest, mismanagement, and technological
obsolescence. The culmination was the closure of the mills, exacerbated
by the 1982 Great Bombay Textile Strike. The feud found resolution in a
compromise in 1989, with Gujarmal's five sons receiving 60% of the
assets and Kedar Nath's three sons securing 40%.
 Transition to Education Hub:
The decline of Modi industries transformed Modinagar from an industrial
powerhouse into an educational hub. Labor issues, familial discord, and
heightened competition precipitated this transition. Despite challenges, the
Modi group is gradually returning to business, signaling a shift from the
expansive vision of Gujarmal Modi to a more close-knit business model,
according to Jain of Modi Sugar Mills.

Questions
·How did the symbiotic relationship between the
Modi Group and the Modinagar township
contribute to the conglomerate's economic
success?

·Assess the impact of the 1982 Great Bombay

Textile Strike other contemporary labour
agitations industries under Modi Group in
Modinagar.

·Explore the role of effective succession

planning in family-owned conglomerates,
drawing insights from the Modi group's
experience.

·Analyse the economic consequences of

Modinagar's transition from an industrial hub
to an educational center. What challenges and
opportunities arise in such transformations?

·Evaluate the factors that led to the decline of Modi

industries, considering labour unrest, mismanagement,
and technological obsolescence. How might these
challenges have been mitigated?

·Discuss strategies for the Modi group's gradual return

to business, considering the lessons learned from its
historical successes and failures.

Submission Deadline: 29.01.2024