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The Demise of Atlas Cycles

A brand that made commuting cheap and accessible for millions, finds itself caught up in a series of legal mishaps

Arvind Kumar Shitij Sharma

Atlas Cycles established its 25-acre factory in 1951 in Sonipat, Haryana. During the initial years, the company operated out of a makeshift shed. The new factory produced and sold more than 4 million cycles annually. The factory attracted local and migrant workers from other parts of the country. It was also the one to introduce India’s first racing bicycle in 1978.

From originally being a bicycle saddle manufacturer to becoming the largest cycle manufacturer in the country, to becoming the focus of legal battles that caused production to come to a halt, Atlas Cycles has had its fair share of ups and downs. The demise of this company appears to have been brought about by members of the very family that were its progenitors. In the process, highlighting the shortcomings of a public company with a major portion of its holdings in the name of a single-family.

The factory now stands abandoned, the sound of heavy machinery no longer muting the traffic outside. On the grounds of the factory itself, there are not more than five or six people. No one is allowed to enter the factory, including reporters, because of a court-mandated decision. The material impact of the dispute in the Kapur family is as present a picture as the empty yellow factory with its rusted gates.

However, beside the factory building is the Atlas Ram Mandir, which is still open to the public between the hours of 5 to 9 in the morning and 6 to 10 in the evening.

Following multiple lawsuits and management crisis, Atlas cycles Ltd. had to shut its operation. The company’s rising liabilities led to a strike by the workers in 2011. A court judgment (Case No. RT657/07/01/2011/01.07.2013) made it illegal for the workers to protest or to hold public meetings in and around the factory.

There’s a blackboard just near the entrance of the factory. Bold white letters at the top of the board proclaim ‘Suchna’ or Notice. It’s a legal notice dated 15-04-2015, barring protests or assemblies within 100 meters of the factory.

“He (Mahesh Jhanjharia) had to eventually quit his job and find work elsewhere.”, said Brijesh Jhanjharia.

“My father used to work at this factory for fifteen years. Before the dispute between the owners began, the company went into large sums of debt which caused a lot of trouble for workers like him. Many workers, mostly migrants had to vacate their quarters. The company was unable to pay the workers’ salary and did not deposit provident fund allowances for over 6 months.”, said Brijesh Jhanjharia whose father worked at Atlas Cycles’ factory in Sonipat. The protest lasted for over a month and the workers demanded that the company must relocate them to an Atlas Cycles factory in Bhiwani, Haryana. “He (Mahesh Jhanjharia) had to eventually quit his job and find work elsewhere.”, said Brijesh Jhanjharia.

Sonipat being a predominantly industrial town was bustling with activity and new industries were being set up. By 1960, Milton Cycles set up a cycle auxiliary parts factory in Sonipat and later moved on to manufacturing bicycles and posed direct competition to Atlas Cycles. Milton Cycles is still functioning today. Many workers were relocated and found other work.

"... the manufacturing unit at Sonipat unit has been suspended with immediate effect and the Board of Directors may in future, after assessing the situation, may direct for the closure of the said unit or otherwise, as it deems fit," Atlas Cycles Ltd said in a regulatory filing.

To understand the current state of the factory, we must look at the series of events that led us here. According to the residents in the area, Sh. Rai Bhadur Janki Dass Kapur was among those who provided information to the British in exchange for favors. Even though there is no official record this, it seems to be tied closely to the locals’ perception of the company and the man himself. But the trouble itself began much later after the company had already been incorporated and been through its subsequent golden age.

Atlas Cycles (Haryana) Ltd was, for the most part, to be run by the family members of late Rai Bhadur Janki Dass Kapur i.e. the Kapur family. The group itself has a cumulative shareholding which amounts to 45%.

Late Sh. Rai Bhadur Janki Dass Kapur had three sons namely B.D. Kapur, Jaidev Kapur, and Jagdish Kapur. The company has three cycle manufacturing units. These units were located in Sonipat, Sahibabad, and Malanpur. According to a Memorandum of Understanding between the three brothers in 1999, the ownership, control, and management of the three cycle manufacturing units was to be divided amongst the brothers.

The MoU also contained the units which would be headed by each division of the family, and as such, the Sonipat plant fell under the management of the late Shri B.D. Kapur while Sahibabad and Malanpur fell under Jaidev Kapur and Jagdish Kapur, respectively. It also contained an arbitration clause in the event of a dispute or differences arising.

The dispute itself began in August 2000. It was the result of a valuation report prepared following the MoU which left certain members of the family out such as the estranged Arun Kapur. The courts, however, have on multiple occasions noted that even though the Kapur family owns a large majority of shares, Atlas cycles is an independent legal entity that is separate from the MoU entered by the three brothers. And legal disputes such as this not only affect the performance of the company but also rope in dozens of the Kapur family’s other concerns as well as third parties into litigation.

The company has been riddled with legal disputes which began when one of the plants ran into losses which it was alleged were to be made up for by the other two units. The plant is question was the one in Malanpur. However, in 2014, the board of Directors took the decision to close the unit and halt all manufacturing activities. It decided to divide the plant’s territory between the two remaining plants in Sonipat and Sahibabad.

However, as is apparent from the actions of the Board of Directors, all the territories of the Malanpur unit have been transferred to Sahibabad which earns all the profits, even though the Sonipat unit made an equal contribution towards liabilities. The plant, which was earlier flourishing and had successfully completed tenders from the governments of Gujarat and Rajasthan in 2017-18, has been financially choked by the Board of Directors to the extent that it is unable to procure any more loans.

As of now, the Sonipat unit owes Rs. 25 crores to no less than 12 different vendors for supplies it has received. This is in keeping with what the workers have reiterated from time to time, about the irresponsible manner in which both the family and Board of Directors have operated. For now, the factory stands in a legal embargo, putting a stop to operations that began not long after the country’s independence.

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