Road transport was the main factor in the demise of many of the light railway lines. In this case, the lines were chiefly used by Tata employees only and they were laid down as light railways so that the maintenance costs could be kept down and also to ensure a rapid construction.
In the early days of the light railways, the tracks were usually laid alongside existing roads and in cases where there were no roads, the track was laid in such a way that the track-bed could also serve as a road if required. This way they ensured that construction costs were low, as surveys for line alignment and land acquisition issues could be...
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avoided. Before the advent of faster buses, this also ensured that the light railways had an excellent patronage. But this very idea later spelled doom for almost all the light railways as buses would soon become faster and more convenient than slow, narrow gauge trains.
Out of all of Tata's lines in the area, the Chinchwad-Mulshi line had the best chances of being converted to a regular railway line. But the expansion of the city and the gradual takeover by faster buses, meant that the line saw its prospects of being a popular commercial line, slashed very quickly. Also, while there was a possibility to connect it to the Roha-Bhira line and have a new connection from Pune to Roha, Roha itself was a non-descript town and barring the suburbs of Pune, there wasn't much traffic along the route to justify a passenger railway line.
Once the construction of the dam was completed, the lines were only used as an employee shuttle service and occasionally transporting equipment. Maintaining the entire line with only such low volume of traffic soon became a financial burden. Buses and trucks served the purpose better, and the railway lines were soon abandoned.