The man, identified by prosecutors as the factory's former director Ilya Averyanov, told a radio station over the phone he was holed up inside as special forces circled the building.
"I shot one guy and unfortunately I think I killed him," the man told Business FM. "If I survive, I will fight to the end ... Now I will either shoot myself or hand myself in."
The man said he had opened fire in self defence to stop people taking the factory from him. "They used fraudulent documents to steal my factory and bankrupt me. I have eight children," he told Business FM.
Other media reports, citing Russia's interior ministry, said the man later fled the scene and was on the run.
The "Menshevik" factory was being reviewed for bankruptcy by a Moscow court, state news agency RIA reported. Its owner had filed several complaints with the courts, arguing that he was being defrauded, the agency added.
(Writing by Polina Ivanova; Editing by Andrew Heavens)
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)