BHEL, Trichy, component suppliers may face closure

About 150 small industrial units in Tamil Nadu may be facing possible closure by the end of this financial year because of alleged step-motherly treatment to them by public sector giant BHEL, Tiruchirappalli, their main customer.

Trouble started for these vendors a few years ago after the Tiruchirappalli unit of the power equipment major began shifting some of its sourcing requirements to other BHEL units.

About 100 of the 450 small units that had come up in Pudukottai, Tiruchirappalli and Thanjavur districts of Tamil Nadu have shut shop and another 150 are facing closure, according to the Tamil Nadu Small and Tiny Industries Association (TANSTIA) and the BHEL Small Industries Association (BHELSIA).

Apart from dwindling orders, the small vendors in the region have been hurt by the slow progress in the approval of power projects in the country. The units are operating at about 25-30% of their capacity, they say.

According to the industry associations, as many as 12 thermal power plant projects in the country are awaiting approvals from the environment ministry. Other issues include coal supplies and a slowdown in realising funds for setting up power plants in the private sector.

Senior executives of BHEL here declined to comment. E-mails sent to BHEL officials in New Delhi seeking their comments were also unanswered.

The Tiruchirappalli unit consists of a high pressure boiler plant and a seamless steel tube plant. It has been profitable over the past three decades and contributes about a third of the state-owned company's revenue.

BHEL's net profit declined 6% to Rs 6,615 crore and turnover rose 1.3% to Rs 50,156 crore in 2012-13.

The 450 fabrication and component units had been set up with investments totalling Rs 1,500 crore, according to Rajappa Rajkumar, vice president of TANSTIA, the apex body of the SME sector in the state.

The units directly and indirectly provide employment to about 40,000 people.