Power outages cripple key industries in Coimbatore

With no power for five to six hours during the day, entrepreneurs face 'dark future'

Thirty-two-year-old Karthik's company on the outskirts of Coimbatore makes machines to manufacture gear components, and used to earn revenues of around Rs 1 lakh a month. But in wake of the post-Diwali power crisis, the volume of business has fallen by almost 50 per cent and he now runs only two of his four machines.

Many other entrepreneurs in Coimbatore have shut their businesses partially or completely. Some have taken jobs in others' factories. Power cuts are back in the town after a gap of four months. They range from five to six hours during the day, and last for an hour in the evenings, locals said.

Representatives of the three key industries - engineering, pump sets and grills - in this town, which houses lakhs of micro and small enterprises (MSEs), said unanimously that Coimbatore's economy was collapsing owing to the power crisis, which has continued for four years now.

According to Tamil Nadu Chief Minister J Jayalalithaa, "the sudden and unanticipated drop of about 2,500 Mw can be directly attributed to Central government agencies, including Central generating stations and Central public sector undertakings…"

"While the power cut is becoming a political issue between the Centre and the state government, we are caught in between," said J James, Coimbatore district president of the Tamil Nadu Association of Cottage and Micro Enterprises. Its members are engineering units that produce parts for a range of industries, from bicycles to aircraft. James estimates that about 7,000 units have closed, causing job losses of 80,000-100,000.

"The production loss is around Rs 100 crore a day and another Rs 20 crore by way of interest, wages, maintenance and other costs," said James, ruling out the use of generators. While grid power costs around Rs 5.30 per unit, using generators would send the cost soaring to Rs 13-14 per unit. The labour cost per eight-hour shift has risen to Rs 500-600 for a skilled worker, from around Rs 300 four years back, while the product price remains at about Rs 80.

With major customers - big industrial groups in Coimbatore - now looking at moving to other states and even outside the country, James said the future looks "dark". LMW, CRI Pumps, Pricol and Texmo recently announced that they would set up manufacturing facilities in Gujarat and Jharkhand, and even in China, mainly due to the cost advantage.

Next to engineering, Coimbatore is known for the manufacture of pump sets (mainly agricultural pump sets). Over the past four to five years, Coimbatore's share of India's output of pump sets has fallen from 75 per cent to 50 per cent, while 40 per cent of the factories have shut their doors and orders are now flowing to other states, more particularly to Gujarat, said R Kalyanasundaram of the Tamil Nadu Pumps and Spares Manufacturers' Association.

"We are not able to compete with other manufacturers in pricing and supply," said Kalyanasundaram, who notes that genset-based power production costs some Rs 28-30 per unit, compared to Rs 5.50-7 per unit from the grid.

The situation is the same in the grill industry, which caters to the construction industry. I Sahul Hameed, district president of the Grill Manufacturers Welfare Association, said that some 8,300 micro enterprises earlier operated in Coimbatore. In the past two years alone, however, 15 per cent had shut down and moved to neighbouring states such as Kerala, where the industry is booming.

Unlike other industrial units, grill manufacturers cannot run on generating sets, since they require a high voltage line. "If a grid connection is not available, we cannot survive," said Hameed, who noted that the industry has a good flow of orders. The industry can make grills worth Rs 16-20 crore a day, but does barely half of that, he added.

Coimbatore's industries have sought the support of the Central and state governments, because tens of thousands of jobs are at stake.