Smaller units catering to BHEL in Tiruchi to increase capacity

The small and medium enterprises (SMEs) operating in and around Tiruchirapalli (Tiruchy) plan to invest around Rs 250 crore to upgrade their facilities. Most of these enterprises are engineering units and predominantly cater to public sector company Bharat Heavy Electricals Ltd’s (BHEL’s) units. These have also decided to join hands to address the capacity issue.

Meanwhile, BHEL is likely to increase its outsourcing orders by 150 per cent.

A V Krishnan, executive director, BHEL Tiruchy complex, which manufactures boilers for power projects, said he had asked all the vendors to increase capacity. Currently, the complex has around 500 vendors, of which around 420 are in and around Tiruchy.

“We are ready to increase our orders, but vendors don’t have enough capacity. We have suggested them to adopt the cluster approach to address this issue,” added Krishnan

Rajappa Rajkumar, president, BHEL Small and Medium Industries Association (BHELSIA) said, “we are thinking of a model where one cluster will take up an order which in turn will be shared with other members in the cluster”.

The association is planning to float a company for clusters that will have a common facility centre in the outskirts of Tiruchy. It will be used by the member units.

The detailed project report for the proposal will be ready in six months. “Total investment would be around Rs 100 crore, of which Rs 60 crore will come the Government of India and Rs 15 crore from micro, small and medium enterprises. The remaining will be contributed by the members of the clusters,” added Rajkumar.

S Sampath, managing director, Velmurgan Industries and Secretary of BHELSIA added that the proposed cluster will not only ease the operations, it will also bring down the investment cost by 15 per cent and will increase the capacity by 50 per cent.

“Going forward, by 2011-12, BHEL will increase its outsourcing to seven lakh tonnes” said G Ramakrishna, general manager, outsourcing, BHEL Tiruchy. He added that BHEL Tiruchy also roped in 25 micro units, mainly women entrepreneurs, into the net. These units will employ two to three people.

The biggest challenge for the units, however, is finding labour. It was estimated the industry would require around 5,000 people over the next two years.

“The other major issue is that of power,” said M Somu, one of the suppliers for BHEL and Hero Honda. Currently the town faces a power cut of three hours in a day.

The units, hence, have to invest in generators, an additional expenditure that they can’t avoide.