Smaller units in Tiruchy to set up captive power plant

Small and medium enterprises operating in and around Tiruchirapalli (or Tiruchy for short) have decided to jointly set up a 3Mw power plant with the use of second-hand equipment sourced from Korea and China, according to industry representatives.

These engineering units, numbering around 500, cater mainly to state-owned Bharat Heavy Electricals’ Tiruchy plant, which manufactures boilers. These units are in the process of upgrading their facilities to meet the requirements of BHEL, which plans to enlarge the scale of outsourced orders by 150 per cent, from the current Rs 1,125 crore to Rs 2,800-2,900 crore in 2011-12.

However, power shortages are a major constraint. Rajappa Rajkumar, president of the BHEL Small and Medium Industries Association (BHELSIA), said that power cuts not only affect quality, but also delivery schedules. The association has mooted the idea of setting up a 3Mw power plant, and a majority of the units have agreed to the proposal.

“The proposed plant would cost around Rs 15-20 crore, which the industry can afford, considering that the power cuts cause losses,” said Rajkumar. The industry faces a four-hour power cut every day, he noted. About 30 generators with capacities of 100-125 KV have already been added, said Rajkumar.

M Somu, a supplier to BHEL and Hero Honda, said that the town currently faces a compulsory power cut for three hours a day. “We now have to invest in generator sets, which will mean additional expenditure, but we don’t have a choice,” said Rajkumar.

Members of the association are planning to visit Korea and China to buy second-hand boilers and other equipment. The power plant can be set up in six to nine months, and can run for at least 15 years.

These units are already looking at adopting a ‘cluster’ approach (whereby a few companies pool their resources and jointly supply components to BHEL) to address the capacity constraints. The cluster approach will enable them to set up common facility centres on the outskirts of Tiruchy, which will be used by the member units.

Rajkumar added that the detailed project report for the proposed cluster would be ready in six months. Total investment in the cluster will be around Rs 100 crore, of which Rs 75 crore will be contributed by the Union government, for which in-principle approval has been given, and the remainder by members of the clusters, according to Rajkumar.

S Sampath, managing director of Velmurgan Industries and secretary of BHELSIA, said that the proposed cluster will not only facilitate ease of operations, but also bring down investment costs by 15 per cent and increase capacity by 50 per cent.

BHEL-Tiruchy’s outsourcing started in 1969 with 815 tonnes and increased to 400,000 tonnes in 2009-10. In terms of value it climbed from Rs 0.25 crore to Rs 1,125 crore, recalled G Ramakrishna, general manager in charge of outsourcing at the company.

The vendor base over this period increased from 12 to 500 and the number of jobs created by these units has gone up from 120 to 50,000.