Crises in power sector industries and their remedies.

From left to right:- Mr. Vipin Kumar Jain, Secretary General, MP Small Scale Industries Organization, Mr. Yogesh Kumar Tamrakar, President, MPSSIO, Bhopal, Mr. S. R. Prasad, Executive Director, Bharat Heavy Electricals Limited, Mr. R. S. Kharb, President, GIA, Bhopal, Mr. Yogesh Goel, Secretary, Govindpura Industries Association, at Business Standard Smart Business event held on 19^th Oct 2013 in association with MP Small Scale Industries Organization and Govindpura Industries Association.

To combat the political issues of the country, the Maharatna Company Bharat Heavy Electricals Limited said it is looking at new areas like nuclear power, transportation and defence. The company’s Bhopal unit called on local industrialists of Govindpura and Mandideep (both in Bhopal) to join hands with BHEL in prevailing sluggish market conditions and cut-throat competitive environment. The company has said the present tough economic conditions are posing a challenge before the company to maintain its ‘Maharatna’ status.

“A couple of years back, the country was moving in geometric progression for establishing power generation capacity from one Five Year Plan to the other. Suddenly, with emergence of Coalgate, land ceiling, environmental issues it has lost way and its impact is being faced in a big way, more so on heavy industries whether public sector like BHEL or multinationals manufacturing power generating equipment. In fact the impact of this devastation on business has now started spreading up to the medium and small industries also.” said S. R. Prasad, Executive Director of BHEL Bhopal unit. He was speaking at ‘Smart Business’ organized by Business Standard in association with Govindpura Industries Association (GIA) and Madhya Pradesh Small Scale Industries Organisation (MPSSIO), Bhopal.

Although BHEL Bhopal is looking for new business frontiers to overcome the on-going crisis, he said country was losing its way as far as power generating capacity is concerned due to issues which are political in nature.

“If these issues persist, we shall be forced to work in suppressive manner and take heavy financial blows which shall put a question mark on our survival,” Prasad further said. “We have succeeded in impressing the Ministry of Defence that now in case of imports in defence, a partnership shall be a must and BHEL has emerged as working candidate.”

A manufacturing unit in Bhilwara in Rajasthan will fetch Rs.800 crore businesses to BHEL Bhopal and minimum 5-7% of this will go to local small and medium scale industries, he clarified. Similarly, he further said, the company has good possibilities of getting technology from Alstom and Nuclear Power Corporation of India Limited, the project has already been approved and clearance of the same is awaited at Prime Minister’s office. He urged the local industrialists that if they want to survive in the present economic conditions, they will have to improve by focusing more on timely delivery of goods and modern technology.

Raising concerns over rising inflation, and costly labour, MPSSIO Secretary General, Vipin Jain raised a demand to relook the costing of orders due to rising labour cost, “Labour cost has become higher due to shortage of labourers on account of government sponsored Mahatma Gandhi Rojgar Guarantee Yojana.Earlier BHEL used to pay Rs 85 per hour labour for any job now it has brought down it to as low as Rs 35 per hour, it has become tough for local industries to supply at such low price Also State Government has fixed min wages of Rs.242 per day for skilled labours while BHEL has slashed per hour labour wages on any job tougher and difficult to supply .”

To which Prasad said, “BHEL also have to consider minimum cost and high quality in present cut-throat competitive environment. If local industries have to secure business they will have to ensure defect free supplies at minimum possible cost,” he said, “This will not only eliminate unnecessary and avoidable cost of rework and rejection but will also make our product very cost effective.”

MPSSIO President Yogesh Kumar Tamrakar also raised concerns over rising prices and challenges of cost cutting in present tough conditions. He urged that there should be more effectiveness in research and development if industry has to make more effective power equipment.

Govindpura Industries Association President R. S. Kharb pointed out reverse auction process of BHEL to get supply from local industrialists. “It is hampering business of local industrialists; it needs to be looked at”. The BHEL Executive Director assured them that issues of local level would be sorted out soon yet overall economic sluggishness and cheaper imports, especially from China, were hurting the business of many local power equipment makers. “Local industries will have to join hands with BHEL if they have to overcome the challenges,” R. S. Tiwari, General Manager of BHEL assured.