The Hindu Business Line : A beehive of industry and optimism

Over a period of time, relationship between the ancillaries and BHEL developed into a love-hate kind, with each depending upon the other and BHEL feeling it was doing enough for ancillaries and they feeling that BHEL was being supercilious. To BHEL, the ancillaries were like adult, unemployed children at home, living off parents and not doing enough to earn their living. BHEL was for long telling `the children' to `learn to stand on your own legs'.

CITY'S PRIDE: BHEL's valves plant in Tiruchi.

For a better part of its 2,000-year history, Tiruchi represented a covetable piece of land on the banks of a perennial river worth fighting a war for. The Cholas, Pallavas, Pandyas, Hoysulas and Nayaks jostled with each other to wrest control over the town and the fertile lands adjoining it, as did the Moghuls, French and the British in the later years.

In the early 1960s, to a young bureaucrat called Dr V. Krishnamurthy, Tiruchi looked like an area, which ought to be developed as an industrial centre. He mooted the idea of setting up a boiler unit of Bharat Heavy Electricals Ltd — a proposal he advanced risking accusation of being parochial. For the remainder of the century, Tiruchi was synonymous with BHEL. Its name brought images of bending and welding of metals, of sprawling temple complexes and harsh climate.

Busy town

Today, in Tiruchi, there is so much activity that the place resembles a beehive into which somebody poked a stick. The year 2005-06 will probably be remembered as epoch-making, if only for the mood of optimism the year has brought in. The economic upswing in the country has not trickled into Tiruchi. It has flooded the town.

The 300-odd metal fabricators, who depended upon BHEL for survival, are gasping for capacity. People are talking of new industrial estates — several of them — each potentially home to Rs 100 crore to Rs 250 crore of investments. They are talking of new products such as windmill towers and rice-husk boilers. An IT school is coming up, as is a branch of the Indian Institute of Technology, Madras. There is a demand for building up the tiny airport into one that could handle larger aircraft and a call for more flights.

The big dada is busy

When the figures come out, BHEL will be shown to have processed a record three-lakh tonnes of steel in 2005-06, one lakh more than the previous year. It is pushing ahead with its Rs 475-crore expansion — the largest in 20 years — that will take its capacity from 3.5 lakh tonnes now to 7.5 lakh tonnes by 2011-12.

Dr V. Gopalakrishnan, Executive Director, BHEL, Tiruchi, has a three-pronged strategy to arrive at the goal. The first is to triple sales from utility boilers (for large power plants) to Rs 6,000 crore. Dr Gopalakrishnan sees no big problem here, the market being so good.

The second is to get into `small boilers' segment, where BHEL today has a negligible presence. These are boilers for small-sized captive and co-generation power plants, waste-heat recovery boilers for steel and paper industry and stoker boilers for sugar industry.

According to Dr Gopalakrishnan, BHEL continues to be a preferred vendor but customers have stopped giving enquiries to BHEL because the company is not into these products. He targets revenues of Rs 3,000 crore from this business by 2011-12.

Desalination equipment

Finally, BHEL wants to get into other non-conventional areas, such as equipment for seawater desalination. The idea is to produce power, perhaps using biomass, and use the power to split seawater into drinkable water and salt. The equipment could then be exported to West Asian markets. Preliminary marketing efforts are under way.

Between this and other services such as `renovation and modernisation' and `consultancy', Dr Gopalakrishnan believes it possible to garner revenues of another Rs 1,000 crore.

Robust order books

Above all, BHEL intends to focus on capability creation, with a renewed thrust on R&D, the cornerstone of which is research into coal and combustion technology. Other companies also are growing. Cethar Vessels Ltd, one of the larger manufacturers of industrial boilers, expects its turnover for the current year to cross the Rs 800-crore mark, against Rs 325 crore last year. Order book is robust and turnover next year is likely to be around Rs 1,300 crore.

Cethar produces a range of small boilers for captive and cogeneration power units and heat recovery steam generators. Just as BHEL wants to enter its turf of (smaller) industrial boilers, Cethar Vessels intends to invade BHEL's market of large boilers. The company's Chairman and Managing Director, Mr K. Subburaj, says that in the near future, the company will be producing boilers for power projects between 250 MW and 1,000 MW.

Growing children

When BHEL was set up, it spawned a clutch of ancillary industries, mostly metal fabricators who did jobs for BHEL. Over a period of time, relationship between the ancillaries and BHEL developed into a love-hate kind, with each depending upon the other and BHEL feeling it was doing enough for ancillaries and they feeling that BHEL was being supercilious. To BHEL, the ancillaries were like adult, unemployed children at home, living off parents and not doing enough to earn their living. BHEL was for long telling `the children' to `learn to stand on your own legs'.

Today, the healthy disconnect is happening. Even as the ancillaries are getting more business from BHEL, the BHEL component of their total business is shrinking. These metal fabricators are getting jobs from elsewhere, from other sectors.

Change of focus

Some of them have gone into the manufacture of windmill towers, an area that is booming. While some of the bigger units are trying to break into the boiler club, the smaller ones are getting into the manufacturing of products such as dampers, pumps, motors, fire fighting equipment, valve actuators, control panels and electro-forged floor grills. A few of the units are looking at "global opportunities".

Only in 2003-04, of the Rs 80-crore combined turnover of these 150-odd units, Rs 70 crore came from jobs for BHEL. In the current year, these units expect a turnover of Rs 350 crore — business from BHEL will not be more than Rs 120 crore. Clearly, the children have grown up.

Industrial estates

Here is the evidence: At least three new industrial estates are coming up near Tiruchi. One on the `Thanjavur road' and two on the Tiruchi-Chennai highway. According to Mr Rajappa Rajkumar, President, BHEL Small and Medium Industries Association (BHELSIA), some Rs 80 crore of investments have already come up in the 500-acre Thanjavur road industrial estate. Twenty companies are putting up metal fabricating capacities, the leading ones being windmill tower manufacturers, Anand Engineering and Bharakadh Industries. Windmill tower is a growing business. Last year, about 700 — or half the windmill towers produced in the country — were made in Tiruchi. In 2005-06, Tiruchi units would make more than 1,000 towers.

The constraint

The spurt in orders has left fabricators in this region gasping for shop-floor hands. There is a shortage of trained manpower — mainly, fitters, welders, grinders, painters, electricians and gas-cutters.

Thanks to the growth in power equipment and the advent of new opportunities from the windmill sector, the `load' on the metal fabricators in Tiruchi region has been on the rise. In 2002-03, these units processed 60,000 tonnes of steel. By last year, the load had increased to 1.5 lakh tonnes, thanks to windmills manufacturers who got about 40,000 tonnes of towers made at Tiruchi. In 2005-06, the load increased by about 10,000 tonnes, but is expected to touch 2.5 lakh tonnes next year. All these require trained hands. Mr Rajappa Rajkumar says there is a scope for providing jobs to 8,000 people.

Tiruchi units are now engaged in a massive manpower hunt. College-hopping has become a regular exercise for BHELSIA. In fact, one of the reasons for setting up industrial estates is to attract people from nearby villages.

A permanent solution to the problem is in setting up a training centre. BHELSIA has a plan to do it under a non-profit company called Trichy Engineering and Technology Cluster, created to set up common facilities for the units with grant from the Government's cluster development scheme. The company has received Rs 50 crore from the Central Government. A project proposal was submitted in August 2005 to Small Industries Development Corporation (SIDCO), which is the nodal agency for Tamil Nadu for administering the cluster development scheme. SIDCO is studying the report.

The shortage of manpower is a serious concern, but it also underscores the growth that is happening in Tiruchi. BHEL is on an uptick, so are the 300-odd ancillaries. Can you imagine — in the early days of liberalisation a decade ago, many thought that global boiler biggies such as GE and ABB would finish off BHEL and Tiruchi would die!