Improvement in power supply has not brought cheer to hundreds of BHEL’s ancillary units in and around Tiruchi. The setback of power sector has hit them hard. Apart from commissioning new power plants, the problem of coal links has caused capacity underutilisation even in existing power plants across the country. The sustainability factor is bleak for ancillary units.

Owners of ancillary units that had scaled up production capacity two years ago anticipating higher outsourcing demand are now unable to repay their debt. They are desperately looking for the State government intervention to ensure the BHEL prioritises local vendors to safeguard the livelihood of several thousand workers and their families. Many ancillary units had invested heavily upon BHEL’s assurance of constant orders for at least 10 years. If the situation continues, they would be left with no option but to close down.

For smaller industries, a change in the model of outsourcing business advocated by BHEL has seemingly affected ancillaries. To cut down delivery cycle time due to stiff competition from private players, BHEL has advised vendors to source material for fabrication. According to an industrialist, a working capital of Rs. 1 crore is required to adapt to the “away centre” business model advocated by BHEL. The industries are unable to decide on investments as the order book position of the BHEL is not robust.

The sustainability of vendors who are facing repayment problems has become a big question under the present scenario, says M. Srinivasan, president of BHELSIA.

There was no hope round the corner. If anything, the industries had been forced into a calamitous situation by the Centre’s decision to pass on the higher cost of imported coals to customers. State utilities, the industrialists fear, would not raise the cost of power for political reasons. This would only mean that the independent power producers would rather continue with underutilisation of their capacities and desist from taking the risk of importing coal at higher costs. Once known nationally and even internationally as a fabrication hub, Tiruchi was bound to lose its prominence, the vendors say.


  • Change in outsourcing model a direct hit on ancillary units

  • Ancillary units apprehensive about Centre’s decision to pass coal import cost to customers


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