BHEL is open to all possible opportunities — brownfield, greenfield, acquisition and joint venture — to enhance its capacity, Some units, in particular, are on a major expansion drive.
The public sector power equipment major Bharat Heavy Electricals Ltd (BHEL’s) Tiruchy Unit, which manufactures boilers, is exploring possibilities to set up a greenfield facility in Western India. A senior official from the Unit said the unit is not able to acquire land in Tamil Nadu for future expansion, with suppliers’ capacity constraints being a major reason for the possible shift from Tamil Nadu.
Speaking to Business Standard on the sidelines of Boilers 2010, organised by the Tamil Nadu Boilers Association, A V Krishnan, executive director, BHEL Tiruchy said that presently a Rs 1,300 crore expansion plan is being implemented and it will be on till 2012. The proposed investments include a Rs 390 crore greenfield facility at Tirumayam, near Tiruchy, which is expected to commence production in November 2011.
By March 2012, the unit is expected to reach 650,000 tonne physical capacity and a turnover of Rs 15,000 crore. “Beyond this we are not in a position to expand our capacity in Tiruchy, to cater to our customer demand, since land acquisitions and raw materials are the two biggest challenges,” said Krishnan.
It may be noted, BHEL had asked for additional 45 acre in the radius of around 6-8 kms, but the state administration is yet to identify.
“We first have to address the challenge of sourcing raw materials, before thinking about new products,” said Krishnan. The possible move include set up a manufacturing unit in Maharashtra or Madhya Pradesh,” said Krishnan. The unit has started segregating the products, by setting up satellite manufacturing facilities.
For instance Tirumayam manufacturing facility is to manufacture pipes. Similarly the unit is now planning to set up a manufacturing facility for boiler headers. “Currently the proposal is in discussion stage, the project would attract an investment of around Rs 200 crore,” said Krishnan.
Commenting on suppliers capacity constraints, he said, around 500 vendors in and around Tiruchy, with a total capacity of 250,000 tonnes cater to the unit. “This is not enough for us, and we want 30 per cent of our suppliers to have 500 tonne plus capacity. Presently, only three contractors have such capacity, while the rest have only 60-70 tonne capacity.”
Recently, BHEL-Tiruchy added 52 vendors from Madhya Pradesh, Uttar Pradesh, Punjab and Andhra Pradesh who are supplying 150,000 tonnes. “It is better to be close to the vendor base which would cut the logistics cost,” he said.
The other possible greenfield facility is for tubes and pipes. Currently BHEL-Tiruchy’s requirement is around 225,000 tonnes of tubes and pipes ever year of which 70 per cent are imported. This is expected to increase three times by end of 12th and 13th Five Year Pan.
“We are not able to get suppliers in the global markets due to heavy competition. We are now thinking of joining hands with manufactures to set up a greenfield facility for tubes and pipes.”
