BHEL plans 'model production cluster' to end cartelisation

In order to break the cartelization of industrial consumables, the BHEL Small Scale Industries Development Service, now in its new avatar as Bidass, has embarked on a model cluster of networking. Bidass which has now 397 member units spread around Trichy region was formed as the first network cluster in the early 1980s and later incorporated as a Section 25 registered company under the Indian Companies Act, 1956.

Started in 1984 with a membership of 13 units, Bidass has today grown to have 397 members as Trichy was fast becoming a hub of engineering activity for boiler industry in India. Many daring entrepreneurs had set up fabrication facilities and machine shops in and around Trichy, and a group of entrepreneurs had established their units to cater to the ancillary needs of BHEL and similar boiler manufacturing companies.
 Meanwhile, the looming risk of increasing consumable prices was increasing the cost of production. Moreover, supply has to be regular and time-bound to keep up production schedules. A lateral thought occurred, and an idea was born to buy directly from manufacturers and supply quality products to member units in time, said S Sampath, president of Bidaas.

It is a model of cluster networking, and the primary idea is to avoid intermediaries. The resultant savings is passed on as price reduction to the members, Sampath explained. In fact, Bidass had achieved a turnover of Rs 37 crore in 2010-11 and this figure shot up to Rs 50 crore in the current fiscal. Since oxygen is a prime cutting consumable for member units, Bidass has put up a state-of-the-art Liquid Oxygen Plant to supply high quality oxygen at very low prices. The unit will be officially opened by the executive director of BHEL, A V Krishnan, on July 24. Bidaas, however, charges two percent over and above the market price to meet the administrative expenses as the association has employed around 65 people, said vice-president of Bidaas M Vairavel. But the price charged by Bidaas is the benchmark in the market, and all other suppliers gravitate their prices around this price. Furthermore, there can be no cartelization by outside suppliers when Bidaas sets the benchmark prices, added Vairavel.

Any fabrication unit having an experience of two years in the market without any partnership squabbles may become a member of Bidass by paying a nominal Rs 20,000 as fee.

Vairavel said the association was now planning to increase membership to 600 units after getting due approval from the company secretary. Bidaas has at present depots at Thuvakudi, Mathur, Ariyamangalam, and Thiruverumbur, and one more at Pudukkudi is under construction. The association is also planning to add one oxygen plant at Mathur depot, and an Argon plant, another high cost cutting gas.