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Ancillaries seek priority in getting BHEL orders

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Expressing shock and dismay over alleged “predatory pricing" tactics of a Nagpur-based company, BHEL Small Industries' Association (BHELSSIA) on Friday appealed to the BHEL management to put on hold finalisation of annual tender, for ensuring survival of Tiruchi-based ancillaries struggling for existence for the last few years due to dwindling orders.

The particular company had, the BHELSIA complained, made the lowest quote for 24 out of 38 types of job works, slashing bidding by up to 20% from the existing level, with the purpose of building an order book.

The BHELSIA is apprehensive that the Tiruchi-based ancillaries which should get priority as per MSME policy, had been incapacitated in bidding for 85% of the total orders valued at Rs. 1,600 crore.

Considering the reality that the manufacturing profits is hardly three to five per cent, the BHEL has to take an appropriate decision considering the plight of the 250 ancillary industries with a workforce of over 40,000 labourers, BHELSIA president S. Ashok Sundaresan told media persons.

Fifteen companies have been closed down over the last few years, and about 60 more units were on the verge of closure, facing NPA (Non-Performing Assets) proceedings, BHELSIA president said.

The ancillaries of BHEL in Tiruchi which are famed throughout the country for their fabrication skills will go extinct if a corporate company is allowed to underbid in the tender, Mr Sundaresan said.

BHELSIA’s stand point is that firms in Tiruchi and Tamil Nadu should be given priority in grant of orders. Else, the ancillaries will be left with only two options - either accept the loss making price and incur a loss of Rs. 200 crore, or to go without work for a year, on account of foregoing the business loss of 2.25 lakh tonnes, accounting for 85% of the total annual transaction valued at Rs. 1365 crore, Mr Sundaresan said.

A study by Statistics Department of the State government has firmly recorded the industrial sickness in Tiruchi, and the BHEL order with fair pricing for the current year is the only hope for revival of these ancillaries.

“It is unfair on the part of BHEL to allow a corporate company to wipe out the MSMEs in this region after having asked us to invest in land and machinery and become ancillaries. The BHEL should reject the underbid predatory price and re-orient its tender policy by disclosing fair price”, Mr. Sundaresan said.


It is unfair on the part of BHEL to allow a corporate company to wipe out the MSMEs in this region after having asked us to invest in land and machinery and become ancillaries

S. Ashok Sundaresan

BHELSIA president

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