TIRUCHY: Hundreds of ancillary units, primarily MSME units, that depend on contracts from PSU major BHEL are weighed down by debt, dwindling skilled manpower and a severe liquidity crunch and are struggling to remain relevant. From a peak of 450 ancillary industries that once powered BHEL’s ecosystem, many have shut down or shifted to other trades.
“Since 2018, we’ve faced one blow after another – first India’s climate commitments, then Covid-19 lockdowns and bad debts. Only a few units now have the strength to bounce back,” said S Ashok Sundaresan, member and former president of the BHEL Small and Medium Industries Association (BHELSIA).
According to him, the most pressing challenge is the acute shortage of skilled manpower. “Most of our experienced workers – fitters, welders, turners, CNC operators – have migrated to northern India or the Gulf. We now have around 20,000 workers but we need to double that to meet the fresh demand from BHEL,” Sundaresan said.
Mentioning there being a heavy demand for welders and turners, he said, “We are training new workforce ourselves, but it will take time before they can match the skill level of the older generation.” Even for those who have restarted operations, lack of working capital remains a major hurdle.
“Many units can’t sustain operations for even a few months. Banks are reluctant to extend new credit and several BHEL orders are now going to suppliers in other states,” he added. Adding to the woes is the issue of liquidity damage, said K Senthilraj, core committee member of BHELSIA.
“As our production potential has gone down, we sometimes fail to deliver on promised timelines and end up paying liquidated damages (LD) to BHEL. If these penalties can at least be eased until we revive, it would help us recover faster,” he remarked.
For Prabhu Venkatramani, a second-generation entrepreneur and former BHEL supplier, diversification was the only survival strategy. “I stopped supplying to BHEL-Tiruchy and moved to other clients. The reverse auction system has made it hard for local firms to compete – suppliers from northern India quote very low prices since they are close to raw material sources like steel plants. We might be next door to BHEL, but raw material costs hit us hard and we have already lost half of the orders to MSMEs in other states,” he said.
To help the struggling ecosystem recover, BHELSIA has urged both the union and state governments to declare the BHEL industrial belt as a special industrial zone and direct banks to extend fresh loans to ancillary industries.
“Without access to credit and policy support our revival will be incomplete. We also need the government to help train the workforce so we can fully utilise the Welding Research Institute inside BHEL,” said Rajappa Rajkumar, former BHELSIA president and CEO of the Tamil Nadu Boilers Association.
A senior BHEL-Tiruchy official said the company is committed to reviving its old supplier network. “Our annual outsourcing potential is around three lakh metric tonnes of boiler components. Orders have started picking up since 2023, and we have begun reaching out to local industries. A meeting with suppliers was held in July 2025 to ensure Tiruchy-based vendors are part of our growth,” the official told the TNIE.