United they stand. Sixteen vendors of BHEL have joined hands to form a ‘cluster company' to undertake large orders from the public sector power equipment major. The logic that a single company with complementary skills among the members and common facilities will do more business and be more profitable has given birth to the Dindigul Engineering Cluster Ltd.

The 16 vendors have garnered Rs 10 crore and, with twice as much as loan from banks, have set up a large fabrication facility with multiple facilities. Each member has chipped in (apart from the capital) with his own expertise to make a mosaic of skills that enhances productivity and hence, profitability.

Therefore, you have under DECL, a machine shop, a paint shop, a non-destructive test facility and a common despatch co-ordinator unit. Each of these is run by a shareholder who has expertise in that particular field. In fact, there is a training facility and a canteen. The others have set up fabrication units.

BHEL is very happy with the situation. “Now, I need to deal with only one entity,” said Mr G. Ramakrishnan, General Manager in-charge of outsourcing. This year, BHEL will outsource fabrication of 480,000 tonnes of steel, compared with 341,000 tonnes last year.

More jobs

Mr Ramakrishnan is keen on giving as much jobs to DECL as the company could take. A trial order for conversion of 400 tonnes of steel was placed on the company. Mr Ramakrishnan intends to load DECL with 1,000 tonnes a month, (which is fairly large). The ruling conversion rate is Rs 12,000 a tonne.

DECL, he says, has set a good example that many others want to emulate. For instance, the textile units in Karur are keen on copying the DECL model, with the intention to provide contra-cyclic cushion to their textile business.

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