A sudden increase in electricity tariff is seen as a hurdle to TN foundries which are already facing stiff competition from domestic and foreign foundries.
Coimbatore: The sudden hike in electricity tariff is turning out to be a big hurdle to foundries in Tamil Nadu which are already facing stiff competition from both domestic and foreign foundries.
The Institute of Indian Foundrymen (IIF) has requested the Government to ensure that power is made available at reasonable rates and uninterrupted power supply is made viable for foundries operating in the State.
"IIF is a national-level association representing Indian Foundries across the country with about 4,000 members. IIF plays a vital role in facilitating interventions required for the benefit of the Foundry Industry and the users of metal castings. We, the IIF Coimbatore Chapter and Chennai Chapter represent about 1,000 foundry units in this region.
The manufacturing value chain in India depends to a large extent on the performance of the Foundry Industry which is one of the core sectors contributing both directly and indirectly to around 50 percent of the Manufacturing GDP. Manufacturing sectors like Automotive, Mining and Construction Equipment, Oil and Gas, Energy, Medical, Food and Agriculture rely a lot on the Foundry Industry for their products. Hence, the Foundry Industry is rightly called as the Mother of all Industries," stated IIF's Southern Region Chairman, S Muthu Kumar.
He added, "Around 95 percent of foundries in India are in the MSME segment contributing significantly to the 17.5 billion dollar industry, with export revenue of around 4 billion dollars. Given the reliance on manpower, foundries also generate distributed wealth and employment across the country. TANGEDCO, TANTRANSCO and SLDC's 'Tariff Petition' is an initiative in the right direction for the benefit of both the industry and DISCOM. However, certain norms and expectations laid down in the tariff petition need consideration for downward revision as the cost increase across the society will be by large unbearable all of a sudden."
"During the R&C period between 2008 and 2015, the casting buyers in India and abroad who were buying mostly from Tamil Nadu moved to other States in India. As more orders flowed in from other States, there was an expansion of existing foundries and new foundries emerged from 2008 onward, grabbing the opportunity. The technical manpower in TN also moved to other States due to opportunities. The TN foundries, particularly Coimbatore, lost their opportunity to sustain and grow and became almost stagnant.
Smaller foundries in other States developed into bigger foundries adopted a cluster approach and became huge competitors in both the domestic and export markets. Other State Governments incentivized the Foundry Industry and thereon existing and new foundries expanded or emerged. Large-scale foundries in large numbers emerged in Karnataka, Maharashtra, Gujarat, Rajasthan, Uttar Pradesh, Uttarakhand, Haryana, Jharkhand, Chhattisgarh, Madhya Pradesh, West Bengal and Orissa," explained S Muthu Kumar.
IIF's Southern Region Chairman also reiterated that a continuous power supply with good power quality is needed for the Foundry Industry since the industry is entirely dependent on Thermal Energy (Heating, Cooling and Constant Temperature requirements). "When power interruption occurs, the thermal requirements such as heating, cooling and constant temperature achieved using electrical energy tend to go to ambient temperature and become a total waste. This not only increases the cost of production but also causes deterioration of the product, process quality and loss of time.
Due to power interruptions, we are not able to make timely supplies to our customers, and hence end up paying liquidated damages as well as our orders have been shifted to other states where power supply is good. Hence, it is important that the Foundry Industry receives continuous power with good power quality. We humbly request the Government to allow for minimum billing demand of 85 percent of contracted load (or) actual recorded demand, whichever is higher."
Commenting on the 'Peak Hour Tariff,' S Muthu Kumar said, "We are requesting the Government to maintain the existing peak hour tariff of 20 percent and the timing of six hours in two slots (06:00 to 9:00 and 18:00 to 22:00.) Our industry being labour-intensive and with our shifts already set and running for many years, it is difficult for our employees and their families to change shift timings to odd timings. Family life will get affected for the employees if shift timings are changed to accommodate the change in peak hours. This will lead to disruption of normal life and may lead to lesser preference to work in foundries that are already facing a scarcity of manpower.
The night-hour rebate should be allowed as 20 percent on 'Energy Charges' which will encourage more users to use power during night hours. This will also help foundries to operate more during night hours by offering incentives to employees. Also, the tariff for future years should be decided based on the 'True Up Petition' filed by DISCOM. For FY 2022-23, Demand Charges should be fixed at Rs 400/ kVA and Energy Charges at Rs 6.50 per unit."
"A sudden increase in electricity tariff is a hurdle to TN foundries which are already facing stiff competition from domestic and foreign foundries. Entire raw materials and input materials are sourced from other States where suppliers have their factories for various reasons. Due to transportation costs, the cost of materials to TN foundries is already high. Hence, power at reasonable rates is a must for foundries to stay viable.
Due to the pandemic 2020-2022, a shift of orders from China is happening to India, Turkey, East European, and South American foundries. The export orders are the only opportunity available to TN foundries to sustain and grow as most of the domestic orders have been grabbed by other State foundries. It is of utmost importance to stay competitive to attract business. A reasonable power cost will help and sustain, and nurture the growth of the foundry industry in our State," he explained.
IIF's Southern Region Chairman, S Muthu Kumar added, "Many of the foundries and machine shops operating in micro and small sectors are under the LT category. Hence, LT, LTCT and LT 112-150 KW consumers may be spared from peak-hour timing and additional tariff since it will have a cascading cost effect on society, as well as trigger manpower scarcity in these industries. There is no practice of operating foundries during night hours (22:00 to 06:00 hrs) as it is not practical for the employer and employee, and is not a welcome measure.
These MSME units also employ women, who in turn may not work at odd shift timings due to their family commitments. Hence, we humbly request that the Peak Hour Tariff system and timing for LT, LTCT and LT 112-150 KW consumers be dropped."
"For FY 2022-23, Fixed Charges should be at Rs. 50/ KW and Energy Charges at Rs.6.50 per unit. Most of the foundries in the MSME sector using LT are operating 12 to 16 hours shift timings, starting at 6 am. Early in the morning, the owner of the foundry or a few employees start operating the foundry and as the day progresses, more employees join in for production.
In other words, preparatory work is done early in the morning such as switching on the furnace and gradual heating. The MSME industry is adaptive to the normal working hours of society and the energy consumed by them will be useful to evacuate solar energy from 10 am to 4 pm," stated IIF's Southern Region Chairman.
"A sudden increase in electricity tariff is a hurdle to those already facing stiff competition. A variable slab system such as 0-50 KW, 50-100 KW and above 100 KW will create chaos and a non-level playing field for the MSME sector. This may trigger unrest and negative influence in the society," concluded S Muthu Kumar.