The Hindu Business Line : Tussle for Coimbatore cluster may intensify

THE battle for the Centrally-aided Industrial Infrastructure Upgradation Scheme (IIUS) (popularly known as Industrial Cluster project) for Coimbatore is likely to intensify.

The Southern India Engineering Manufacturers' Association (SIEMA)-Institute of Indian Foundrymen (IIF) combine has pitched in with its project proposal estimated to cost about Rs 136 crore.

Earlier, in February this year the Coimbatore District Small Industries Association (Codissia) had said that its proposal for an industrial cluster project for Coimbatore, at an investment of about Rs 66 crore, had received the nod from the Union Government.

SIEMA is confident that its proposal would receive the green signal from the Centre since it is `industry-driven' unlike the project of Codissia, which it feels is `institution-driven.'

However, the out-going Codissia President, Mr Tee. Narayanaswami, speaking to Business Line, said the State Government had written to the Centre asking for release of funds to Codissia's cluster project and he asserted that its project is not `institution-driven' and has the backing of about 780 small-scale industrial units.

Explaining the details of the project at a press conference here, Mr C.R. Swaminathan, President, SIEMA and Mr G. Rajendran, Convenor of `IIF-SIEMA Pump, Motor & Foundry IIUS Project' said it contains four distinct components — performance improvement segment, sand reclamation plant, power generation plant and pump and motor segment. The project is aimed essentially at small and tiny foundries, which are in need of external help to upgrade their product processes.

While the performance improvement segment envisages a capital expenditure of Rs 10 crore that would be funded entirely by the grant from IIUF, the sand reclamation plant would need an investment of Rs 15.60 crore that would be largely funded by Centre's grant (Rs 11.70 crore as per project report) and the rest as contribution from the stakeholders.

Mr Rajendran said the foundry industry in the region requires around 600-800 tonnes of sand every day, which is being brought from Shertallai in Kerala. Apart from the cost involved, due to environmental concerns, there is opposition to sand mining. Once the sand reclamation plant is established, the industries would be able to re-use 75 per cent of the sand they had used in making moulds. The plant would have a capacity to process 35 tonnes of sand per hour.

Mr Swaminathan said a large chunk of the fund under the project — Rs 92.50 crore — has been earmarked for the establishment of a power generation plant using windmills with a generation capacity of 19 MW initially, that would be scalable to 50 MW - 100 MW. Several potential areas like Sultanpet, Idayarpalayam etc are being considered for installing the windmills. While the stakeholders would contribute Rs 80 crore towards the windmill project, the balance would come as grant.

Mr Rajendran said at present, the HT consumers are being charged Rs 3.50 per unit by the Tamil Nadu Electricity Board. SIEMA hopes that it would be able to supply power to the participating industries at Rs 2.50 per unit. The cost of power accounts for nearly 16 per cent of the production cost to the industries and supply at a concessional rate would result in a saving of about Rs 6 crore annually to member units. The pump and motor segment has been allotted under the project Rs 18.16 crore, with grant under IIUF expected to be Rs 10.88 crore and contribution by stakeholders Rs 7.28 crore.

Mr Swaminathan said the SIEMA-IIF cluster project is `industry-driven' whereas Codissia's project was `institution- driven.' The main beneficiaries of SIEMA-IIF initiative would be the small and tiny foundries that the Centre also is keen to support. Codissia `did not involve' SIEMA and IIF in the preparation of its project report, though the Union Government wanted all the three to submit a common proposal.

He was confident of the viability of SIEMA-IIF project proposal. He expected the final approval for the project to come in September and the Centre might release the first tranche of its assistance by October. It might take a year for the project to be implemented, once all clearances are obtained. While the grant from IIUF for the project is pegged at Rs 45.08 crore, the stakeholders' share of Rs 91.18 crore would be raised through debt and as contribution from the beneficiary members.

The project report has been prepared by KPMG, at the instance of Central Manufacturing Technology Institute (CMTI), Bangalore, which was identified as the nodal agency by the Centre. Si'tarc, COSMOFAN and COFIOA, the last two representing small foundries, were also associated with its preparation.

The Codissia President, Mr Narayanaswami, denied that Codissia did not involve SIEMA-IIF in the preparation of the cluster project report. They had participated in meetings convened by the State Government regarding the Coimbatore cluster project and Codissia had agreed to incorporate in its revised project report some of the suggestions made by SIEMA and IIF.

He said his association did not agree to the suggestion for preparation of a fresh project report since already a report has been prepared and appraised by SBI Caps. Codissia is "one step short of getting funds" for the project.

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