Chennai to be NEG Micon's global hub

Chennai is fast becoming the global hub for many a transnational company.

First it was global auto major Ford. Then it was the World Bank. Now it is NEG Micon Denmark.

Ford chose Chennai to launch its car-manufacturing facility and then export cars (Ford Ikon) with the 'Made in India' label. The World Bank soon chose the capital of India's southern state of Tamil Nadu to begin its back office operations.

Now NEG Micon Denmark has also zeroed in on Chennai. NEG Micon (India) Pvt Ltd, the Chennai-based wholly owned subsidiary of the Danish parent, will be the company's international hub for exports of wind energy turbines.

NEG Micon is a global leader in wind power and has operations in over 42 countries. It has installed over 12,000 wind electric generators worldwide. Thus, when the Denmark-based company chose its Chennai arm over all others across the globe to have a manufacturing base, it was no mean achievement for the Indian city.

The Chennai unit has sold 1,600 wind turbines in India thus far.

NEG Micon decided to start a 100 per cent subsidiary in Chennai in 1997 when its partner, NEPC, could not service the 1,200 turbines that had already been installed in India.

This was followed by a few years of recession. But soon, the Indian subsidiary began to impressive with its progress. It was chosen as NEG Micon's best subsidiary worldwide for two consecutive years.

The parent company sat up and began to take notice of its Indian operations. Good quality work at low expense seemed to be the mantra at the Chennai unit of NEG Micon.

At a company meeting in Denmark, soon questions began to arise: 'Why do we need a high-cost country like Denmark to take care of global supplies?'

"Not only did the high cost involved in manufacturing from Denmark tilt the decision in our favour, the quality of the products that went from here too helped us. I would say the quality of the products that went from here made them think of starting a manufacturing base in Chennai for the world market, strongly," said Ramesh Kymal, managing director, NEG Micon (India) Pvt Ltd.

"The local market is quite big and is growing everyday. We also found that India has all the fundamentals: shortage of power, an economy that keeps growing at 6-7 per cent, enough wind potential, skilled labour and good technical manpower. These are some of the reasons that made NEG Micon set up a manufacturing base in Chennai," added Kymal.

Tamil Nadu has the maximum number of wind generators in India. This also accounts for the presence of all suppliers that are needed for this. Chennai thus became the ideal choice for a manufacturing base, and NEG was not tempted to go out of Tamil Nadu and start a new unit.

Tamil Nadu continues to be the biggest market for wind turbines today. Though India has the potential to produce around 45,000 MW of energy from wind, only 1,800 MW has so far been tapped. Of this, Tamil Nadu produces 1,000 MW.

NEG's Chennai unit has the capacity to manufacture about 600 wind energy turbines annually on a single-shift basis. The turbines manufactured at the Chennai factory are marketed the world over under the 'Made in India' label.

Officials said that all machines up to 1.5 MW will be made in India to cater to worldwide requirement. All machines beyond that size will, however, be manufactured in Denmark. Some critical components too will continue come from Europe.

Forty per cent of the production from Chennai is for exports, and the rest is for the local market as the market in too India is huge.

Yet, the transition NEG Micon Denmark was not smooth. Shifting to India presented no apprehensions to the parent company, but its customers did not seem satisfied with the decision. Most customers from Europe flatly refused to buy anything that had a 'Made in India' label.

"We had to do a lot of convincing while talking to the farmers in The Netherlands and some other European countries. We told them that what they were going to get was an NEG Micon brand product. We asked them, when you buy a Mercedes, do you ask where it's made? We also showed them some presentations of our factory in Chennai. Finally, we also told them that they had no other choice! Now, they have reconciled themselves to the fact that hereafter, they would be getting machines made in India," Kymal said.

However, he confessed that they had to be extremely careful about the quality of the products and they had to be at least 10 per cent better than the ones made in Denmark.

The company's first consignment from Chennai will leave Indian shores in November 2003.