Ripples were created by tender notice (DSP/NIT/2009-10) of April 23, 2009 in which J&K government’s Jammu based Directorate of Stores Procurement Department sought sealed tenders from “major cement manufacturers” for supply of OPC grade 43 cement confirming to BIS 8112 of 1989. Since the department is a bulk purchaser of cement, steel and other items, it was a major opportunity for state based manufacturers as the department planned to purchase 16 lakh bags in the first go.
“When we approached the department, we were told we can not be given an application form because Khyber is not a major manufacturer,” said Umer, who owns the largest cement manufacturing plant in Kashmir. The plant has a production capacity of 1500 tons per day (tpd).
So Khyber, a known cement brand in Kashmir, started the hunt to see which category it fell in – tiny, small, micro, medium, large or major. The company approached concerned officials in the industries ministry.
“There is no definition for ‘major’ in state industry records,” said Umer. “Finally, they (officials) had to approach the Union Ministry of Micro, Small and Medium Enterprises (MSME) that bailed us out.”
Any cement plant that has the capacity to manufacture 900 metric tons a day and the produce is of BIS standards is a major plant. This came as a relief for the company. Even otherwise, any plant that has rotary technology and manufactures the best quality cement irrespective of whether it is OPC or PPC falls in the major manufacturers’ category.
By the time the reply from New Delhi came, Khyber had approached the Chief Minister. “Our plea was simple. We do not need any subsidy or any preferential price. We asked for a level playing field and Chief Minister was gracious enough to intervene and it helped,” insists Umer.
But the major question is why the policy makers in state government are so keen to procure its requirements from outside the state if they have the same product available here? Away from media gaze, hundreds of crores are actually being pumped out of the state exchequer at the cost of the local industry.
In case of cement, no manufacturer from outside is in a position to offer a cement bag at less than Rs 300. The same standard cement locally manufactured is being sold at Rs 100 less in retail, and could go down in case of bulk purchases. Unlike purchases from outside, the government is not required to pay CST on the purchases it makes within the state.
It is not the Stores Department only that procures material from outside the state. Police Housing Corporation issued a very interesting tender in March. It asked tenderers, manufacturers and suppliers to quote their tenders for certain brands – Gujarat Ambuja Cement, Shri Cements, ACC, Ultratech Cements, Vikram Cements and JK Cement.
“If you want to choose from the brands what is the fun of going for a tender,” asks one cement manufacturer who owns a 200tpd plant in Srinagar.  Khyber Cembents got the process stayed.  
Procurement from outside the state has been a routine affair for all these years. While local manufacturers are supposed to have their share of pie in the private market, the lucrative bulk market in the government sector has been given to the non-local manufacturers. Last year, the Stores Department purchased Greasm cement. It started with 100 thousand bags and crossed a million, sources in trade said.
Cement is one odd sector that is a vibrant industry. By and large, most of the needs in private market are met by the local manufacturers. Khyber has 1500 tpd capacity. Public sector JK cements has upgraded its capacity to 1200 tpd, so is that of TCI whose capacity will very soon touch 1300tpd. Apart from 600 tpd Saifco, there are many small players like Itefaq, Arco and others who own 200 tpd capacities.
But the government seems to be biased against the entrepreneurs in the state. The Department of Stores is a case in point. It is permanently stationed in Jammu for unknown reasons. And almost all the supplies are being received at their Jammu depot. Sending it to Srinagar – to its Pampore depot – adds to the cost that the public kitty has to pay.

LEAVE A REPLY

Please enter your comment!
Please enter your name here