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| JK Cements turned into 'white elephant' during PDP rule | | State exchequer suffered a loss of Rs 1.26 crore | | early times report
jammu, Jan 21: A whooping loss of Rs 1.26 crore was caused to Jammu and Kashmir Cements Limited during Mehbooba Mufti led dispensation.
According to the details available with Early Times the alleged lethargic, non- serious and incongruous administrative set up of that period allowed the profit making company to turn into a "white elephant."
Documents in possession of this newspaper reveal that failure of Jammu and Kashmir Cements Limited to utilise the cement grinding cum- packing unit Samba to the optimum capacity, as well as to market the cement to private parties/ and government departments resulted in operating loss of Rs 1.26 crore between 2015 to 2018.
The production of the Cement grinding-cum-packing unit Samba started in September 2015- the period when the PDP led government was ruling the erstwhile state- and the company had incurred a capital expenditure of Rs 26.10 crore on the plant till 2017.
However, against the envisaged production of 1,93,050 Metric Tones cement through capacity utilisation of 70 per cent, 80 percent and 90 percent, respectively during the first three years of production, the actual production during October 2015 to March 2018 was 34,619 MTs (18 per cent) only.
Low capacity utilisation indicated that the plant was conceived without ascertaining the demand position and the company could not market the sale of cement and get the sale orders from private parties or the government departments. To provide market support for sale of cement manufactured, the government in April 2016 directed all the departments to purchase their requirement in Jammu Division from Jammu and Kashmir Cements limited in the first instance and opt for open market only after the company was unable to supply the requisite quantity and provided a non-availability certificate. Despite these directions the company could not increase its sales and utilise the plant to its optimum level.
Envisaged sale realisation of Rs 178.19 crore (First year: Rs 51.97 crore; second year: Rs 59.40 crore; third year: Rs 66.82 crore) during the first three years of operation of the plant as projected in the techno-economic feasibility report could not be achieved. Records showed that during the years 2015-16 to 2017-18, against the revenue earnings of Rs 27.13 crore, the company incurred expenditure of Rs 28.39 crore on running the plant, resulting in operating loss of Rs 1.26 crore.
The fact remains that the plant was under-utilised to the extent of 82 per cent of the envisaged capacity and the company could not generate adequate supply orders from private parties or government departments due to which the expenses of the plant exceeded the revenue earnings, resulting in direct loss of Rs `1.26 crore. Despite lower sale rate- Rs 425 per bag of cement as compared to private cement sellers- ranging between Rs 435 to Rs 470 per bag, the company has failed to increase its sales. Further, in view of 77 per cent cash sales 38 of cement during 2015-18, the argument regarding credit sale was also not tenable.
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