JAMMU: The Government of Jammu and Kashmir has put on complete sale the Jammu & Kashmir Cements Limited (JKCL), the company so far fully owned by the UT Government and under the Administrative Control of Department of Industries and Commerce, Government of J&K.
In a notification issued, the Government of J&K intended to put JKCL on complete sale, besides going for 100% disinvestment of the equity shareholding in its undertaking and management control, through ascending e-auction from qualified bidders.
“The Government of Union Territory of Jammu and Kashmir (UTJK) intends for complete sale of Jammu and Kashmir Cements Limited, by way of strategic disinvestment of the equity shareholding of Government of UTJK (100%) in its undertaking the Jammu and Kashmir Cements Limited (JKCL), along with full management control.
This disinvestment process is being implemented through competitive bidding route,” the Govt. notification read.
As per the reports, the JKCL primary engaged in the manufacturing and selling of cement has been defunct for years and all the revival attempts by the government which would have hopefully revived the company have failed.
The J&K Government with the ‘intention to revive’ the company is selling it by way of cent percent strategic disinvestment of the equity shareholding of UT Govt. in its undertaking.
“This disinvestment process is being implemented through a competitive bidding route.” “Interested Bidders who meet eligibility criteria mentioned in the PIM may provide their comments on the draft RFP.
Post the receipt of comments from interested bidders, the Government of UTJK would issue a Final RFP to invite bids from the interested bidders,” the copy read.
In October, 2022, J&K Administrative Council held a meeting chaired by Lt. Governor Manoj Sinha while exploring the possibilities to functionalize the company, approved the proposal for disinvestment of JKCL.
“The disinvestment in JKCL was necessitated as the company was not able to sustain and manage its finances properly and maintain efficiencies of operations over time,” AC said in a statement in October, 2022.
The decision to for ‘complete selling of JKCL’ was taken on October 19, 2021, (AC decision vide its decision No 113/15/2021 dated October 19, 2021) that the company needs to be sold to a private company that can revive and run it, while the company is being sold in 2022.
As per the reports, the interested bidder should have a minimum net worth of Rs 250 crore, must have a net positive EBITDA in at least three out of the immediately preceding five financial years.
Eligible entities would be permitted to form a consortium comprising up to four members, to participate in the transaction. The acquirer will have full ownership of all the assets and mining leases that the JKCL has.
Jammu and Kashmir Cements Limited
This Company was incorporated in the year 1975 under Companies Act, 1956 as a Government owned company. The primary objective of the creation of JKCL was to reap benefits of the rich deposits of Limestone in the Khrew (in Pulwama district) belt for manufacturing and sale of cement.
The company started its operation with the commissioning of its first integrated plant at Khrew, Pulwama with a capacity of 600 TPD in 1982. Two new plants, one integrated plant at Khrew, Pulwama with a capacity of 600TPD and one grinding unit at Samba, Jammu with a capacity of 300TPD were commissioned in 2010 and 2015 respectively.
Now on e-auction, this company for now has rights over a Limestone mine in Khrew spread over 88.1 hectares, with an estimated net mineable reserve of around 10.4 million tonnes. Over the years, JKCL’s main source of revenue has been sale of cement to various Government departments and PSUs. After a peak production for nearly two decades, production declined and plants are non-operational currently.
Apart from failing to generate the cash flow, JKCL for years has failed to show growth, and has been sharply declining, the same was observed by the J&K Administrative Council in its couple of meetings held headed by the LG Manoj Sinha. Its decline started from the year 2012-13.
The government owned company is now downgraded with its machinery without any productivity. And the buyer of the company would be authorized to utilize 240 kanal of land adjacent to Khrew plant at the Industrial Estate.
JKCL went into the commercial production in 1982 with an installed capacity of 600 metric tons/day. Previously, in 1977 had allotted 88.10 hectors of land on lease for two decades for extraction of limestone. However, the last lease deed renewed was upto 2007. The company set up a new plant in 2010, and the installed capacity of production of cement for each plant was 2 lakh MTs/year. But the company failed to manage any of the units.
JKCL Board had approved setting up another plant on modern lines in collaboration with Bangaluru based company Promac Engineering Industries, but the ‘modern plant’ was never reached even half of its actual capacity.
Apart from the mess in its governing and running which could be cited as the factors resulting in the failure of decades old company JKCL and apparently putting it on e-auction, the plant was even closed by the Pollution Control Board in 2018. With having years of technology running the plant which needed up-gradation and repair from time to time, the machinery in JKCL was merely improved and renovated by the Government of J&K.
Moreover, for an already going down company, the government decided to set up a grinding unit at Samba district of J&K, but it only added to the debt burden of JKCL.
For e-auctioning of JKCL, the interested Bidders need to submit their comments in electronic form via email on [email protected] The interested bidders would be required to submit a Tender fee of INR 10,00,000 + GST as applicable).