Srinagar: The Jammu and Kashmir government has officially closed J&K Cements Limited (JKCL) after the company ran into losses and has now invited global bids for its sale.
Officials said that the strategic disinvestment of J&K's (100 percent) equity participation in its venture, JKCL, coupled with complete managerial control, has received formal approval from the J&K administration.
"The JKCL is being sold, and the Industry and Commerce Department has invited bids. The deadline for interested parties to submit their proposals is March 17," a senior Industries Department official said.
JKCL was incorporated in the year 1975 under the Companies Act, 1956 as a government-owned company with an authorised capital of Rs 60 crore.
The primary objective of the creation of JKCL was to reap the benefits of the rich deposits of limestone in the Khrew belt for the manufacture 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 600 TPD was commissioned in 2010 and one grinding unit at Samba, Jammu, with a capacity of 300 TPD was commissioned in 2015.
Nonetheless, for the past three decades, private cement manufacturing enterprises in J&K have prospered, while the government-owned company, which had the monopoly on being the first choice for cement purchasing in local development works, has experienced losses year after year.
According to a senior Industries Department official, a comparison of the costs incurred by JKCL and the private cement-producing plants shows that they are significantly different.
JKCL was spending 10 times as much on salaries as private businesses do.
"On an average, a cement production facility with a 1000-ton capacity spends Rs 30 to 40 lakh on pay and wages for its staff, while the salary component at JKCL was expected to be about Rs 3 crore," said an official of the Industries Department.
The Administrative Council of the J&K administration in its meeting dated October 19, 2021, provided in-principle approval for the complete sale of JKCL by way of strategic disinvestment of the equity shareholding of J&K (100 percent) in its undertaking the JKCL.
"As part of the disinvestment exercise, the management, and control of JKCL will be transferred to the successful bidder through a transaction structure which includes the purchase of shares of JKCL. By way of control of JKCL, the control of the entire business of JKCL (including mining rights and land currently with JKCL) will also stand transferred. J&K will also provide the necessary forest clearances from the Jammu and Kashmir State Forest Department, Ministry of Environment, Forest and Climate Change Government of India," reads an official document. "The interested bidders will be required to submit the best price offer for buying out 100 percent share of JKCL which would be payable at the time of the closing of the definitive agreements. J&K through assistance from NITI Aayog has engaged KPMG Assurance and Consulting Services LLP as transaction advisor for providing advisory services and managing the disinvestment process on their behalf.”