Cimmco approaches BIFR against Rlys wagon order

Written by Praveen Kumar Singh | Praveen Kumar Singh | Indu Bhan | Indu Bhan | New Delhi | Updated: Feb 28 2012, 09:00am hrs
Ailing wagon manufacturer Cimmco has approached the Board for Industrial and Financial Reconstruction (BIFR), which had earlier formulated a revival scheme for the company, stating that its recently obtained wagon supply contract from Indian Railways was not big enough to sail it through the difficult times. In the revival scheme, BIFR had mentioned that Cimmco should be given preferential treatment in government contracts till 2013-14.

Cimmco was declared sick by BIFR in 2000 and its manufacturing factory at Bharatpur in Rajasthan was closed till September 2008 due to force majeure circumstances. BIFR scheme was announced in March 2010.

The wagon maker said Indian Railways had not adhered to the scheme and gave a lower order of 353 wagons than its entitlement of 1,086 wagons. It has also claimed that last year, Cimmco was asked to supply 1,760 units when railways had followed BIFR recommendation.

The order is part of the railways tender floated in January 2012 to procure 15,715 wagons in 2011-12 for R2,050 crore. The transporter had apportioned 70% of the tender based on firms performance in the last five years and 30% based on price bids.

Opposing implementation of the tender condition, Cimmco said: Instead of a pure arithmetical and mechanical interpretation of the tender condition, it was essential that the past performance of the sick company was considered when the company was in a position to perform and not when it was lying closed due to sickness and was under a force mejeure condition. The company has also sought BIFR scheme should be followed till 2013-14.

The case has been adjourned for hearing on March 1. However, it would not be easy for Cimmco to get a favourable order as Texmaco and Hindustan Engineering & Industries, which were also awarded contracts under the tender, have also approached BIFR opposing Cimmcos contention.

It is an attempt to misuse the BIFR mechanism and steal a march over it and other manufacturers, Taxmaco said,

apprehending that any directions given to the railway ministry on the tender will prejudice the rights of the wagon manufacturers who have been awarded the contract.

It said that BIFR cannot decide a tender or a contractual matter, Taxmaco said, while seeking to be implead as a party in the case.

A relevant part of the railways' official document on apportionment of quantity to bidders shows that the transporter had internal disagreements on how many wagons should be ordered from Cimmco. While member mechanical Sanjiv Handa was in favour of 1,257 units, former financial commissioner (FC) Pompa Babbar and current FC Vijaya Kanth pitched for order of 353 wagons only. Babbar and Kanth had said that the BIFR scheme was substantially implemented and the net worth of the company has turned adequately positive.