for Rs. 140 mn loss
order for 9.3 million metres for school uniform material placed by
the government with 11 local textile manufacturers is estimated to
incur a loss ofsome Rs.140 million to the government as a result
of financial irregularities. The Ministry of Education following a
directive by President Chandrika Kumaratunga this year requested
the Ministry of Industries to ascertain the potential of local
textile manufacturers capable of producing this quantity of
material for the free supply of school uniforms required for 2005.
local textile manufacturers have been selected by the Ministry of
manufacturers will be given the orders, despite an estimated lower
cost if the required material is imported, in an apparent effort
to safeguard the local textile industry.
manufacturers had pledged to produce 2.6 million metres locally
and agreed to import 6.7 million meters in the grey form, which
they would then finish locally by rendering value addition.
This requires a processing facility to singe and dye the
gray imported fabric white in colour.
the Ministry of Education having entrusted this job to the
Industries Ministry on May 21, a newspaper advertisement was
placed calling for potential manufacturers to forward
standard form was made available provided by the Textile Training
and Service Center (TT&SC) which is an organisation affiliated
to the Ministry of Industries. The TT&SC served as the
authority and adviser to the Industries Ministry in choosing the
11 producers and drawing up required specifications.
closing date for all applications was June 2, 2004. By June 16, 11 local producers were chosen and names
submitted to the Education Ministry for approval.
present, due to the closure of Kabool Lanka and Veyangoda Textile
Mills, Sri Lanka is not in a position to produce the required
quantity of 9.3 million meters of white cloth for school uniforms.
11 local producers were chosen, the Education Ministry called for
a comprehensive report on the capability and machine capacity of
the manufacturers. An
inspection team from the Textile Training Service Center was
thereafter dispatched to ascertain the production capabilities of
the chosen manufacturers.
subsequent report resulted in them identifying that many of the 11
producers were without the necessary processing facilities. For instance, Magsons Synthetic Textiles Ltd., were found, do
not have processing facilities and therefore the allocation of
500,000 meters of white shirting and 50,000 meters of robe cannot
be granted to that particular manufacturer.
Another local producer, Duro Synthetic Textiles Mills was
also found to have inadequate processing facilities. They had been
given an order to transform 1.4 million metres of gray cloth into
white. The inspection team found they were in a position to handle
only 600,000 metres.
Distributors has been given an order for 200,000 metres of white
shirting. They too,
according to the report, do not have processing facilities and
therefore the allocation cannot be given. Texpro Industries (Pvt)
Ltd, Vanguard Industries (Pvt) Ltd, Baksons Textile Industries
Ltd., Star Textile Processing and Sha Tex were all found to be
wanting as their processing capacity for singeing, mercerising and
sanforising the grey cloth was found to be inadequate.
The inspection team found that the Sha Tex factory was not
even in production. Yet, they had been allocated with 540,000
meters for processing.
the inspection team submitted their report, only three chosen
producers were eliminated as their factories are no longer
functioning. The rest
were all retained despite the fact that they possess inadequate
processing facilities to perform value addition to the imported
the elimination of three local producers an outstanding quota of
2.1 million metres which had been allocated to these three
producers was redirected and awarded to Hybro Industry to import
as grey fabric and finish locally. However the finishing plant at
this factory too is not functioning at present.
week, the Education Ministry in a press release said a total of
7.99 million metres of grey fabric will be imported by local
producers and processed locally prior to dispatching to schools.
This is not the case.
What is in fact taking place is that the local producers
plan to produce only a fraction of the supply and import almost
the total quantity from China at a price that is estimated to be
20 to 30 percent more than the open market price. Thereby making an instant profit. It is believed that the market price is only Rs. 42 per metre
but these manufacturers conniving with some government officials
plan to transfer the bulk consignments of cloth to the government
at a price of Rs. 65 for each metre.
a result, the loss to the government, assuming the quality of the
material imported is maintained by the textile manufacturers, will
be around Rs. 140.4 million.
Previously the quality of the material had not conformed to
government's policy is to produce uniform material locally with
value addition at every stage and to ensure that the material is
distributed among all schoolchildren at the school itself, before
the school vacation in December 2004.
material previously had to be obtained through divisional
secretariats and Grama Sevakas, greatly inconveniencing parents.
objective of the Education Ministry in handing out this order to
local manufacturers was to promote the local textile trade. But this objective has been completely negated in this deal.
The government could well have saved money by directly
importing the cloth from China on a long-term credit plan.
Chandrika Kumaratunga has been petitioned in this respect by
concerned parties who are urging the President to cancel this
proposal and immediately call for an open tender to obtain the
material at lower prices. By
doing so, they insist the local textile manufacturers involved in
this scam together with certain government officials will be
exposed and have their bluff called.
Service Center denies.
Textile Training and Service Center (TT&SC), D. P. Gunawardena,
denied allegations that the chosen local manufacturers are
planning to import the required cloth in its finished form from
said the entire process is to be monitored by the TT&SC and if
producers fail in conforming to stipulations they will be
said the aim of the government in entrusting part of this order to
local manufacturers to process the grey cloth was done to assist
the local trade which is on the verge of collapse.
explained that since the government requirement was for the
material to be made available by December this year to all
schools, local manufacturers were stuck for time which is why it
was agreed that 7.99 million meters would be imported in the form
of grey cloth and only value addition rendered by local producers.
said he was totally unaware if local producers were intending to
import 75 percent of the quota allocated to them from China and
transfer the cloth to the government for a price higher than the
market value, falsely claiming the increase is a necessity due to
the rise of the dollar.
cannot happen since we will be monitoring the whole process,"
he said. He added the
shortcomings identified by the inspection team sent from the TT&SC
have been marginalised to a great extent, as those factories with
shortcomings will sub contract part of the work.
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