25th July, 2004  Volume 11, Issue
2

Home

News

Politics

Issues

Focus

Editorial

Spotlight

Insight

Sports

Business

Review

Arts

Letters

Nutshell

Interviews

Fashion

Archives

ISSUES

Dressed for Rs. 140 mn loss

By Frederica Jansz 

An 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.

Selection process

Eleven local textile manufacturers have been selected by the Ministry of Industries.  Local 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.

Local 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.

Following 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 applications.  A 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.

The 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.

Inadequate facilities

At 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.

After 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.

Their 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.

Pathma 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.

After 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 grey cloth.

Following 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.

Instant profit

Last 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.

As 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 specifications.

The 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.

Uniform material previously had to be obtained through divisional secretariats and Grama Sevakas, greatly inconveniencing parents.

'Objective negated'

The 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.

President 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.  

Director, Textile Training and Service Center denies...

Director, 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 China.

He said the entire process is to be monitored by the TT&SC and if producers fail in conforming to stipulations they will be blacklisted.

Gunawardena 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.

He 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.

Gunewardena 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.

"This 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.

  Back to the headline

News Politics Issues Editorial Spotlight Sports Bussines Letters Review Arts Interviews Nutshell 

 

 

 

©Leader Publication (Pvt) Ltd.
1st Floor, Colombo Commercial Building, 121, Sir James Peiris Mawatha., Colombo 2
Tel : +94-75-365891,2 Fax : +94-75-365891
email : editor@thesundayleader.lk