By Our Reporter
SHILLONG, March 19: The Comptroller Auditor General (CAG) has come down hard on the state government over the ‘unproductive modernisation’ of the Mawmluh Cherra Cement Limited (MCCL).
In its report, the CAG mentioned that the modernisation project of the MCCL suffered due to faulty Techno Economic Feasibility Report, besides inefficient planning and project execution.
It stated that the project was completed with a cost overrun of Rs 81 crore and time overrun of 9 years, adding that the company could achieve only 22 per cent capacity utilisation against projected capacity utilisation of 60 to 75 per cent despite major capital investment.
The Meghalaya government had invested Rs 162.79 crore in MCCL, which was 99.93 per cent of the total paid-up share capital (Rs 162.90 crore) as on March 31, 2019, the report said.
“The MCCL decided to augment its existing wet process production capacity in 2004 by adding a new 600 tonnes per day (TPD) dry process plant with an annual production capacity of 1,80,000 MT. The company planned the project based on the Techno Economic Feasibility Report prepared by Mis Holtec Consulting Private Limited. On the execution of the project, the Compliance Audit done in October/ November 2019 revealed that the company, which had previously engaged Holtec Consulting Pvt. Ltd as consultant for preparation of the Techno Economic Feasibility Report for the project, again engaged them as consultant for implementation of the project in December 2004,” it said.
Audit observed that the report failed to properly assess the life and suitability of the existing machineries/equipment for reuse in the new plant, the CAG said, while adding that the company had to provide for new machinery, initially planned for reuse in the project.
The audit also examined the utilisation of machine hours during first three years of plant operations — October 2016 to March 2019.
The CAG report further revealed that the MCCL embarked upon this major modernisation project “without assessing their existing human resources capacity and planning for revised staff requirements”.
“As a result, the company faced shortage of experienced and skilled technical staff in the factory to operate the new modernised plant,” it added.
According to the CAG, the company’s decision to augment its existing cement production capacity suffered due to inefficient planning and execution of the project.
The consultant was also ineffective in supervising the project. Initially planned at a cost of Rs 62 crore, the project was completed at Rs 143 crore with a cost overrun of around Rs 81 crore (131 per cent) and time overrun of nine years.
The CAG has recommended the government to carry out an in- depth analysis of the causes of excessive breakdowns and low-capacity utilisation and take appropriate measures to improve capacity utilisation. Batting for proper assessment and addressing the requirement of technical and skilled manpower for efficient operations of the modernised plant, the CAG asked the state government to ensure effective monitoring of production operations at the top-level of the management by identifying problems and promptly taking corrective measures to increase sales turnover of the company.