JK Government approves disinvestment of JKCL

10 Oct 2022 , 08:31 AM

According to an official spokesman, the union territory administration approved the disinvestment of Jammu and Kashmir Cements Limited (JKCL) on Sunday since the business was unable to sustain and manage its finances correctly.

The proposal for JKCL’s disinvestment was approved by the Administrative Council (AC), which met under the supervision of Lieutenant Governor Manoj Sinha, after considering all options for its resurrection, according to a spokesman.

The meeting was attended by Arun Kumar Mehta, Chief Secretary for Jammu and Kashmir, and Rajeev Rai Bhatnagar, Advisor to the Lieutenant Governor.

According to the spokesman, the company’s inability to continue, manage its finances effectively, and preserve operational efficiencies made the disinvestment necessary.

Even though it had specialized limestone mining licenses at its disposal, the company was unable to fully realize its potential or withstand fierce competition in the market, he claimed.

The company, which benefited from economies of scale, failed to produce the necessary growth, cash flows, and operating margins during the past more than two decades, according to the spokesman.

He said that despite the government’s assurance of demand in exchange for advance payments, the company has not increased in size even slightly over the years and, in fact, has seen a significant decrease in both production and revenues starting in 2012—2013.

The representative claimed that due to administrative and financial shortcomings as well as a failure to make use of the company’s advantageous location, the company went out of business, further depreciating its equipment and plant without producing anything.

He continued that the business had not only accrued losses but was also saddled with obligations related to salaries, unpaid wages, and payments, as well as a failure to make required deductions like GST.

According to the spokesman, the Administrative Council gave preliminary clearance in October of last year for the total sale of JK Cements Limited by considering the possibility of a rising e-auction and an authorization to use 240 kanals of land close to the Khrew Plant at Industrial Estate.

The potential bidder needs to be worth at least Rs250 crore. In at least three of the previous five fiscal years, the bidder must have had net positive EBITDA.

A consortium can be formed by eligible parties to take part in the transaction. There can be a maximum of four members, including the lead member.

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