CHAPTER 19
MINISTRY OF RAILWAYS

IRCON International Limited

19.1.1    Avoidable extra expenditure on re-transportation of concrete sleepers

For execution of a work of Jamuna Rail Bridge in Bangladesh, IRCON International Limited (Company) required 3,82,000 concrete sleepers for conversion of existing broad gauge line to dual gauge line. For this, the Company placed (October 1999) an order on M/s. PCM Cement Concrete (P) Limited (PCM) for supply of 2,00,000 number of dual gauge sleepers @ Rs.1221 per sleeper to be delivered at Burimari station in Bangladesh. From there, the sleepers were to be transported to Santahar in meter gauge (MG) flat wagons for execution of the work. However, the decision to take delivery at Burimari was taken by the Company without ascertaining the availability of MG flat wagons between Burimari and Santahar.

In November/December 1999, the Company came to know from Bangladesh Railways that MG flat wagons were not available between Burimari and Santahar. Therefore, the Company finalised and placed (July 2000) the subsequent supply orders on two other suppliers for 1,80,000 sleepers @ Rs. 1249.80 and Rs.1248.00 per sleeper with delivery at Santahar and Ishurdi station respectively.

The Company took up the matter with PCM for change of the delivery point from Burimari to Santahar/Ishurdi. However, PCM did not accept the same and offered (August 2000) to supply the sleepers at Rohanpur/Singhbad at the same rate provided base date of escalation was advanced to January 1999. Ultimately, the Company decided (September 2000) to accept the rate of Rs.1251 per sleeper with delivery point at Rohanpur against the awarded rate(s) of Rs.1249.80/Rs.1248.00 with delivery at Santahar/Ishurdi. In the process, the Company had to bear the additional cost of transportation of sleepers @ Rs.88.93 per sleeper from Rohanpur to Ishurdi as compared to the supply orders of July 2000.

Thus, the lapse on the part of the Company in not ascertaining the availability of the requisite wagons at the selected place and in not matching the rate with those of the subsequent contract, resulted in an avoidable extra expenditure of Rs.1.68 crore (April 2002) on re-transportation of the sleepers (1,89,209 Nos.) from Rohanpur to Ishurdi

Management contended (September 2001) that while making bids for foreign projects, there was hardly any time for collection of data which was not only time consuming but also very costly. They also stated that in such cases an in-depth study could not be done before submission of the bid and, therefore, the clients’ data as provided in the bid documents was only taken into consideration.

The reply is not tenable as it negates the basic preparatory requirements like identifying the proper delivery point before awarding the order. Further, it could have been easily ascertained from the Bangladesh authorities whether the requisite facilities were available at the selected place of delivery before placing the first supply order.

The matter was referred to Ministry in May 2002; their reply was awaited (September 2002).