CHAPTER 2
DEPARTMENT OF ATOMIC ENERGY
Indian Rare Earths Limited
2.1.1 Unfruitful expenditure on repairs to a sick plant
Contrary to the technical recommendations by an expert, the
Company undertook major repair work on a sick unit for its revival. The scheme
was subsequently abandoned rendering an expenditure of Rs.8.02 crore infructuous.
The Synthetic Rutile Plant (Plant) in the Orissa Sands
Complex (OSCOM) of Indian Rare Earths Limited (Company) remained sick since
inception in 1986 due to a series of technical problems relating to basic
process and inadequate performance of major equipments. Inspite of
modifications/renovation undertaken in the past based on suggestion/
recommendations of various expert committees with a view to bail out the Plant
from teething technological problems, the production level never exceeded ten
per cent of the installed capacity. Even the variable cost of production was
higher than the prevailing sale price. As a result, production was stopped in
May 1997.
M/s. Lurgi Metallurgee GmbH, Germany, the industry leader who
inspected (February 1997) the Plant was of the view that even if the production
level reached 10-15 per cent of installed capacity, the Plant would incur losses
of Rs.12 crore to Rs.13 crore annually with the existing basic process
technology. However, the Company took up rehabilitation works for Rs.2.67 crore
in 1997-98, Rs.3.67 crore in 1998-99 and Rs.1.68 crore in 1999-2000 totalling
Rs.8.02 crore. Thereafter, the Company stopped further repairs/rehabilitation
work.
Ministry stated (March 2001) that the increase in input
prices left the Company with no option but to keep the rehabilitation work on
hold. The Company ultimately decided (August 2002) not to revive the Plant on
the grounds that it was not economically viable and abandoned the rehabilitation
programme. The Company failed in its efforts to restart the Plant that continued
to remain inoperative (July 2002).
Thus, the Company’s injudicious decision to undertake major
rehabilitation works on a chronically sick Plant resulted in infructuous
expenditure of Rs.8.02 crore.
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