Mawmluh Cherra Cements Ltd (MCCL), the comatose state-owned cement company, had an output of less than 25 percent of its stated capacity before it halted operations on the coming of the Covid-19 pandemic in March last year, Chief Minister Conrad K Sangma told the Assembly today.
The main reasons for low capacity utilization was unscheduled breakdown, requiring maintenance and repairs, and a lack of knowledge and skills to operate the new ‘dry process’ plant, he added.
The dry process plant required an investment of Rs 142.97 crore. However, the company was nowhere near its stated capacity of 1.80 lakh tonnes of cement per annum, producing the equivalent of only 40,000 tonnes per year between April 2017 and March 2020.
“The production was way below the breakeven level, which resulted in the company not being able to cover even the fixed costs,” Sangma stated.
Since 2014-15 the state government has pumped Rs 177.50 crore into the ailing firm.
“However, with the low level of inadequate operations and generation of revenue, MCCL found itself reeling under severe liquidity problems. With the announcement of the national lockdown in the last week of March 2020, the plant was put under shutdown and, till today, the plant is yet to be made operational,” the CM said.
With more than 100 staff taking voluntary retirement, the total strength of the company is 306 across various wage categories.
Sangma also said that the government has released interim payment for salaries amounting to Rs 3 crore during 2020, including Rs 1 crore as contingent expenditure.
Sangma also told the house that, as per the latest estimates, the liabilities of MCCL amount to Rs 65.93 crore, which includes Rs 27.09 crore due to government departments, Rs 14 crore to suppliers and contractors and Rs 24.84 crore as liabilities to employees.
Talks about the future of the company have been held between the CM and stakeholders, such as those in Sohra and Mawmluh Dorbar.
He made it clear to them that an independent study from 2019 estimated that the company would require another Rs 190 crore to revive it, an amount the government could ill afford. Another option would be to cut the state’s losses and shut the company down, but this was “not considered to be an acceptable choice.”
The other choice was to look for a private company to form a joint venture with the government in running the manufacturer.
“As such the meeting unanimously decided to explore entering into a joint venture with a private entity that has the capacity to make significant investments in the plant. The state government is presently preparing the cabinet memorandum seeking the approval of the cabinet for the joint venture proposal of MCCL,” the Chief Minister added.
