Is the government shutting down J-K Cements?

Among cement-makers, J-K Cements holds the biggest mining lease in the Valley, with rights over eighty-eight hectares of limestone-rich land in Khrew.



Haseena Begum, widow of Ghulam Mohammad Bulla. Daughters in the background, along with Bulla's elder brother Mohammad Shahban. Photograph by Kuwar Singh

Fifty-seven-year old Ghulam Muhammad Bulla succumbed to renal failure, leaving behind a wife and two daughters who were dependent on him, last October.

He was a machinery attendant at the Jammu and Kashmir Cements in Pulwama district’s Khrew area. “We sold part of our land to pay for his dialysis. Now, I don’t know how we will run the household,” said his widow Haseena Begum.

Among cement-makers, J-K Cements holds the biggest mining lease in the Valley, with rights over eighty-eight hectares of limestone-rich land in Khrew. The company’s brand of cement is also well-regarded in the market, arguably more so than the private players’. But losses, which began mounting since the financial year of 2013-14, have brought the firm on the verge of bankruptcy, leaving the futures of its 620 employees uncertain. Their salaries have been pending since January last year.  

Maqbool Mir, a machinery operator at J-K Cements’ factory in Khrew town, now tags along with the trucks leaving out of the area every evening to unload cement bags at shops around the Valley; work that fetches him Rs. 350 a day. He recently burnt his fingers doing this labour, and has dyed his palm with henna to hide the scars. 

Source: Internal company document

If Mr. Mir is able to find work every day of the month, he will just about manage to earn as much as his in-hand salary. But over a year of financial drought has crippled his family. The local school has refused to give his two daughters report cards — which would allow them to move on to the next grade — until Mr. Mir clears the pending tuition fees.

Hundreds of Mr. Mir’s colleagues are in a similar boat. Their town of Khrew in Pulwama district emerged as a cement manufacturing hub after the state-owned J-&K Cements commissioned its first plant there in 1981. Several private players have since moved in, capitalising on the region’s high-grade limestone reserves, the main raw material used in making cement.

Post-mortem

J-K Cements owns three cement factories. The oldest in Khrew, with a production capacity of 600 tonnes per day, has been shut since July 2018 under the orders of the state pollution control board for violating environmental norms. The plant’s machinery, nearly four decades old, is also on its last legs. “Parts needed for its maintenance are not available in the market anymore,” said Atul Sharma, who served as the firm’s last managing director. According to internal company documents reviewed by The Kashmir Walla, upgrading the old plant would require an investment of 80 crore rupees, and would take a year to complete. Upgrading a little less than half its full capacity would take 30 crore rupees and six months.

The second factory was set up adjacent to the older one in Khrew, and also has the same production capacity on paper. But employees say this new plant at Khrew has become an albatross around the company’s neck after Promac Engineering Industries, the Bengaluru-based contractor hired to build the new plant at Khrew, bungled up the construction. “The plant has a production capacity on paper of 600 tonnes per day. But in reality it can’t operate beyond 350 tonnes per day,” said a staffer on the condition of anonymity. 

“Promac ran away midway without formally handing over the plant,” Mr. Sharma said. “I studied the case, and we recovered some money from the bank and performance guarantees. Rest of the payment had been released to them as per the terms of the contract.” 

The new plant at Khrew has also been shut since August last year, when political conditions deteriorated in the Valley following the Indian government’s surprise decision to strip the conflict-affected region’s special freedoms. Though it has some reserves of coal to restart production, employees are now demanding their pending salaries before they resume work. 

The plant has a production capacity on paper of 600 tonnes per day. But in reality it can’t operate beyond 350 tonnes per day,

“We are not asking for all the fourteen months’ salary to be cleared at once. But we need some months’ pay before we go back to work,” said Hilal Ahmad Dar, the general secretary of the J-K Cements Employees Association. The association has been writing to prime minister Narendra Modi, lieutenant governor Girish Chandra Murmu, and other public officials for the release of their pending salaries. 

The only factory currently open is a smaller plant in Samba district of Jammu, which has half the production capacity of the older plants. But since the firm does not have a limestone mine nearby, the clinkers of limestone used in manufacturing have to be brought from Punjab, thinning the margins for J-K Cements.  

“The new plant at Khrew was only recently commissioned when the government [at the time run by a coalition of National Conference and Indian National Congress] in 2012 decided to build another plant at Samba and the company had to take out another loan,” Mr. Sharma said. According to internal company documents, the Khrew plant cost 87.52 crore rupees to build, out of which 61 crore rupees was taken as a bank loan. The Samba plant cost 26.96 crore rupees, out of which the bank financing was 18.88 crore rupees. 

The firm presently has a liability of 302.02 crore rupees. About half of this amount is pending salaries to employees as well as various payments that have to be made in their favour, such as retirement gratuities, transfers to their welfare and central provident funds, and insurance premiums from their pay package. Mr. Sharma estimates that every month the Khrew plant remains shut, the firm goes about 5 crore rupees further in the red. 

Ishtiaq Hussain Drabu, the current managing director of the firm, blames the union and what he describes as an uncooperative attitude of workers. “They have to earn their own salaries [by running the Khrew plant and producing cement]. But at the plant there is more hooliganism than work,” he says. 

Data is for financial years; last quater data not included for financial year 2020. Source: Internal company document

If work were to resume, the firm would need government aid to buy coal to continue operation beyond a few days. The management estimates an immediate need for 35 crore rupees to kickstart operations, according to internal company documents. This would include funds to give out three months of pending salaries to the workers. 

They have to earn their own salaries [by running the Khrew plant and producing cement]. But at the plant there is more hooliganism than work.

The proliferation of private players in Khrew has also strained the supply of trucks for take-off of cement, Mr. Sharma said. Additionally, political turmoil can bring the plant to a halt. “After the uprising following Burhan Wani’s killing, the plant did not function for five months. On average, three days in a week used to be strikes called by Hurriyat [Conference]. Before that, the floods in 2014 had impacted production,” he added.

An Unlikely Resurrection

The firm’s management has held multiple meetings with the Lieutenant Governor Girish Chandra Murmu over J-K Cements’ future. While workers are hoping for a possible bailout, “the lieutenant governor asked us to privatise the Khrew plant,” Mr. Drabu said. “There are a lot of workers here, but the plant is small, so we have to shut it down.” According to internal company documents, the firm’s total assets amount to 467.99 crore rupees.

In December, in a letter to the industries and commerce department reviewed by The Kashmir Walla, Mr. Drabu wrote that “the [union-government-owned] Cement Corporation of India has suggested they are ready to take over the Samba plant on exchange of book value along with all employees available at Samba, subject to clearance from their Ministry.”

Employees are afraid that the management would nudge them towards a golden handshake — a lump sum payment to lay them off— but Mr. Drabu said “the government needs to have even that much money. There are so many workers.”

The J-K general administration department meanwhile has transferred 160 J-K Cements employees to other government branches after tagging them as “surplus staff”. More employees are likely to be transferred in the coming months. This has left the remaining staffers anxious that the government is planning to shut down the firm. “Those who have connections with the bureaucrats to get transferred are getting left behind on a sinking ship,” Mr. Dar said.

The staffers are also the highest paid public employees in J-K, Mr. Sharma said: “Their salaries kept on rising [by orders of the firm’s board of directors] even as production was declining.”

Today, while the management and workers are caught in a negotiation over how many months they can be paid to resume operations at the plant, the wait for their year-old salaries has proven too long for some. 

Bashir Ahmad Shah, another worker at the plant, is worried of a similar fate. He has been ridden with high fever since January, but the doctors are still running tests to determine what is wrong with his health. The company has disbursed 25,000 rupees in light of his condition, but his medical bills have already mounted to 80,000 rupees. Unlike Mr. Mir, who can hide his wounds with henna, Mr. Shah is unable to work odd jobs to support his wife and two daughters. Like many of his colleagues, his family has bought food grains and other groceries on loan. 

“When my daughter goes to the grocery store, the shopkeeper asks her, ‘Where is your thief of a father?’” he says. 

For Mr. Bulla’s family, the struggle hasn’t ended yet. When he died, his family kept his body at home for twelve hours, “while we were arranging money for his funeral,” says his brother, Mohammad Shaban Bhat, who was also a worker for J-K Cements and is yet to receive his post-retirement gratuity.

Kuwar Singh is a Reporting Fellow at The Kashmir Walla.

The story appeared in our 9-15 March 2020 print edition.

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