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Railways to revisit tender norms on industry protest over predatory bidding

New Delhi, Sumit Moitra: The crisis in the wagon industry that has forced most of the manufacturers to refuse the recent Railway order given out at price below cost of production is set to get resolved soon.

In a meeting between the representatives of the industry and the Railways ministry held on Monday at New Delhi, the latter has decided to look into the charges of predatory pricing and examine reworking the clauses of tenders to reduce chances of any bidder quoting unrealistic prices that could hurt the economic health of the entire industry.

“Railways has agreed to revisit tender conditions whereby chances of predatory pricing are curtailed. We are hopeful of an early solution,” JP Chowdhury, executive chairman of Titagarh Industries, and one of the industry representatives who attended the meeting told dna.

In June, the Railways had come out with a much-awaited industry wide order for 8,509 wagons. But, almost all the major wagon makers refused to produce those wagons for a price quoted as ‘L1’ (lowest) by one of the manufacturers. The industry had described ‘L1’ as predatory, dna had earlier reported.

The price quoted by the ‘L1’ bidder and accepted by the Railways with respect to the order for wagons of type BOXNHL was Rs 10.80 lakhs a piece, lower than previous year’s price of Rs 11.74 lakhs.
The realistic price should have been not less than Rs 13 lakhs, the industry had told the ministry.

Following this, the industry started making representation to the ministry through the Association of Rolling Stock Manufacturers of India.

The situation turned difficult for the industry as the companies had to explain to their idle workforce why the orders have been refused, for the first time ever, industry sources said.

Texmaco Rail, the largest manufacturer of wagons, disclosed on Wednesday its predicament due to this crisis.

“The performance of the quarter was severely impacted due to abrupt downward revision of prices of wagons by the Railways against existing orders due to predatory prices quoted by a party against tender for wagons resulting in zero despatches of wagons on account of the Railways from May 2015 onwards,” Texmaco said in notes to its accounts on Wednesday when it reported a loss of Rs 4.10 crore on a topline of 127.60 crore.

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