Friday, 30 March 2012

Bengal price glare on army’s truck orders

Bengal price glare on army's truck orders

New Delhi, March 27: The row over the alleged attempt to bribe army chief Gen. V.K. Singh is being played out against a backdrop in which a Bengal-based Indo-Russian joint venture is one of the competitors against the Czech-origin Tatra trucks that are the mainstay of the armed forces' heavy vehicle requirement.
Sources in the army told The Telegraph that Ural India Ltd, which has an assembly plant in Haldia, had offered to sell a category of all-terrain multi-wheeled vehicles to the army for Rs 40 lakh each while the army was buying the same category of Tatra trucks assembled by defence public sector Bharat Earth Movers Ltd (BEML) for Rs 1 crore each — a difference of Rs 60 lakh between the offered price and the price at which each truck was purchased till 2010.
The army chief had said in his interview that he was urged by the alleged briber to approve a file that would allow the purchase of 600 Tatra vehicles — a transaction involving at least Rs 600 crore.
Since the alleged bribery attempt, V.K. Singh had ordered that not a single Tatra brand truck should be bought by the army. There are about 7,000 Tatras with the army, bought over nearly 25 years between 1986 and 2010.
The Tatra trucks are assembled by BEML under licence from Tatra Sipox UK Limited, the joint secretary (land systems) in the defence ministry had said on Monday. Defence ministry sources said on Tuesday that "the decision on whether or not to buy Tatra trucks is entirely within the ambit of the army".
But BEML is a defence public sector unit under the department of defence production of the ministry of defence. Tatra makes money through licence fees that BEML has to pay to Tatra Sipox UK Ltd with whom the agreement has been renewed since 1997. The original licence agreement with Tatra was routed through Omnipol Foreign Trade Corporation of the erstwhile Czechoslovakia.
The major stakeholder in Tatra and in Tatra Sipox UK Ltd is the Vectra Group based in the UK and owned by non-resident Indian Ravi Rishi.
In 2003, Tatra was acquired by the Connecticut-based Terex Corp. In 2006, Terex sold its 80.5 per cent holding to Blue River (later renamed Tatra Holding). Blue River has four partners: Vectra Ltd, Sam Eyde, KBC Private Equity, and Meadowhill and Ronald Adams.
In India, Vectra has several subsidiaries. It has an assembly plant at Hosur in Tamil Nadu, Kamaz Vectra, in which Russian firm Kamaz holds 51 per cent stakes and Vectra 49 per cent. In December 2010, the director-general of Kamaz, Sergey Kogozin, signed an agreement with V.R.S. Natarajan, the chairman-cum-managing director of BEML, for 4x4 vehicles to be supplied to the armed forces. It was estimated the armed forces need 6,000 such vehicles every year.
The Vectra Group sells or is seeking to sell heavy-duty automobiles and helicopters not only to the defence ministry but also to the home ministry. The home ministry has asked for additional helicopters to be used in counter-Maoist operations because the Indian Air Force cannot supply them in enough numbers.
The Vectra Group has also represented Eurocopter in India. In December 2007, defence minister A.K. Antony cancelled and ordered a re-bidding for a competition to purchase 197 helicopters for the Indian Army because of a senior officer's suspected connection with Global Vectra Helicorp, a Vectra Group company.
About three months ago, after the army told the defence ministry that it would not buy Tatra vehicles because BEML had not established facilities in India for the repair and refurbishment of the vehicles as spares were in short supply, it changed the General Staff Quality Requirements (GSQRs) — the requirements for each vehicle.
After that, the defence ministry issued a global tender to introduce competition into the category of heavy vehicles to transport missiles and cannons — practically the entire requirement for mobile artillery. Ural India and, possibly, Ashok Leyland, the Tatas and Mahindra & Mahindra are among the competitors for the order.
Ural India is a joint venture between Calcutta-based company Motijug Agencies and Uralaz of Russia, according to the company's website. Like Tatra, Ural also makes heavy-duty tippers, dumpers and all-terrain vehicles. The company says that the ministries of defence, coal and steel are among its customers.