“Procuring material just in time is a challenge”

The price fluctuation and commitment failure of deliveries is the major lacking practice.

  ITD Cementation India is one of the leading construction companies in India operating for over eight decades and has established its prowess across multiple lines of business: Maritime structure, highways, bridges & flyovers, TBM & NATM tunnels, foundation & specialist engineering, airport, industrial structure & building, mass rapid transit systems, box pushing, tube heading & microtunelling, hydroelectric power, dams & irrigation, and water & waste water. Outlining on some of the major challenges for project procurement community A B Khandelwal, Vice President-Corporate Materials, ITD Cementation India Ltd points out, “Procuring the material just in time is a challenge. The major raw materials required for construction industry are TMT bars, cement, sand and aggregate. While sand and aggregates are the local items, cement and steel availability and prices are uncertain. The prices are fluctuating like gold market.”

Beating the Procurement Blues
“Credit terms are against bank guarantee with 30 days interest free or against Bank Letter of Credit (LC). For mob and demob we have to appoint the transporter on rate contract basis on per kilometre basis. The post purchase activities like co-ordination the banks for payment against LC with corporate accountant is the major time consuming. The quality certificate and back to back performance guarantee from the vendors or subcontractor is the also one of the procurement activities after supplies. The foreign currency hedging is required against currency fluctuation,” said Khandelwal on explaining how to beat the procurement blues associated with credit terms, logistic and so on.

Khandelwal also observed, “Due to incorporation of Minimum Import Price (MIP) on steel, the rates have increased. Also the prices on imported plant and machineries are becoming costlier due to higher currency exchange rates.”

What is lacking in Indian procurement practice
With his expert observations Khandelwal notices that price fluctuation and commitment failure of deliveries are few major concerns in the area of Indian procurement practice. He said, “The price fluctuation and commitment failure of deliveries are the major lacking practice. Government tenders were drafted many years ago and continuing as it is as on today. Many steel manufacturers and improved high technology quality items have been developed but not included in approved vendor list. So due to this the supply pressure on vendors the deliveries are getting affected hence project completion.”

He further adds, “We procure very less from traders. Around 98 per cent of required materials is being procured directly from manufacturers or authorised dealers. They are all professional companies.”