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Condom line snaps for Mercator, other SMEs.

The new eligibility criteria instituted by the Union health and family welfare ministry in the tender document issued recently appear to favour the larger condom manufacturers at the cost of smaller ones.
Industry sources say the changes could put over half-a-dozen small and medium enterprises (SMEs) completely out of business, endangering the livelihoods of around 5,000 unskilled and semi-skilled labourers employed in these units.
The ministry conducts a tender for procurement of condoms to be distributed across the country as part of the National Family Planning Programme (NFPP) every year. The tender is awarded to the lowest bidder and the price thus quoted is used as the benchmark, to be matched by other bidders for the tender quantity. However, this year, smaller manufacturers allege that the terms and conditions have been deliberately tweaked in favour of large manufacturers and multinational companies, thereby denying them a level playing field. A senior official at one of the smaller companies told that the problem started with the procurement process for this fiscal being delayed. "And when the tender document was finally released, we were shocked to see new pre-conditions instituted."
The new criteria make several SME manufacturers ineligible. "As per the earlier pre-conditions, all of us were eligible and rate contract holders, but now we cannot participate in the bid process."
Going by the new tender document, a firm is eligible to bid if:
l Its production capacity is at least 50% of the current tender quantity (it was 10% earlier)
l It bids for at least 50% of the tender quantity (this condition has been newly introduced)
l It has manufactured and marketed under its brand name in the domestic market at least 5% of the average annual quantity procured by the ministry from private manufacturers in the past two years, that is, 1,045.50 million pieces (this has been newly introduced)
Now, a large proportion of the tender quantity (close to 75%) will be sourced from Hindustan Latex (HLL), a corporate entity under the ministry, and the balance from approved suppliers and current rate contract holders such as JK Ansell (a 50:50 joint venture between the Raymond Group-India and Ansell International), large private manufacturers such as TTK-LIG and a bunch of SMEs including Mercator Healthcare. The smaller players have reason to feel that the pre-qualification criteria have been designed to benefit the bigger players. For one, the first two conditions require the SMEs to build on their production capacity, which requires significant investments and cannot be done overnight.
The third criteria also demands significant investments in brand building, advertising and marketing, product packaging, creation of a distribution channel, etc. These are areas the players have almost never had to focus on, having primarily been manufacturers of the product.
But the pre-conditions do work to the advantage of JK Ansell and TTK-LIG.
Both have the necessary size. Also, both have been operating with well-known brands – JK Ansell with KamaSutra and TTK-LIG with Kohinoor and Durex. HLL, on its part, has the Moods brand. Adding to the woes of the condom manufacturers is a significant reduction in the tender quantity this fiscal. The procurement quantity mentioned in the tender notice is down by a steep 65% from 1,889.49 million pieces (Mpcs) last fiscal to 663 Mpcs.
The SME condom manufacturers have been pursuing the matter with the health ministry since the tender was announced.

 

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Deep Choudhari: Mechanical Engineer.
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