No Truck With The Devil

Tatra Tantrum

The BEML protest letter to the MoD asking that army continue with Tatra

common refrain about Bharat Earth Movers Ltd (BEML) in defence circles is as that “rogue PSU”. Now, it would be unwise to reject the moniker as the fulmination of insular armymen. The Bangalore-based public sector undertaking, it seems, has been taking the army for a ride by supplying them with “substandard” Tatra vehicles all these years—and in a brazen manner, arm-twisting and forcing its way when faced with obstacles. In this season of sensational disclosures and fabricated fears of a coup, the original issue of corruption—which triggered the ruckus—has been somehow obfuscated. Outlook has learnt that BEML is upset with Gen V.K. Singh not just for blocking the procurement of a tranche of 644 vehicles. There’s also the prospect of the PSU losing its decades-old monopoly in supplying heavy-duty Tatra trucks to the army. In the event, it seems the bribes offered to the general in the coming months would have been much more.

The army’s projected requirement for the next few years is roughly 5,000 high mobility vehicles (HMVs) and it has been recommended that procurement be initiated by inviting competitive bids from multiple vendors, instead of the single vendor system (BEML-Tatra) resorted to earlier. After Operation Parakram in 2001-02, a decision was taken to upgrade the Tatra fleet to increase their load-carrying capacities. New parameters were formulated and a request for proposal (RFP) was floated in 2010 by the weapons and equipment directorate where six vendors, namely M/s Vectra, M/s Ural, M/s Mann Force Trucks, Vehicle Factory Jabalpur, M/s Tata Motors and BEML were shortlisted for 10-tonne 6x6 vehicles. Simultaneously, a request for information was also floated for 12-tonne 8x8 vehicles to expand vendor base and trials began. The then Master General of Ordnance branch (MGO), Vinay Sharma, recommended that since trial testing is likely to take 3-5 years, procurement for 644 vehicles take place through the single vendor (BEML) as before, to meet immediate operational requirements.

Documents with Outlook show that following the chief’s objections, even this had been rejected in favour of the multi-vendor route. An audit report from 2008 sheds more light on why the army is keen to get rid of BEML. In ’06, the MGO had placed an order for 490 Tatras (6x6) for Rs 254 crore with BEML. The scrutiny showed that though the other two vendors, Tata Motors and Ashok Leyland, had carried out the new modifications suggested and approved by the army, BEML had not. Yet it got the supply order, on the strong recommendation of secretary, defence production, MoD. It also discovered that though the army needed the lighter Tatra 4x4s to ferry troops, they had not been given troop carriers, but vehicles built for laying mines. “Thus vehicles not designed to carry troops had been procured...to keep BEML’s production line alive,” the ’08 report noted.

BEML chairman V.R.S. Natrajan, who has not fought shy of calling the army chief names after the CBI came knocking, has publicly admitted that it procured completely knocked down (CKD) kits from Tatra Sipox (UK) Ltd, and that the UK-based firm has been appointed by the original equipment manufacturers (OEMS)—Tatra Slovakia and Tatra Czech —to market Tatra products in India. He also said that Tatra Sipox, Tatra Cz and Tatra Sl were all owned by the same organisation, the Vectra Group, “a consortium whose majority shareholder is Ravi Rishi, an NRI entrepreneur”.

But this is what Tatra, the original Czech company, has to say through spokesman Vladimir Bystrov. “Tatra wishes to state that neither Mr Ravi Rishi nor his investment company, Vectra Ltd, have control or have ever controlled, directly or indirectly, Tatra a.s. The British company, Vectra Ltd, is a minority stakeholder in Tatra Holdings and in principle holds one of the four votes. Nonetheless, Tatra will request from Mr Rishi and Vectra Ltd an explanation of the information about any initiated investigation of him and Vectra Ltd by the Indian CBI as it relates to sales of products branded with the ‘Tatra’ name.”

On the mysterious Tatra Sipox UK, the go-between in supplying the trucks to BEML, Bystrov says, “There is no working relationship with it...one did exist in the past dating back to over 20 years ago when Tatra was a state-owned enterprise in the former Czechoslovakia”. In April last year, a story broke out in the Czech media about a criminal complaint being registered against Tatra trucks and Ravinder Rishi for allegedly purchasing CKD kits at below production cost for his Vectra Ltd and supplying them onward to BEML, resulting in losses to the Czech firm. Though Tatra CEO Ronald Adams denied the complaint, he had in an earlier interview justified “the questionable deliveries to the Indian army on the ground that the orders saved Tatra during the depths of the economic crisis”.

ut to August 2011. Stung by the prospect of losing its monopoly, BEML shot off a strongly worded fax to the ministry of defence insisting the army “cannot use any other vehicle except BEML Tatra”. It goes on to list a series of ‘grievances’. We reproduce sections of it, verbatim:

• “In normal parlance as per the existing purchase system the proposals of MGO for budget-linked requirements will go directly to the ministry for processing and placement of purchase order, but strangely for the first time, told to put up to Army HQ for clearance.”
• “All proposals reliably learnt have been told on file, in writing to await the outcome of trial of multi vendor tender”
• “On change of MGO with effect from August 2011 it is officially conveyed that there are no requirements for revenue (replenishment as per old norms) side vehicles which is mystery and strange”
• “The Army HQ/MGO to be advised to release the order on BEML as we have taken advance action for 1,000 vehicles production of 6x6 and 8x8 on the assurance of then MGO retired on July 2011.”

So BEML had clearly initiated more imports of the ‘substandard’ trucks without confirmed orders from the army, which under Gen V.K. Singh has indicated that it is unlikely to accept anymore.

As an officer connected with the process says, “As it is, the 2006 defence procurement procedure states that it should only be from the oem. The PSUs are now just trading conduits. So why is BEML now dictating to the MoD to force the army to somehow buy the trucks?” With skeletons tumbling out thick and fast, the battle has just begun. As the fog lifts, the full Tatra affair will come to light.