1. PERFORMANCE EVALUATION OF
NAGALAND MECHANIZED BRICKS COMPANY LIMITED: A CASE STUDY
Ratan Kaurinta*
Brick manufacturing is a crucial industry in Nagaland. With increased demand
for construction activities, the need for brick manufacturing plant is ever increasing.
Accordingly, the Government of Nagaland initiated a plan for setting up a mechanized
brick plant in the state to improve the quality of bricks and to meet the growing demands
for bricks and reduce the costs of production. Under this plan, a major project viz.
NMBCL was established in 1991, taking into consideration the imperative requirements
and the increasing construction activities in both public and private sector in the state.
Planning for a commercially successful mechanized plant is as challenging as
any other process industry. Therefore, an understanding of the market, raw materials and
fuels, plant site, technical, financial and managerial strengths and lending norms of the
financial institutions before and after starting the project needs no emphasized. In fact,
the absence of such understanding and clear guidelines causes the persistent
mechanization phobia in our state.
Through this paper an attempt has been made to evaluate the performance of
Nagaland Mechanized Bricks Company Limited (NMBCL), Dimapur in order to assess
its role in the industrial development of Nagaland and to highlight some of the key issues
encountered by it in carrying its operation. The main objective of this study is to find out
the plant operational results in terms of physical performance and financial performance
and to identify the problems.
INCORPORATION OF THE COMPANY
The Nagaland Mechanized Bricks Company Limited (A Government of Nagaland
Undertaking) was set up at Toluvi Village, Dimapur at a consolidated cost of `9.91
crores with an installed capacity of 35 (thirty five) million red bricks on a turnkey basis
with a proven design and Hoffman Kiln technology. It was inaugurated on 11th
January,
1988 and incorporated into a full-fledged company on 30th
January, 1991 under the
Companies Act, 1956 with an authorized capital of `3 Crore divided into 3,00,000 Equity
Shares of `100 each.
* Assistant Professor
Department of Commerce
Nagaland University, Kohima Campus, Meriema.

2. 2
The Government of Nagaland through an agreement awarded the Turn Key
contract to M/s Sanjay Traders, Panitola Assam (now Kolkata-based) on 30th
October,
1987 to complete the work in all respects upto successful trial run with the condition of
running the project for 16 (sixteen) months at the operational cost of the State
Government. The plant was incorporated into a full-fledged Company on 30th
January,
1991 under the Companies Act, 1956.1
However, in the event of its failure to complete the
plant, a penalty of 0.25 per cent per week subject to a maximum of 10 per cent of the
value of the contract was made leviable.2
In 1992, IDBI sanctioned `3.00 crores loan for the project. However, only `2
crore was disbursed for the Project and `56 lakhs was paid as insurance premium to
Oriental Insurance Company. The loan could not be service due to non-commissioning of
the project. The total amount outstanding against this loan of `2.56 crore crossed `15.00
crore as on 27/2/2002. The State Government proposed for one time settlement (OTS)
and accordingly `2.57 crores loan was repaid to IDBI during 2003-04.
ORGANIZATIONAL STRUCTURE
The administration and management of NMBCL is vested in the Board of
Directors comprising of 6 members including the Chairman. The Company has one
Managing Director assisted by one General Manager, two Assistant Engineer and one
Assistant Manager with 78 supporting staffs. The Plant has in its role a total of 83
employees with 36 as regular employees, 33 casual and 13 on probation. The manpower
was drawn largely from government Department to man the senior level position on
deputation particularly in technical category.
PHYSICAL PERFORMANCE
Major equipment was installed during 1993 but no trial run was possible as
power was made available to the plant site only during December, 1995. By the end of
September 1996 the first trial test was conducted and certain defects and malfunctioning
in the machines and equipments were detected. The trial production of green bricks was
1
Department of Industries & Commerce, GON, Cabinet Memo. Dated.27-2-2002.
2
CAG Report, 2005. Government of Nagaland. Pp.117-118.

3. 3
carried out with unstable condition of machineries and equipments. The condition of the
project was precarious as the average green bricks produced per unit were reported to be
7,000 bricks per shift which was far below the rated capacity. Besides, the performance
of the machinery and equipment could not be ascertained and the management reported
the problem of working capital requesting the Government to provide sufficient working
capital to run the plant to continue checking the machineries and equipment installed.3
The study found that as on 18/11/1996, the NMBCL could produce 2,50,000 green bricks
approximately.4
The red bricks produced was 1,50,000 out of which 40,000 red bricks
were found to be of good quality and the remaining 1,10,000 bricks was treated as wastes
and kept for re-burning. The quality of bricks was very poor resulting in substantial
losses to the company. The Plant was compelled to stop production as it was
uneconomical to continue till all necessary works are completed by the turn key
contractor. As such, the management did not recommend for commissioning of the Plant
till such time the defects are rectified. The rectification/repairs and replacements works
resumed from 28/8/2000 and continued till the 2nd
week of July, 2001 during which time
the official trial run of machine section was conducted.
The first phase official trial run on production of green bricks in machine section
was conducted on 13th
July, 2001 in the presence of Government representative, the Turn
Key Contractor’s representative and NMBCL management. The trial run was conducted
in 2 shifts viz. A-Shift commencing from 6:00 am to 2:00 pm and B-Shift commencing
from 2:00 pm to 10:00 pm covering a total working time of 16 hours.
The A-Shift operation was conducted almost successfully except for few hours of
disruption due to low supply voltage and minor checkups. The production of green bricks
in Machine-I for effective operation of 4 hours 52 minutes was 9072, and for Machine-II
with effective operation time of 4 hours 40 minutes it produces 7392 green bricks. As a
result, A-Shift could produce a total of 16,464 numbers of green bricks with total
effective operation time of 9 hours 32 minutes. The idle time reported was 3 hours 8
minutes for Machine-I and 3 hours 20 minutes for Machine-II respectively. The
production rate of Machine-I was found to be 31.06 bricks/m while for Machine-II it was
3
NMBCL, Progress Report.Dated.5.3.97.
4
NMBCL, Progress Report.Dated.18.11.96. Annexure ‘A’, p.2.

4. 4
26.40 bricks/m.5
However, the B-Shift could not be carried out due to excessive power
supply fluctuation ranging between 365v to 385v. As a result, the machine section could
produce an average quantity of 55,000 green bricks per day at the rate of 28.64 per
minute by each machine.
Subsequently, several works were found to be partially completed and many
defects were also identified. It was observed that the main reason for malfunctioning and
consequent delay in commissioning was due to idling of the Plant for about 7 years
(1993-1998) before being put to final trial run. Besides, the delay in completion of work
and commencement of trial run can be attributed to the failure of the Department to
provide power supply in time. Also, the idling of the project beyond 1995 till it was
commissioned for commercial production was due to defective installation and
inadequate handling by the management. The management of NMBCL during April
2002, in consultation with the State Government reduced the installed production
capacity from 1,00,000 bricks per day to 35,000 bricks per day due to installation of
defective machinery and kiln design.
The plant was commissioned for commercial production on 6th
August 2004. The
actual production of red bricks between August, 2004 to March, 2005, was 6,77,9386
red
bricks as against the revised installed capacity of 83,30,000 bricks at reduced production
capacity of 35,000 bricks per day and suffered a potential revenue loss of `1.38 Crore till
March 2005.7
Hence, the study revealed that due to lack of adequate and timely action by
the Department, the expenditure of `9.56 crores incurred on the construction of the Plant
remained unproductive for more than a decade. The management attributed this low
production to non-operation of dryer chamber and physical limitations of the kiln
structures.
The delay in commercial production was also partially due to power supply
problems and insufficient clay collection in the absence of excavator. The capacity
5
Trail Run Report, NMBCL. Dimapur, Dated.16th July, 2001.
6
CAG Report, 2005. Government of Nagaland.p.118.
7
August 2004 to March 2005 = 238 days.
35,000 per day x 238 days = 83,30,000
83,30,000 – 6,77,938 = 76,52,062 x `1.80 per brick = `1,37,73,711
(Say `1.38 crore)

5. 5
utilization of the plant was far from satisfactory right from the commencement of the trial
test conducted in May, 1996.8
The study reveals that the NMBCL failed to achieve production target of
35,00,000 bricks per year as can be seen from the year-wise/category-wise production of
bricks indicated in Table 1 as given below.
Table 1: Year/Category-Wise Production of Bricks
(1997-98 to 2000-01)
Year A-Class B-Class Pickets Total
1997-98 1,98,502 nos 1,19,352 nos - 3,17,854 nos
1998-99 2,12,970 ″ 71,473 ″ 23,146 nos 3,07,589 ″
1999-00 2,46,509 ″ 66,411 ″ 30,949 ″ 3,43,869 ″
2000-01 3,06,237 ″ 1,31,643 ″ 15,396 ″ 4,56,276 ″
Total 9,64,218 ″ 3,88,879 ″ 69,491 ″ 14,25,588 ″
Source: NMBC Ltd., Toluvi, Dimapur.9
From Table 1, it is seen that the highest number of bricks produced during the
period 1997-98 to 2000-2001 (upto 18/9/2000) was 4,56,276 bricks (which is 13.04% to
targeted production of 35,00,000 bricks per year) during 2000-01, with 67% A-Class,
29% B-Class and 4% pickets. The total number of bricks produced during the 5 (five)
year period from 1997-98 to 2000-01 was only 14,25,588 bricks which is 40.73% of the
targeted yearly production. This clearly reflects that the target set was unrealistic as the
same could not be achieved even with 5 year productions. The total A-Class production
was 9,64,218 while B-Class and Pickets produced were 3,88,879 Nos. and 69,491 Nos.
respectively. The stock positions with effect from 9.8.2002 taking the production of
bricks from 3rd batch to 15th batch are shown in Table 2 and Table 3 respectively.
Table 2: Stock Position of NMBCL
A-Class B-Class Picket Total
4,06,284 Nos. 2,21,269 Nos. 4,190 Nos. 6,33,743 Nos.
`7,31,311 @1.40 `3,09,776 @1.40 `5,866 @1.50 `10,46,953
Source: NMBCL, Toluvi, Dimapur.
8
CAG Report, 2005. Government of Nagaland. p.117.
9
Audit Notes on NMBC Ltd. Dimapur. Directorate of Treasuries & Accounts, GON.
Dated. 4th
March, 2002. Para-IV.

6. 6
Table 3: Production of Red Bricks
(3rd
Batch to 15th
Batch)
A-Class B-Class Picket Total
Production 9,64,218 3,88,879 72,491 14,25,588
Sales (6.8.97 to
30.9.00)
5,57,934 1,65,610 68,301 7,91,845
Balance (Stock) 4,06,284 2,21,269 4,190 6,33,743
Source: NMBCL, Toluvi, Dimapur.
It is observed from Table 2 & 3 that the total stock of bricks effective from
9/8/2002 was 6,33,743 Nos. valued at `10,46,953. The production from 3rd
batch to 15th
Batch was 14,25,588 nos. with maximum production seen in the case of A-Class
(67.63%) while sales affected was 7,91,845 Nos. with more than 70% of A-Class bricks.
FINANCIAL PERFORMANCE
The position of NMBC Ltd. in respect of financial position, extent of loss and
budgetary support from State Government for the period 1999-00 to 2004-05 are shown
in Table 4.
Table 4: Financial Position of NMBCL
(1999-00 to 2004-05)
(`in lakhs)
Period Profit/Loss Extent of Loss Budgetary Support (Equity)
1999-00 Under Trial Run Under Trial Run 60,00,000
2000-01 - do - - do - 50,00,000
2001-02 - do - - do - 66,91,673
2002-03 - do - - do - 71,00,000
2003-04 - do - - do - 44,86,000
2004-05* - 45.93 55,00,000
- Total 3,47,78,346
*Upto January, 2005.
Source: NMBC Ltd. Dimapur. Dated.6/2/2004.
It is observed from Table 4 that upto March 2004 no official production record
was maintained to determine the financial position. The allocated budgetary support from
State Government as equity share during the last 6 (six) years from 1999-00 upto January
2005 was `3,47,78,346. Starting with `60 lakhs in 1999-00 it increases to `71 lakhs
during 2002-03. The average support amount was `58 lakhs during the 6 year period.

7. 7
During the year 2004-05, the entire amount of `55 lakhs was spent on salary and wages
with no production activities.10
Commercial production of the plant started after a gap of more than 10 years and
could achieved only 5.59% of its installed capacity resulting in potential revenue loss of
`1.38 crore as stated earlier. The Profit & Loss Account of the Plant from 6th
August,
2004 till 25/8/2005 shows that the Plant has suffered losses to the tune of `45.93 lakhs11
due to the imbalance involving expenditure in the overall cost of production and returns
through the sale proceeds. The red bricks are sold in the market at the approved rates that
varies between `1.62 to `1.80 per brick. The Plant produces 11,57,000 number of red
bricks between 13th
July, 2001 to end February, 2005 and realize an amount of
`20,97,376 as sale proceeds.
The study revealed that the reason for poor financial performance of the
company was due to non-operative kiln segment from inception till the 3rd
firing. The
movement of fire took about 45 days to reach half the ring which was very slow and coal
feeding of 300 Kgs/1000 bricks was also found to very high. Further, regular obstruction
of holes by broken green bricks was also detected resulting in substandard quality with
10% of A-Class and 30% of B-Class and the remaining 60% as wastes. The Company
incurred an expenditure of `2.12 lakhs per month and `25.44 lakhs in a year without
running the plant as indicated in Table 5.
Table 5: Statement of Expenditures
Sl.No Particulars Amount (`)
1. Pay and allowances 1,20,000
2. Electricity bill (charged as per 3 nos. transformers) 50,000
3. Insurance premium (for installed machineries and equipment) 42,000
Total 2,12,000
Source: NMBCL, Toluvi, Dimapur.
In addition, the plant availed a term loan of `2,51,436.05 crore from IDBI as
secured loan. The accumulated interest and panel interest stands at `3,52,584.64 crores
upto 22nd
September, 2003, while the total loan amount outstanding as on 31/3/2003 was
`6,04,020.69 crores. An analysis of the profit and loss, production, monthly sales and
break-even point at different selling price of bricks are shown in the Table 6 given below.
10
Utilization Certificate (1st
to 4th
Quarter Equity Share), NMBCL, Toluvi. Dated.4/5/2005.
11
Minutes of the 17th
meeting of BOD, NMBC Ltd. Dated.6/9/05. Agenda 17/6 (b).

8. 8
Table 6: Profit and Loss Analysis
A.Installed Capacity: 30,00,000 Nos. per month.
B. Cost of Production (per month):
Sl. No. Particulars Amount (`)
1. Salary 3,60,000
2. Wages 2,90, 323
3. Clay (3,75,000 Cft @`0.33 per Cft at 80% ratio) 1,20,000
4. Sand (60,000 Cft@`1.25 per Cft at 14% ratio) 75,000
5. Coal (10% and 17% ash content) 15,80,645
6. Consumables (i.e., Diesel, B.Oil, Mobil, Grease etc) 1,45,161
7. Repairs & maintenance (Mech/Elect) 1,16,774
8. Electricity 1,87,935
9. Insurance 11,670
10. Administrative Expenses 25,000
Total 29,12,508
C. Sales Revenue (per month):
@`1.70p per bricks at 80% A-Class production
(i.e., 30,00,000x0.8x1.70) = `40,80,000/-
D. B.E.P Analysis:
a) Fixed Cost:
1) Salary = 3,60,000/-
2) Electricity = 46,000/-
3) Administrative Expenses = 25,000/-
4) Insurance = 11,670/-
5) Maintenance & Repair = 20,000/-
Total = ` 4,62,670/- per month.
b) Variable Cost:
1) Wages @`0.09 P/B = 2,90,323/-
2) Clay @`0.04 P/B = 1,20,000/-
3) Sand @`0.025 P/B = 75,000/-
4) Coal @`0.52 P/B = 15,80,645/-
5) Consumables @`0.048 P/B = 1,45,161/-
6) Repairs & Maintenance @`0.03 P/B = 96,774/-
7) Electricity @`0.047 P/B = 1,41,935/-
Total = ` 24,49,838/- per month.
B.E.P = Fixed Costx100/Sales Revenue – Variable Cost
= 4,62,670x100/40,80,000 – 24, 49,838
= 28.38 units
Source: Compiled from monthly Progress Report of NMBCL, Toluvi.

9. 9
It is clear from the above Table 6, that the Plant can break-even its production at
28,380 Nos. of bricks per day at 100% capacity. However, the actual production was
25,000 Nos. of red bricks per day.
Although mechanized brick industry in the present context are not considered to
be competitive against conventional ones due to high capital investment and the prevalent
scarcity of power supply threatening the production process. The high dose of investment
and depreciation costs also increases the cost of production of bricks. Efficient
production resulting in a lower price-level of brick is thus ruled out. Further, large
distance carrying of Coal is another reason for this high cost of production and higher
selling prices of bricks in the State. All these technical and financial constraints affects
the production of bricks resulting in short supply against the demand created by massive
construction activities as stated earlier. This caused the escalation of brick prices. Thus,
the case of NMBCL is indicative of the techno-commercial failures. The stock positions
of the plant (March 2002, March 2003 and January 2004) are shown in Table 7, 8 and 9
respectively.
Table 7: Stock Position (March, 2002)
A. Raw-materials
Particulars
Opening
Balance
New Stock Utilized Closing Balance
1. Clay 2,05,159.5 Cft. 20,400 Cft. 32,713.88 Cft. 1,92,845.62 Cft.
2. Sand 11,547.05 Cft. Nil 3,271.38 Cft. 8,275.67 Cft.
3. Coal 21.10 MT 105.14 MT 70.43 MT 55.81T
B. Finished Products: (Red bricks in Nos.)
1. A-Class 3,834 95,425 74,200 25,059
2. B-Class 78,506 57,158 1,00,504 35,160
3. Pickets 15,173 9,382 17,779 6,776
Total 97,513 1,61,965 1,92,483 66,995
C. Sales Proceeds: (Red bricks)
Category Quantity Rates
Amount
(`)
Cash
payment
Salary
deduction
Credit Total
1. A-Class 74,200 1.62 1,20,204
`85,604 `25,866 `35,640 `1,47,110
2. B-Class 13,500 1.26 17,010
3. Pickets 2,500 1.40 3,500
- 4,600 1.26 5,796
4. Broken 1 Trip 600 600
Total 87,700 1,47,110
Source: NMBCL, Toluvi Village. Dimapur. March 2002.

10. 10
Table 7 indicates that with raw-material intake of 32,713.88 cft. of Clay,
3,271.38 cft. of Sand and 70.43 MT of Coal, the plant could produce a total of 1,61,965
nos. of red bricks. Out of which 59% were A-class, 35% B-class and 6% pickets. The
sales proceeds was `1,47,110. Out of which cash sales was `85,604 (58%) and credit
sales was `35,640 (24%). This shows that the no clear cut credit policy was followed in
the company. Besides, it was observed that red bricks utilization far exceeds the new
stock by 30,518 nos. resulting in 66,995 nos. of closing stock. The stock position of
March 2003 and January 2004 is shown in Table 8 and Table 9 respectively.
Table 8: Stock Position (March, 2003)
A.Raw Materials
Particulars Opening balance New stock Utilized Closing balance
1. Clay 1,80,804.75 Cft. 12,739 Cft. 16,577 Cft. 1,76,966.75 Cft.
2. Sand 791.58 Cft. 4,000 Cft. 1,326.16 Cft. 3,465.42 Cft.
3. Coal 18.74 MT 36.87 MT 52.8 MT 2.81 MT
4. Paddy husk 393.58 Cft. 4,000 Cft. 1,326.16 Cft. 3,067.42 Cft.
5. Green bricks 1,32,411 Nos. 1,65,769Nos. 1,87,200 Nos. 1,10,980 Nos.
B. Finished Products: (Red bricks in Nos.)
Category
Opening
balance
New
stock
Total Sales
Breakage/
rejected
Closing
stock
1. A-Class 51,649 94,088 1,45,737 75,500 1,510 68,727
2. B-Class 1,63,677 83,394 2,47,071 2,000 60 2,45,011
3. Pickets Nil 2,070 2,070 Nil Nil 2,070
Total 2,15,326 1,79,552 3,94,878 77,500 1,570 3,15,808
C. Sales Proceeds: (Red bricks)
Category Quantity Rates Amount (`) On cash On credit
1. A-Class 75,500 1.80 1,35,900
`83,800 `58,5002. B-Class 2,000 1.50 3,000
3. Broken 5 Trips 500 2,500
4. Broken 3 Trips 300 900
Total 77,500 1,42,300
Source: Progress Report (2003). NMBCL, Toluvi. Annexure-A & B.
Table 8 shows that during March, 2003 the green bricks utilized by the plant was
1,87,200 nos. and red brick production of 1,79,552 nos. Total quantity sold was 77,500
bricks and 8 trips of broken bricks. An amount of `1,42,300 was realized as sale proceeds
while credit sales was `58,500.
The study found that red bricks production was carried out in Bull trench open
kiln as there was no Hoffman kiln operation due to ongoing kiln tunnel communicating

11. 11
door widening works and minor cleaning works. From the statement showing stock
position, finished products and sales proceeds, it was seen that, the value of red bricks
production was far less than the recurring expenditure.
Table 9: Stock Position (January, 2004)
A. Raw Materials
Particulars
Opening
balance
New stock Utilized Closing balance
1. Clay 1,12,863.53 Cft. 28,167 Cft. 24,892 Cft. 1,13,898.53 Cft.
2. Sand 2,230.35 Cft. Nil 1,244.6 Cft. 512 Cft.
3. Coal 44.05 M.T. 59.91 M.T. 81.72 M.T. 22.24 M.T.
4. Paddy husk 1,756.33 Cft. Nil 1,244.6 Cft. 512 Cft.
5. Green bricks 4,19,368 Nos. 1,74,244 Nos. 2,47,475
Nos.
3,33,764 Nos.
6. Firewood 2.5 Tags Nil Nil 2.5 Tags
B. Finished Product: (Red bricks in Nos.)
Category New stock Total Sales Breakage/rejected Closing stock
1. A-Class 1,87,808 1,87,808 1,59,978 3,250 22,080
2. B-Class 5,401 5,401 5,015 251 135
3. Pickets 6,260 6,260 4,985 Nil 1,275
Total 1,99,469 1,99,469 1,69,978 53,501 23,490
C. Sales Proceeds: (Red bricks)
Category Quantity Rates Amount (`) On cash payment
1. A-Class 14,500 1.62 23,490
`3,03,849
A-Class 1,45,478 1.80 2,61,860
2. B-Class 5,015 1.50 7,522
3. Pickets 4,985 1.50 7,477
4. Broken 6 Trips 500 3,000
Broken 1 Trip 300 300
Broken ½ Trip 250 250
Total 1,69,978 3,03,849
Source: NMBCL, Toluvi. Progress Report (January, 2004). Annexure ‘A’&‘B’.
From Table 9 it was observed that as on January, 2004 the major raw-material
were clay, sand, coal, paddy husks, green bricks and firewood. However, given the
present capacity, the Plant has run far short of the reduced capacity by 50% during the
last 3 years. With 2,47,475 nos of green bricks utilized, the total finished product of red
bricks was 1,99,469 nos which is about 80% while only 1,69,978 including 7½ trips of
broken bricks could be sold and realized `3,03,849 as sale proceeds.

12. 12
CONSTRAINTS
Though the machineries and equipments of the plant were somehow operational,
the breakdown rates were high due to age of the machines. Moreover, the machines
cannot produce green bricks as per rated capacity thereby reducing the overall production
capacity of the plant. The installed capacity of the machine section was 1,00,000 green
bricks per day but as per actual operation, the production was only 55,000.12
Besides, the
Company has several other constraints as well which contributed to the closure of the
unit. Some of the major problems faced by NMBCL are stated below.
(i) Defective Kiln Structure:- It was found that kiln structure was working but with
several physical limitations like provision of 5 doors on each side of the kiln and 2 doors
on each of the terminals reducing the production capacity by 25-30% . This asymmetrical
ratio of production in the two sections of the plant creates storage problems of dried
green bricks. Therefore to compensate the shortfall in the present kiln a convenient bull
trench type kiln was constructed with which the revised rated production can be achieved
at 35,000 red bricks per day. The plant has 528 Coal Feeding port holes at a distance of
6ft. between port holes. Supporting wall for kiln terminals to prevent cracks and prevent
leakage of hot air was still visible. However, the defects could not be rectified as it
involves the foundation of the entire kiln structure. Due to this limitation, the kiln
structure could not cope up with green bricks production section.
(ii) Irregular Power Supply:- Power plays an important role in production. Its
failure results in running the plant at a loss. This makes it necessary for power supply to
be regular. The main power supply has been connected from Purana Bazaar under
Dimapur Electrical Sub Division-II and extends beyond Diphu River covering a large
area which results in recurrent overloading thereby resulting in frequent power
disruption. Despite improvement of power supply position in the State, the plant
experienced regular power interruption and load shedding continues till its production
was suspended. It was found that the existing 33/11 KV sub-station which feeds the Plant
extends beyond Toluvi Village i.e., beyond Diphu River, as a result any unexpected
termination of the line trims down the Plant capacity by about 50 percent.
12
Report of 3 Member Committee on NMBCL. Dated. 22/8/2001.para-3.p.2.

13. 13
(iii) Defective Dryer Chambers:- The plant has 44 dryer chambers with average
stacking capacity of 1,72,480 numbers of fresh green bricks for drying with hot air,
supplied by the operation of 2 Kilns through flow pipes of 26½ inches diameter fitted to
the Kiln and above the whole dryer chamber roof. However, as only one Hybrid Kiln was
constructed and the hot air pipes fitted were too big, the hot air produced from a single
Kiln operation was found to be not adequate to fill the pipes making the drying of fresh
green bricks in any of the chamber impossible which significantly affects the supply of
dry bricks to the Kilns for burning resulting in low production. Each chamber has
provision of 10 lines with 45 rows of pallets loaded with 14 numbers of green bricks per
pallet. Reduction of stacking capacity by 99,972 green bricks due to reduction in
utilization of two lines of pallets with 14 green bricks per pallet.
(iv) High Cost of Production:- The Plant operational aspects were severely affected
due to high cost of production. It may be stated that, to produce one red brick, the cost
involved was approximately `5 per piece, while the State Government fixed the rate at
`2.20 per brick. Hence, for every brick produced at Government approved rate of `2.20,
the plant has to incur a loss of `2.80.
(v) Absence of Colliery:- Due to absence of proper colliery in the State, the Plant
has to procure the same from neighbouring States of Assam i.e., from Coal India Ltd.
Margherita. The raw-material costs increases by the extent the expenditure are incurred
that involves huge transportation costs and other related expenses. The burning operation
of the Plant depends entirely on the availability of Coal supply, as no proper alternative
arrangement was available in the State.
(vi) Regular Machine Break-down:- The breakdown of the machineries and
equipment was also due to inappropriate lay-out. Further, it was found through personal
interview with the management of the Plant that except for motors, the remaining
machineries and equipment were without a brand name. As a consequence, the
machineries installed in the Plant were without user’s manual/catalogue/brand
name/manufacturers’ name adding to the extra costs to be paid between `20,000 and
`30,000 for every repairing works.13
13
Deputy Director (Tech), Directorate of Industries & Commerce, GON. 31/8/09.

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(vii) Absence of Basic Infrastructure:- The Company was set up visualizing an
employment of around 300 workforces; however, the number of staff quarters and labour
sheds was not adequate even to house the present incumbent of 83 employees. It was
found that workers do not have any welfare facilities like fair price shop, canteen,
medical centre and staff bus etc.
(viii) Excessive Government Interference:- Unnecessary and excessive interference
by Government also affected the workings of the plant. Credit sales of bricks through
influence and quota system and chits from the State machineries came in the way of
normal sales proceeds. As a result, an amount of `6,72,875 with 22 defaulters from
whom sale proceeds were yet to be realized for the period 1/11/2001 to 31/3/2004.14
(ix) Poor Financial Management:- It was observed that the Company does not
prepare yearly budget to specify the different expenditure. As a result no proper
monitoring budget under specific head/item was ascertained for fund provision.
(x) Ineffective Management: The repair and replacements of defective parts and
components as detected during the normal inspection along with modification works in
the dryer system and kiln was not duly attended leading to sluggish work process which
affected the normal production. The plant incurred huge losses since inception due to
apparent unprofessional conduct and inefficiency on the part of the management.
(xi) Storage Problems:- The machine section could produce 55,000 green bricks per
day whereas the kiln section could produce only about 25,000 to 30,000 red bricks per
day resulting in storage problems of dried green bricks. In addition, the plant has the
capacity to stock clay and sand for 3 shifts only which are small to stock sufficient clay
and sand for proper weathering and subsequent feeding to the machines.
CONCLUSION
The NMBCL is one major project sponsored by State Government and the only
potential project in the construction sector. With the incorporation of kiln tunnel
communicating doors widened on both terminals and modifications of coal feeding fire
zones and Bull Trench type open Kiln (seasonal) the red bricks production could attained
14
Audit Notes on NMBC Ltd. 2005. Directorate of Treasuries & Accounts, GON. Pp.1-2.

15. 15
50% capacity (17,500 bricks per day from 2003-2005) of the revised capacity per day
including production from that of Bull Trench open Kiln.
The highly sophisticated and power driven technology cannot be expected to work
efficiently in such an environment like the state of Nagaland as it involves heavy
investment both in terms of machinery and raw-materials, high energy costs, production
costs, cost of transport, non-availability of spare parts and skilled manpower.
Management is the most important pillar of a project. The techno-commercial
making or breaking of a project totally depends on management. It is often said that,
given reasonable time, a good management may succeed in turning-around an unviable
project, while bad management requires no time in spoiling a healthy project. Therefore,
an understanding of the management's technical, financial and managerial strengths along
with ideas and expectations from the project was certain to run the plant productively, but
inefficient management resulted in its closure.
Brick industry is undoubtedly an important ancillary to construction industry.
Therefore, the existence and future of brick industry are closely linked with the growth of
the construction industry. Selection of technology and extent of mechanization are the
most important issues to be tackled here. Many factors influence these decisions such as
nature of raw materials, desired product quality, cost-effectiveness, plant capacity,
indigenous availability and dependability of machinery suppliers and technology
providers, easy serviceability, labour and area intensity, site topography, scope for
diversification, etc. About eighty per cent of the total investment during the operational
period was on staff salaries and maintenance. Therefore, massive expenditure on
repairing and replacements of parts and components without operating the plant and
downgrading of the installed production capacity from 1,00,000 bricks to 35,000 bricks
and actual production to as low as 25,000 bricks point towards faulty planning right from
inception of the Plant.
Thus, it is felt that financial constraints and undue Governmental interventions
could have been removed to enable the management achieve the targeted capacity and to
revive the plant. Considering the nature of the product and capital involvement of this
magnitude, NMBCL primary contribution to the local economy should have been
through product marketing, industrial linkage effects and infrastructural contributions.

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REFERENCES
1. Audit Notes on NMBCL (1996-2004). Directorate of Treasuries & Accounts,
Government of Nagaland.
2. CAG Report, 2005. Government of Nagaland.
3. Department of Industries & Commerce, Government of Nagaland. Cabinet
Memorandum. Dated. 27/2/2002.
4. Internal Audit Report (2002-03). NMBCL, Toluvi.
5. Minutes of the 17th
meeting of BOD, 2005. NMBCL, Toluvi.
6. Progress Report (1996-2004) NMBCL, Toluvi.
7. Report of the Three Member Committee on NMBCL, 2001.
8. Trail Run Report. Dated.16th
July 2001.NMBCL, Toluvi.
9. Utilization Certificate. Dated. 4/5/2005. NMBCL, Toluvi.