Delay In Finalising Contract Hits Condom Makers

The ministry for health and family welfare (MHFW) may not be able to keep up to its "One for fun" slogan if the condom procurement policy of the family welfare department is any indication.

For, the MHFW which buys nearly 1200 million pieces of condoms every year, has failed to place any purchase order in the first quarter of this fiscal leading to a severe shortage of Nirodh, the most widely distributed condom.

The reason for this is the government's failure to finalise this year's rate contract. The earlier contract was valid till March 31.

This has led to a situation where the leading condom manufacturers, who depend on the government for picking up 70 per cent of their production, have had to drastically cut back output by about one third, since only a small portion of their products, around 250 million pieces, are sold through open market sales.

 

Nearly 70 per cent of the condoms procured by the government under the 'Nirodh' brand are distributed free through ration shops, health clinics, dispensaries hospitals etc.

The remaining 30 per cent consisting of three other varieties of the 'Nirodh' brand are sold in the open market.

The last government order for condoms was placed in February this year and since April there has been no government supply and the market of lower end condoms has gone dry, according to an industry source.

The failure to finalise a rate contract has hit the Rs 350-crore industry hard, where there are five major manufacturers.

These include, the two TTK group companies--London Rubber Company and TTK Biomed, J K Chemicals, Polar Latex and the public sector Hindustan Latex. Together they meet nearly 90 per cent of the government's requirement.

The reason behind the delay is attributed to the ministry of health and family welfare calling for as many as three tenders in a four month period to finalise the price per 100 pieces (rate contract). The ministry approximately orders 400 million pieces per quarter.

According to industry sources, the repeated tendering was due to one of the manufacturers quoting substantially low in the first tender (April 10) and the highest in the second tender (June 9) which prompted the third tender (August 5) that is yet to be finalised.

A government source admitted to the delay stating it was due to administrative reasons. However, health officials are concerned over its

impact on the birth rate as well as the spread of AIDS.

Manufacturers are worried that this delay will lead to their products not meeting World Health Organisation quality norms which specify a six month lifespan. They say it will take three months for their product to reach the market from the placing of orders.

Industry sources point out that the domestic manufacturers will have little option but to divert their production towards growing markets in European countries, Africa, S Korea, Russia and the CIS countries, where the margins are better. This may lead to a situation where they may not be in a position to supply to the government at a short notice.