TRIL sees positive impact of reduction in performance security, wins GETCO order
- January 3, 2022
Transformers & Rectifiers (India) Ltd [TRIL], in a stock exchange filing, said that the company would benefit from a recent notification by the finance ministry regarding performance security.
It may be mentioned that the Department of Expenditure, under the Union finance ministry, recently issued an office memorandum where the reduction in “Performance Security” from 10 per cent to 3 per cent, which was valid up to December 31, 2021, has been extended up to March 31, 2023.
In response to this, TRIL said that the company would get this benefit from all public sector units. TRIL added that this move will also reduce the company’s bank guarantees outstanding with banks, apart from leading to reduction in contingent liabilities as well.
In an independent development, TRIL announced the winning on an order worth Rs.235 crore for the supply of transformers to Gujarat Energy Transmission Corporation Ltd (GETCO), taking TRIL’s outstanding order book to around Rs.986 crore.
Also read: TRIL Bags Transformer Order From GETCO
Performance Security
On December 30, 2021, the Department of Expenditure issued an office memorandum (OM) that sought to extend the validity of an earlier OM dated November 12, 2020, regarding “Performance Security” up to March 31, 2023.
The OM dated November 12, 2020, had brought down the performance security from the existing 5-10 per cent to 3 per cent of the value of the contracts, for all tenders/contracts issued/concluded up to December 31, 2021.
Discussing the rationale of lowering the performance security, the OM of November 12, 2020, said that on account of the slowdown in the economy due the pandemic, there was a severe financial crunch among many commercial entities and contractors, which was affecting timely execution of contracts. Representations were also made to the government about contractors unable to bid for contracts due to the financial crunch. This was leading to reduced competition.
Performance Security is the amount obtained by the successful bidder awarded a government contract, to ensure due performance of the contract. This security amount is usually 5-10 per cent of the value of the contract.
Featured photograph (source: TRIL) shows one of the manufacturing facilities of the company.
