The process of modernisation and revival of National Textile Corporation (NTC), which began in 2002, should pass a milestone soon. The loss-making government undertaking is expected to turn profitable in 2009-10.
Since the modernisation began, NTC was busy in closing its unviable mills, selling viable assets and clearing a long list of dues. It is now nearing break-even, after retiring most of its liabilities. K Ramachandran Pillai, chairman and managing director, told Business Standard: “In 2009-10, we are heading for a break-even, though with marginal profits. In the next financial year (2010-11), we will make good profits.”
According to its data, the textile giant had a cash loss of Rs 117 crore in 2007-08, from Rs 403 crore in 2001-02, before modernisation began. The turnover of the corporation in 2007-08 was Rs 484 crore, against Rs 454 crore in 2001-02.
Incorporated in the late 1960s to manage sick textile mills of the private sector, it itself ran into trouble, with continuous losses and erosion of equity. The Board for Industrial and Financial Reconstruction (BIFR) had sanctioned a rehabilitation scheme for eight subsidiaries in 2002, that envisaged closure of the unviable mills.
In 2001-02, NTC had 119 working mills (and others which weren’t being worked). It has closed 67 unviable units since, leaving it with a total of 52. Of these, 24 are working mills; the other 28 are not. In all, 40 are part of the modernisation plan.
BIFR had approved a Modified Revival Scheme for NTC mills at an estimated cost of Rs 5,267 crore in 2006. The first major sale of five mills’ land in Mumbai by the corporation for Rs 2,200 crore was the main source for initiating the revival scheme. NTC mobilised Rs 4,033 crore by selling assets of the closed mills and surplus assets of the viable mills.
Of the 40 mills to be modernised, NTC is taking care of 22 mills at a cost of Rs 530 crore. “We have completed the modernisation process of 18 mills on our own so far,” said Pillai. Four mills are being modernised after relocation, one each in Maharashtra, Karnataka, Gujarat and Rajasthan.
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In closing 67 unviable mills since 2002, NTC paid Rs 2,100 crore towards compensation to employees. Further, it has settled the claims of banks and financial institutions to the tune of Rs 250 crore and paid Rs 200 crore for settlement of all its overdue provident fund and other statutory dues.
Apart from the 22 mills being modernised by NTC, the other 18 to undergo this are to be done in joint ventures with private players.
In the first phase of JV, in which private players hold 51 per cent stake, NTC signed an agreement for five mills with textile companies like Alok Industries, Bhaskar Industries and Pantaloon Retail.
| TURNAROUND |
| # In 2009-10, NTC to turn profitable |
| # Mobilised Rs 4,033 crore from asset sales |
| # Closed 67 mills since 2002 |
| # Modernising 22 mills on its own for Rs 530 crore |
| # Paid Rs 2,100 crore as employee compensation |
| # Settled claims with banks, FIs, PF/ESI |
| # Another 18 mills to be modernised in JVs with private firms |