Two textile units in Mau closed, VRS coming

Recently devastated by bloody communal riots, Mau, the textile town of eastern UP, received another blow as two textile units in the public sector announced closure.

The Uttar Pradesh government has approved the closure of the loss-making unit of the UP State Spinning Company Ltd, and the National Textile Corporation has announced the closure of loss-making Swedeshi Cotton Mill from December 1. The NTC had acquired the Swedeshi Cotton Mill in 1978.

Mau is represented in the Uttar Pradesh Assembly by Mukhtar Ansari.

The state government has approved the VRS package for the 701 workers and officers of the Mau unit with effect from October this year. The Mau unit suspended production from June last.

The state government has sanctioned interest-free loans of Rs 15 crore to the spinning company for meeting the cost of the VRS. The proposal for the privatisation of the Mau unit has also been approved by the state government.

Official sources said the net worth of the Mau unit had been eroded. The revival of the Mau unit was not possible because working capital was not available for resuming production.

The industries department in June initiated the proceedings for the closure of the units under the provisions of the UP Industrial Disputes Act. The accumulated losses of the Mau unit in 2004-05 were close to Rs 6 crore.

The UP State Spinning Company's three units""in Rai Bereilly, Mau, and Barabanki""were established in 1976 and 1977. The installed capacity of each unit was 50,000 spindles and the three units provided direct jobs to 5,852 workers.

The company has been incurring losses since 1983-84, and was referred to the BIFR after its net worth became negative in 1992.

The IFCI was appointed as the operating agency for the sick unit.

The accumulated losses of the company on March 2005 were over Rs 1,100 crore.

For the viability of the Kanpur-based UP State Spinning Company, the government provided Rs 6 crore in 2003-04 and Rs 12 crore in 2004-05 for VRS to surplus workers of Rai Barelli units and at the head office.

There were 62 employees at the head office and 1,590 at Rai Barelli unit.

For the viability of the Barabanki unit, 12,500 spindles with low productivity are to be removed and 224 surplus workers will be given voluntary retirement. For financing the VRS, the state government has sanctioned a loan of Rs 6.23 crore to the Barabanki unit.

The Swedeshi Cotton Mill was once owned by the Jaipuria family of Kanpur.

The 426 workers of the NTC textile mill have availed themselves of the VRS.