Two textile units in Mau to close shortly

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.

Mau is represented in the assembly by Mukhtar Ansari. 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.

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 had 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 has been totally eroded and production was stopped in June. 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. IFCI was appointed as the operating agency for the sick unit. The accumulated loss of the company on March 2005 was over Rs 1,100 crore.

For the viability of the Kanpur based UP state spinning company government has already provided Rs 6 crore in 2003-04 and Rs 12 crore in 2004-05 for VRS to surplus workers of Raibarelli units and at the head office. There were 62 employees at head office and 1,590 at Raibarelli unit.

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

The Swedeshi Cotton mill, once owned by the Jaipuria family of Kanpur finally closed down on December 1. The 426 workers of the textile mill have been given VRS by the NTC.

The Jaipuria family owned three units of Swedeshi were located in Kanpur, Mau and Pondichery , besides Paharpur cooling towers in Ghazaibad.