Financial Daily from THE HINDU group of publications
Tuesday, Jun 13, 2006
Financial Daily from THE HINDU group of publications Tuesday, Jun 13, 2006 |
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Corporate
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Performance Industry & Economy - Textiles NTC records Rs 1,014-cr net G. Srinivasan
Capacity utilisation has gone up to 90-92 per cent from 80 per cent two years ago and the cash loss has been pruned to Rs 240 crore from Rs 454 crore.
MR K. RAMACHANDRAN PILLAI
New Delhi , June 12 Hobbled by a halting and protracted turnaround strategy, the chronically sick and unviable mills of the National Textile Corporation (NTC) have at last emerged out of the woods, with the holding company for the first time notching up a net profit of Rs 1,014 crore (provisional) for the financial year 2005-06. "This is possible because of the self-financed revival scheme out of the sale of its own lands and mobilising money from the markets through bonds which we are paying it back with interest," the Chairman-cum-Managing Director of NTC, Mr K. Ramachandran Pillai, told Business Line here in an interview today. At a time when not a single mill could be closed in the country for want of a flexible labour policy, the NTC had closed by now as a many as 65 mills under the Industrial Disputes Act with the help of a modified voluntary retirement scheme. As many as 52,762 employees exited the organisation during the last two years till June 1, 2006.
Revival scheme
Mr Pillai said as the revival scheme was self-financing the amount that has been mobilised from the market would be repaid by sale of assets of the closed mills and the surplus assets of the running mills. "Till now, the company has sold assets worth Rs 3,000 crore. It paid Rs 1,808.24 crore for the modified voluntary retirement scheme compensation and fulfilled its obligations to pay interest on these bonds amounting to Rs 450 crore, in addition to paying Rs 248.69 crore as one-time settlement to banks and financial institutions. It also disbursed Rs 184.19 crore by way of settlement of all its (overdue) PF/ESI and other statutory dues," he added. The NTC chief confidently stated that it was expected to begin repayment of bond money, which it had mobilised for the retirement scheme , from January 2007 as it has provisioned sufficient resources for the same. The NTC has been able to successfully garner Rs 2,020 crore from the sale of five of its mills in Mumbai after a long drawn out legal battle. He said today NTC is a cash-rich organisation with about Rs 2,000 crore as deposit, which is earmarked for the modernisation and repayment of bond money of its mills.
Joint ventures
NTC has earmarked Rs 700 crore for the modernisation of 22 mills, while the balance 30 functioning mills would be put up for joint venture route with private partners. Here too, he said, around 10-12 mills (out of 30) mills are already not functioning as the employees there opted for the retirement scheme. Mr Pillai said advisors to NTC such as Crisil, Dhir and Dhir and Ernst and Young would make a presentation here tomorrow to enable the company to get a shortlist of prospective partners for joint ventures. He said the capacity utilisation of the company has gone up to 90-92 per cent during the last year as against 80 per cent two years ago and the cash loss has been stemmed successfully from a level of Rs 454 crore to Rs 240 crore. The percentage of net contribution has increased from 25.33 per cent to 63.21 per cent. Mr Pillai said the Board for Financial and Industrial Reconstruction (BIFR) recently communicated to the company its approval for NTC merger scheme under which all the nine subsidiaries would be merged with the holding company. "Besides drastically pruning the cost of operation, this would render the company leaner and fitter to face the emerging competition in the textile industry through strengthening the synergy in its operations and overcoming shortcomings," Mr Pillai said. The NTC board is meeting here on June 15 to approve the company's financial operations during 2005-06, he added.
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