The Hindu Business Line : NTC gets ‘resounding response’ for partners to run mills

New Delhi, March 26 The latest move by the National Textile Corporation (NTC) seeking joint venture partners to run a dozen mills has evoked ‘resounding response’ from nearly 68 bidders from the private sector. This comes close on the heels of its success in zeroing in on three big industry players in its earlier bid of roping in private industry for running five mills.

Disclosing this to Business Line here in an interview, the Chairman & Managing Director of NTC, Mr K. Ramachandran Pillai, said that with the implementation of the Modified Rehabilitation Scheme, 2006 approved by BIFR and Group of Ministers (GoM), out of the 117 sick mills, 67 had been closed, and 10 had been identified for closure due to lack of production activity. Now, with most of the employees opting for VRS, only 40 mills were left for modernisation and further expansion.

He said that out of the 40 mills, 22 would be modernised by NTC itself, (five mills had already been modernised by end-December 2007) and another 10 would be ready by May 2008, contributing to substantial increase in production and productivity of nearly 15mills in the next fiscal. He said the Corporation has so for spent Rs 262 crore on modernisation of 18 out of 22 mills for purchase of new machinery, civil, electrical and humidification work and for machinery installation.

To a specific question as to whether this would help the parent company’s fortune besides beefing up its outlays to further augment production, Mr Pillai said the catch is that right now, NTC was providing idle wages to 300 people in Uttar Pradesh and another 150 in West Bengal. However, he hastened to add that “this is a problem the Corporation has to handle head-on”.

Good augury

Referring to the company’s decision to go ahead with joint venture partners for 18 mills in which five had been found, in one case of Coimbatore NTC mill the holding company itself might have to run it. Mr Pillai said that the overwhelming response from private parties appears “a good augury”, particularly when the textile industry is not booming now. “A chronically sick PSU company, which was ailing for so many years, is now turning around and is on right track by modernising 22 mills on its own and another 18 through joint venture route shows that the strategy the Corporation devised appears to be on the right track”, Mr Pillai said.

Mr Pillai said that Sri Sarda Mills, Coimbatore got as many as 11 suitors, followed by Laminarayan Cotton Mills, Rishra, Hooghly and Sodepur Cotton Mills 24 Paraganas in West Bengal at 8 each with other mills getting a descending number of suitors.

The NTC chief said the consultancy firm Deloitte has been retained to process the latest batch of joint venture partners for the dozen NTC mills. All the eligible parties would be called for a presentation soon and this would be followed by a due diligence by the interested parties with a site visit.

Criteria

Mr Pillai said the parties would be short-listed based on pre-set criteria like five year consistent track record in manufacturing and profits. He said the joint venture would be in the ratio of 51 per cent by NTC and 49 per cent by the partner with five members from NTC and three members from the JV partners in the board but the management control being with the joint venture partner.

“This way, public sector character will be retained and we will have management only at the board level, leaving the functional autonomy to the JV partner”, Mr Pillai said. He said the lands of the mills could not be sold but the right to use preferably for textile-related activities for 33 years would be given to the JV partner and “after five years we have a provision to revoke or modify the JV agreement”.

More Stories on : Sick Units | Textiles

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page