The Hindu Business Line : KSTC in recast mode; revival scheme for mills

The Kerala State Textile Corporation (KSTC) has embarked on a revival scheme for the textile mills under its fold at a total outlay of Rs 24.10 crore.

The exercise has been set in motion in the light of the poor performance of the textiles sector among the public sector enterprises, even as the other sectors have shown significant improvement in terms of profitability over the last few years.

The scheme covers modernisation of Kottayam Textiles (Rs 3.56 crore), Prabhuram Mills (Rs 4.47 crore) and Edarikode Textiles (Rs 2.38 crore) and total revival of Malabar Spinning and Weaving Mills (Rs 13.69 crore).

The required funds are being raised through an equity contribution of Rs 10.29 crore from the Government and term loans of Rs 11.82 crore from banks. An amount of Rs 1.98 crore is slated to come from sale of old building and machinery.

Mr M. Ganesh, Managing Director, KSTC, told Business Line that the combined capacity utilisation of the mills was only 70 per cent, while the industry benchmark was in the range of 90-95 per cent. A major reason for the low capacity utilisation is the old spindles, which will be replaced with modern machinery.

Similarly, the revival scheme for Malabar Spinning and Weaving Mills envisages capacity addition with the number of spindles going up from the existing 6,000 to 10,500. The revival of the mills is expected to be completed by September this year.

Cotton scarcity

Another major problem being faced by the mills is non-availability of good quality cotton, which is procured from outside the State, and at competitive prices. Cotton, the raw material, accounts for as much as 55 per cent of the value of production.

To overcome the situation, the Government is planning to set up a ‘cotton bank’, which will be accessible to not only the KSTC mills but the entire textiles industry in the State. Apart from assistance from the Government, the Kerala Financial Corporation will extend soft loans for funding the bank, which will operate through ‘escrow account’ mechanism.

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