New Delhi, June 28
BUOYED by the returns the sale of surplus lands of its three mills fetched, amounting to Rs 1,160 crore, National Textile Corporation (NTC) is keen on retaining one of the mill lands for itself to develop it on a commercial scale.
Sources in the Textile Ministry told Business Line here that NTC has decided to keep the land of Indu Mills in Prabhadevi facing the Arabian Sea for commercial exploitation through an ambitious development programme. They said that the Export Promotion Council for Handicrafts (EPCH) would be approached to develop a world-class gem and jewellery centre in that land. The EPCH has expertise in developing such a world-class mart, as it had developed one such international mart for handicrafts in Greater Noida near Delhi.
The sources said that the proposal is to develop this NTC land in Prabhadevi not only to build a world-class centre for gems and jewellery, but also other business centres, including hotels and malls for making it the tallest building in Asia.
Eventually, they said that the entire diamond industry from Antwerp is going to house itself in this place as an outsourcing location of a different kind, given the pronounced comparative advantage India enjoys in terms of expertise and craftsmanship for gem and jewellery.
The sources said that NTC has disposed of 37 acres of land so far and if it gets the Bombay High Court approval, it could free up another 93 acres that it has as surplus land in the city. Hence, the corporation deemed it fit to undertake some beneficial things for Mumbai as part of corporate governance principles. Moreover, by developing the land of one of its own mills for commercial purposes, it could do in its own mite something to make the city the Shanghai of India, as the Prime Minister, Dr Manmohan Singh, wished a few months ago when he visited Mumbai. They said the BrihanMumbai Municipal Corporation (BMC) has granted permission for sale of surplus land of seven NTC mills located in the city under the Development Control Regulation Act, 58.
The Government appointed reputed consultants for maximum value realisation of the land proposed to be sold.
The sources said that the total accumulated losses of eight out of nine subsidiaries as on March 31, 2004 amounted to Rs 10,534 crore. The NTC holding company has retired under its modified voluntary retirement scheme (MVRS) as many as 44,831 employees during the last three years. The total number of employees as on May 1, in the NTC roaster is 29,134.
The sources said that so far, the Government has provided Rs 1,800 crore by way of severance payments to NTC employees opting for the VRS. They added that NTC has floated high-cost bonds amounting to Rs 2,000 crore in the restructuring bid of its ailing mills.
Even as the proceeds like the latest one in the Mumbai mill sale of land appear substantial, these would mostly be used to retire high-cost debt and also principal so that the operating mills could start on a clean slate.
They said that the rehabilitation schemes approved by the Board for Industrial and Financial Restructuring (BIFR) suggested the revival of 53 viable NTC mills with resources generated from the sale of surplus assets. The scheme also envisaged the closure of 66 chronic loss-making mills and all these unviable mills have been closed.
As the 53 viable mills persist with losses and rely on the Government's budgetary backing for meeting the shortfall in wages, the Government has proposed to the BIFR to permit the modernisation of the 17 best performing viable mills mostly in Southern India in the first phase at a cost of Rs 380 crore. The efforts will be to induct strategic private partners for the balance mills in subsequent stages.