Bangalore: The state-owned National Textile Corp. (NTC) plans to use around Rs600 crore of the money it raised by selling land to build four new mills which, it claims, will use the latest equipment.
NTC has a total of 52 mills. Many of the mills are in a state of disrepair, while it is modernizing some of them through partnerships with private-sector firms. The company itself ended 2006-07 with about Rs700 crore in revenues and Rs120 crore in losses.
To help the company recover its losses, the government has allowed it to sell land on which some of the mills that had run into disrepair were located. Since 2005, NTC has earned Rs2,100 crore from the sale of 50 acres of land.
The new mills will be developed at Hassan in Karnataka, Rajnagar in Gujarat, Achalpur in Maharashtra and Vivhavari in Rajasthan and NTC will invest Rs150 crore in each of them. “NTC will be developing and funding all four mills. The funds have come from our sale of mills (mill land). There will be textile-related activities like spinning, weaving, processing and garment manufacturing in these mills,” said K. Ramachandran Pillai, chairman and managing director of NTC.
He expects all the four new mills to be up and running by December this year.
NTC exports to the US, Hong Kong, Singapore, Malaysia, Bangladesh and South Korea through agents. It also sells ready-made apparel and textiles through retail outlets across several Indian cities.
According to Pillai, the decision to set up new mills is part of the company’s new investment strategy that has been drawn up in association with Mumbai-based Gherzi Eastern Ltd, a consulting firm.
NTC has completed acquiring land for the mills with the help of concerned state governments. At Hassan, for instance, the government of Karnataka has given 40 acres of land to NTC to set up the mill situated in a special economic zone.
P. Natarajan, managing director of KPR Mills, a Coimbatore-based textile firm, said: “Technology is the key to survival for textile companies now. The reason why the NTC mills were not doing well is because they weren’t modernized. This move is welcome because it will raise the quality level (of NTC) and bring it at par with competitors in the private sector.”
NTC is also seeking private-sector partners to revive 12 of its existing mills that are in a state of disrepair. Alok Industries Ltd, Welspun, Eskay Knitwear, Ganesh Polytex Ltd, Kamala Mills and eight other companies are in the race to do this. The partners will be selected on the basis of a competitive bidding process.
NTC started this programme to involve the private sector in helping revive its mills last year when it found partners for five of them. The companies selected for this were Future Group, Bhaskar Industries and Alok Industries. While NTC retains a 51% stake, the private sector firm involved in the project gets 49%.
“The conditions of the joint venture remain the same for these 12 mills where only textile-related activities wouldbe allowed. We still haven’t decided on commercial activities like (developing) shopping malls in these mills,” saidPillai.
NTC expects an investment of Rs600 crore—Rs50 crore for each—to be made in the 12 mills. All of this amount will come from the private sector.
Sunil Khandelwal, chief financial officer of Alok Industries, which has bid for three of the 12 mills this time, said: “These joint ventures are a win-win situation for both NTC and the private partner. There are no liabilities when the mill is handed over to us and it’s a profitable venture for companies like us.”
Alok Industries is already developing two mills along with NTC where it is setting up garment units in Mumbai and Aurangabad. This time it has bid for one mill in Coimbatore and two in West Bengal.