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Government close to a solution on NTC mills

G. Srinivasan

NEW DELHI, July 16

WITH operational losses mounting due to delay in finding a durable solution to the deep-rooted sickness of textile mills under the National Textile Corporation (NTC), the Government may accept the inevitable options of ``privatisation, failing which clos ure of unviable mills with no activity or partial activity'' of the 119 mills of the holding company.

Hints to this effect were thrown after a meeting of a Special Tripartite Committee on NTC constituted by the Ministry of Labour held early this month here.

Sources who took part in the meeting of the Industrial Tripartite Committee with representatives of Members of Parliament and Central Trade Unions to scan the revival plans for NTC told Business Line here that opposing views were voiced by union leaders of different political persuasions on the controversial issue of privatisation/closure of the chronically sick mills.

A review of the performance presented before the Committee meeting revealed that the annual loss of NTC has been increasing every year from Rs. 621.71 crores in 1996-97 to Rs. 1,019 crores in 1999-2000. The accumulated losses of NTC are Rs. 7,350 crores (provisional) as on end-March 2000.

The total salary/wage bill of NTC increased from Rs. 505.00 crores in 1996-97 to Rs. 518 crores in 1999-2000, despite the fact that large number of employees had taken voluntary retirement.

The budgetary support had also been increased from Rs. 369.50 crores in 1996-97 to Rs. 444 crores in 1999-2000 to meet the shortfall towards salary/wages. In the current fiscal, a non-Plan provision of Rs. 346 crores has been provided to NTC against whic h Rs. 70 crores for salary/wages and Rs. 25 crores for VRS has so far been released to NTC.

Out of the 119 mills, there are only 25 mills with full activity, while mills with no activity number 43 and mills with partial activity 51. Since the latter category of partial activity mills could be turned around if there are takers based on the physi cal assets of the mills including land, the Government seriously considers that the option of privatisation of these mills might help in protecting some of them from total closure and save the jobs of the workers in these units.

``Despite its desire to keep the maximum number of subsidiaries and mills operational based on BIFR's norms, those mills which do not fulfil such norms of viability may need to be privatised to keep the mills working, failing which they may have to be cl osed,'' an official note observed.

This proposal seems sensible, independent experts say, since the various operational parameters of the running mills have reached their low level. Thus, the average capacity utilisation of NTC mills during 1999-2000 was about 47 per cent in spinning and 60 per cent in weaving.

The yarn production of NTC mills is only 589 lakh kg and cloth production of NTC mills is 477 lakh metres, representing a minuscule portion of the aggregate production of the cloth and yarn in the country. The monthly average wage bill of NTC is in the o rder of Rs. 43 crores out of which Rs. 35 crores is idle wages.

Till end-March 2000, the amount advanced to NTC as loan with interest is Rs. 4,499 crores and National Renewal Fund/Voluntary Retirement Service amount is Rs. 469 crores. Outstanding statutory dues as on end-March 2000 is Rs. 294 crores.

However, as this issue is contingent on sale of land vested with these mills, a final decision on this might help in finding a solution to this ticklish issue. Already, the Supreme Court while hearing the case about revision of IDA pay scales of NTC empl oyees directed BIFR in its order of May 9, 2000 to file an affidavit on the action taken in connection with the cases of the eight sick subsidiaries of NTC pending before BIFR (Bureau for Industrial and Financial Reconstruction). The next date of hearing has been fixed on August 10, 2000.

The apex court has also issued notices to Chief Secretaries of the States in which NTC mills are located to consider approval/clearance of the State Governments concerned for sale of land of these mills. The value of the surplus land and buildings of NTC as assessed by the Central Board of Direct Taxes would be of the order of Rs. 2,389 crores out of which Rs. 1,904 crores have to come from sale of surplus land and buildings located in Mumbai.

Though the Land Development Control Regulations of Government of Maharashtra stipulates surrender of one-third of the land to Maharashtra Housing Area Development Authority for purpose of public housing and another one-third to City Corporation of Mumbai , sources said that it has been informally learnt that the State Government has lifted the ban on sale of NTC lands and formal orders are still awaited.

With the Government keen on finding a solution to the vexed issue of unviable textile mills either through privatisation failing which closure, the sources said that the Government is committed to safeguarding the interest of the workers to ``the maximum extent possible'' since a decision in principle has been taken to implement the Gujarat pattern of the VRS with suitable modifications.