UP to downsize cooperative spinning mills with VRS

To cut mounting losses and downsize workforce, the Uttar Pradesh government has sanctioned Rs 75 crore for the voluntary retirement scheme (VRS) in five units of the UP Cooperative Spinning Mills Federation Limited.

The five mills with combined workforce of around 4,000 are situated in Amroha (Jyotiba Phule Nagar), Bahedi (Bareilly), Mau Aima (Allahabad), Bahadurganj (Ghazipur) and Fatehpur.

The federation has a total of 11 mills in UP and a few years back, similar VRS scheme had been floated for six other sick units located in Sitapur, Etawah, Bulandshahr and Maghar (Sant Kabir Nagar).

The ‘eligible’ employees, who are willing to lap up the VRS scheme, would be provided interest-free loan by the state handicraft and textiles department under certain conditions.

“While, we wanted to cut losses and make the units more viable, there had been VRS demand from the workers’ side as well, which has been considered sympathetically by the government,” federation managing director Mohd Iftikharuddin told Business Standard.

He informed the units were at present functioning on job work basis and downsizing was the most viable option in such circumstances.

“The case of proposed privatisation of these spinning mills is also pending before the Supreme Court, which pertains to the issuance of bonds by these units in the past,” he informed.

Although, much would depend upon the court’s order, the state government plans to recoup the loan amount from the asset sale of these units in due course.