Parliamentary Panel Flays Govt Move To Close Ntc Mills

The Parliamentary Committee on Public Undertakings (Copu) has expressed concern over the governments move to close 107 National Textiles Corporation (NTC) mills.

The latest move to close 107 mills of the corporation would render more than one lakh employees jobless. This would be a very hard option by the government, says Copus 1997-98 report, which was tabled in Parliament on Monday.

Castigating the government for not implementing the Rs 2,005-crore turnaround strategy formulated for NTC Mills, the committee said: The government is understood to have appointed another committee to look into the matter. Based on its report, the finance ministry is understood to have recommended the closure of 107 mills of the corporation.

The committee, which is headed by former textiles minister G Venkatswamy urged the government to earnestly try to implement the turnaround strategy, approved by the cabinet in May 1995. It also asked the Centre to pursue the issue of sale of surplus land for this purpose with the Maharashtra government.

The turnaround plan, devised in 1992, envisaged merger of some units, besides modernisation of 55 mills, at an investment of Rs 532.78 crore.

However, a special tripartite committee was appointed in 1993 to review the turnaround plan. Based on its recommendations, the cabinet approved modernisation of 79 mills at an outlay of Rs 2,005 crore.

The turnaround plan was expected to earn an overall profit of Rs 114.47 crore for NTC. The modernisation was proposed to be funded by the sale of surplus land and buildings available with NTC Mills.

However, the government is facing problems in implementing the turnaround plan because of non-cooperation by the Maharashtra government, states the Copu report.

The Maharashtra government has been dragging its feet on the issue because 80 per cent of the amount to be raised through sale of surplus land and buildings would come from Maharashtra-based units.

The Copu report also expressed dismay at the fact that 117 of the 120 NTC mills have been incurring losses continuously since 1993-94. Except for Tamil Nadu and Pondicherry, all the NTC subsidiaries have been referred to the Board for Industrial and Financial Reconstruction (BIFR).

Even the Tamil Nadu and Pondicherry units have been incurring losses since 1992-93 and might be referred to the BIFR if they incur losses during the current fiscal year, said the committee.

The Union textiles ministry has cited the growth of powerlooms in cloth production as an external factor for sickness in NTC Mills. Mill production dwindled from 25 per cent in 1985 to seven per cent in 1995.

The committees report listed internal factors for NTC Mills sickness as obsolete technology, delay in modernisation and discontinuation of budgetary support. The failure of the government to take adequate and timely steps for revival of NTC units has also contributed to their current plight, added the report.

The committee also expressed concern over the losses incurred by another public sector undertaking, British India Corporation (Bic) Mills. Bics accumulated losses amounted to Rs 257.69 crore against a net worth of Rs 212.69 on March 31, 1996.

Both the subsidiaries of BIC have also started accumulating losses above their net worth, pointed out the committee.