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British India Corp Kanpur unit set for prodn halt

Vishnu Pandey  |  New Delhi/ Kanpur 

The troubled British India Corporation (BIC) operated Cawnpore Woollen Mills, better known as Lal-Imli mill, is set for production halt due to unprecedented funds crunch.

Currently, the mills are operating at merely 3-4 per cent of full production capacity due to scarcity of funds for procuring raw material for pending orders and applying for fresh tenders. Unfulfilled orders worth around Rs 10 crore are pending with Lal-Imli and worker wages for the month of May have been paid by borrowing credit. The production is being carried out from the paltry raw material borrowed from Punjab based Dhariwal woollen mill. The peak season for orders begins from June while the lack of working capital has stalled the pending orders.

The BIC officials say that the efforts for revival are being actively pursued and fresh draft proposal is being sent to Board of Rehabilitation of Sick Public Enterprises (BRSPSE) and a survey has been done by Wool Research Association (WRA) to draw an acceptable and feasible revival plan. The city MP and Union minister, Sri Prakash Jaiswal has also assured to get the mill in sound condition.

Lal-Imli director, P K Sharma said arrangements are being made for paying monthly wages to workers while he is unaware of the progress made by revival plan. “There is crisis situation but we hope some solution will be reached soon,” he added.

The month’s end is again approaching and the payment of wages seems to be a tough nut to crack this time too, for the BIC management. If the salaries are paid again with the loan received from NTC, there will hardly be any money to buy the raw materials.

BIC owned Kanpur Textile Mill (KTM), is also facing trouble following Mumbai High Court orders to liquidate its assets and hand them over to Kotak Mahindra management, which as claimed, is an unpaid debt of Rs six crore.

The production capacity has been lingering at around 25 per cent for past one decade but the working has come to a virtual halt since past two months. The revival package for the mill has been lying pending with Bureau of Industrial and Financial Reconstruction (BIFR) for last three years while the textile ministry has stopped allocating the funds for wage payments which consume up to Rs 2.25 crores every month.

The yearly turnover of the Lal-Imli was Rs. 8.7 crores at the time of nationalisation in 1981 after which the production witnessed an uptrend till 1999, raising the turnover to Rs 70 crores after the machinery was modernised. The mill has however, been struggling for funds since then, resulting in failure to realise full production capacity.

The ministry also rejected the Rs. 283-crore revival package seeking prior approval from BRSPE just as the Elgin mill revival package was sanctioned. The mill products enjoy a good market reputation due to the high quality and affordable pricing, but the funds crunch has ensured that the brand presence has failed to get exploited.

The historic mill was the third one to be set up in Kanpur in 1876 after the Elgin and Myor cotton mill. The mill witnessed various phases of privatisation before being nationalised under union textile ministry in 1981.

The Labourers Association leader Raju Thakur said the Union government needs to speed up the disposal of funds now, to prevent loss of production and agitation among the thousands of workers.

First Published: Sat, June 26 2010. 00:57 IST