Ntc Revival Plan Pruned, Land Sale Proposal Spiked

The plan to sell surplus National Textile Corporation (NTC) land in order to modernise 79 of its mills at a total cost of Rs 2,005 crore has been dropped. Instead, the corporation has formulated a new revival plan that envisages modernising 45 mills at a total cost of Rs 575 crore.

A committee chaired by the textile secretary, which includes the expenditure secretary, the NTC chairman, and the advisor (projects) to the Planning Commission is reviewing the new plan. The committee is expected to submit its final recommendations for the cabinet's consideration by the end of the month.

The new plan has been formulated as the existing turnaround strategy, which had been approved by the government on May 9, 1995, ran into trouble. The strategy's key elements were nationalisation of 15 mills, merger of 36 unviable mills into 18 viable mills, rationalisation of surplus manpower by offering a voluntary retirement scheme and modernisation of 79 mills at an outlay of Rs 2,005.72 crore.

 

The original plan was to fund the modernisation plan with the proceeds from the sale of surplus land and buildings that were available with the NTC. According to the evaluation conducted by the Central Board of Direct Taxes, the available surplus land and buildings of NTC would fetch a sum of Rs 2,349.10 crore.

After the implementation of this strategy, NTC was expected to earn a net profit of Rs 114.47 crore per year, with the overall production value expected to touch Rs 2,960.95 crore a year. The turnaround strategy was proposed to be implemented in two years.

However, the plan ran into trouble as some state governments like Maharashtra expressed the apprehension that money raised from sale of NTC assets in the state would be taken out of the state. Planning Commission sources revealed that of the Rs 2,000-odd crore that was proposed to be raised, Rs 1,700 crore would be raised from Maharashtra alone.

Shortly after assuming office, Union minister of textiles R L Jalappa had promised a review of the original plan and the finalisation of an alternative plan. By this time, the cost of implementation of the revival plan had already escalated on account of inflation.

It is not clear what the new proposal suggests for the rest of the mills under the corporation. Sources, however, expressed the view that it was possible that the unviable mills would continue to remain a burden on the exchequer. At present, the wage bill of the sick NTC mills alone works out to Rs 30 crore a month.