Modern by design

Print edition : June 01, 2012

The New Minerva Mills in Hassan, Karnataka. The greenfield project became operational in fiscal 2011-12.-PHOTOGRAPHS: BY SPECIAL ARRANGEMENT

The NTC, once makers of janata cloth', is now a top-of-the-line textile company.

IN the deregulated development milieu in which India took its first steps to open up its economy in 1991, survival itself was a challenging task for many public sector undertakings (PSUs). While the successful navaratnas among them not only survived but also thrived by converting the challenges into opportunities, the number of loss-making PSUs continued to grow year after year. A few of the sick units did manage to not only wipe out their accumulated losses but also modernise and diversify by leveraging their assets such as lands. The National Textile Corporation's (NTC) is one such saga of triumph.

The NTC was incorporated as a state-owned company in 1968 with the remit to manage the affairs of sick textile undertakings that the Central government had taken over. Nine of its subsidiaries across the country managed 119 textile mills. However, eight of the subsidiaries were declared sick between 1992 and 1994 under the Sick Industrial Companies (Special Provisions) Act, 1985. Obsolete technology, excess manpower and poor productivity characterised the mills.

After protracted parleys, the Board for Industrial and Financial Reconstruction (BIFR) approved a revival package for the sick subsidiaries in 2002. The package, estimated at a cost of Rs.3,937 crore, envisaged modernisation of 53 viable mills and closure of the others. But implementation was stymied in the absence of clearances for the sale of mill land and this led to the completion date being extended from March 31, 2004, to March 31, 2006. Meanwhile, the only remaining viable subsidiary too went sick in end-2005. Undeterred, the NTC presented a modified rehabilitation scheme, at a cost of Rs.5,267.56 crore, to the BIFR in January 2006, which was approved in March 2006.

In the six years since then, the NTC has transformed itself into an entity that is well on the road to recovery. This became possible after the company took bold steps such as closing down unviable mills and providing reasonable compensation to workers rendered idle. It modernised a clutch of viable mills with the aim of making them profit centres by making products that were contemporary and in demand among consumers.

From the days of the janata cloth' it made for the poor, the NTC today has a range of products made in integrated textile mills straddling the value chain of ginning, spinning, weaving, processing and garment-making.

FABRIC TESTING AND (below) weaving at the New Minerva Mills. The mill earned Rs.24 crore by exporting fabrics in the first year of its operation.-

In fact, in the initial days of the revival it offered its employees a voluntary retirement scheme (VRS) but did not have the funds to pay them. Subsequently, it mobilised Rs.2,028 crore by private placement of bonds.

The NTC now is a single company following the 2006 merger of the nine subsidiaries with the holding company. The rehabilitation scheme also ensured that the NTC did not need a budgetary handout Rs.385 crore in 2002-03 for paying wages to its employees. Since 2009-10, it has met this requirement from its own resources.

Under the scheme, 78 mills were closed and 22 were taken up for modernisation. Of these, three were greenfield projects: New Minerva Mills in Hassan, Karnataka; Finlay Mills, in Mumbai, now relocated to Achalpur in Amaravati district on the site of the closed Vidharbha Textile Mills; and New Rajnagar Mills in Ahmedabad, Gujarat.

THE JUPITER MILLS on Elphinstone Road in Mumbai being demolished in March 2006. The sale of surplus assets helped save the NTC.-PAUL NORONHA

While the first is an integrated textile mill with spinning, weaving and processing facilities in the first phase and garment-making in the second, the other two are composite mills. The Achalpur mill will have spinning, weaving and processing facilities, while the one in Ahmedabad will have spinning and weaving only.

A fourth greenfield project has been identified for the manufacture of technical textiles but is yet to take concrete shape, say company sources.

The New Minerva Mills in Hassan is functioning in the special economic zone (SEZ) there and became operational in fiscal 2011-12. According to Deputy General Manager (Technical) M. Suresan Kaiprath, the mill earned Rs.24 crore by exporting fabrics to China, Peru, Pakistan and Korea in the first year of its full commercial production. The unit has an in-house laboratory to assess fibre properties in order to optimise and satisfy the requirements of the importer, he said. The mill, set up at a cost of Rs.235 crore, has all modern amenities including an effluent treatment plant. The mill boasts energy- and environment-compliance of global standards, which has helped reduce rejects from overseas buyers.

The majority of NTC's modernised mills are in the south. A visit to two NTC mills in Coimbatore, Sri Rangavilas G.S. & W. Mills and Murugan Mills, showed that they had come a long way from the days of obsolete technology. They now employ the latest global practices in spinning and weaving to meet rigorous market demands.

M.M. Chockalingam, Executive Director, NTC, says: Out of the 13 mills in the southern region, eight are into exports. We manufacture both cotton and polyester cotton. Last year, our exports were worth Rs.50 crore. This year, we plan to export Rs.100 crore from the southern region (including the SEZ unit in Hassan) out of the target of Rs.150 crore for the holding company. Before the modernisation of the mills, quality and price realisation had suffered heavily, but that has changed now, he said. The rate we are getting for our yarn is equivalent to that of private mills; in some counts we are selling at higher rates than private sector yarn.

The NTC has plans to modernise 22 of its 34 showrooms in the south, Chockalingam said. We have completed work on 10 showrooms and are in the process of completing another six this year. The sales turnover has increased threefold after modernisation in all our showrooms. Earlier, we were selling shirts and suits but now we sell garments. Where we do not produce clothes for children we fetch and sell them through our showrooms, earning a margin. Such consignment sale, as in other private retail outlets, is catching up fast, he added.

Despite the slowdown, last year NTC mills in the south logged a turnover of Rs.464 crore as against the Rs.700 crore for the whole company. It has set an overall target of Rs.1,000 crore for 2012-13.

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