Inter-ministerial consultations are being conducted on the likely closure of the ailing National Textile Corporation (NTC), which consists of 23 mills with obsolete technology that have remained non-operational. However, the land under the NTC may be monetised, sources said.
Due to the unavailability of working capital and other financial constraints, operations in all NTC mill units are currently suspended. To protect the interest and welfare of employees, they are being paid wages and statutory dues as per mutual agreement between the management and representing workers of the mill. NTC is an host to 7,825 employees working on the payrolls at its mills.
An official said, “The Cabinet will take up the NTC closure after the consultation process is over.” Even though it made profits due to monetisation of land in FY17, NTC has been incurring operational losses since FY07. The primary reasons for this incurred loss are high input cost, high worker turnover/ wage cost, lower market competitiveness, etc.
In FY20, the latest year for which financials are available, the company reported a net loss of Rs 350 crore, an increase of 13% on year. Under the Board for Industrial and Financial Reconstruction (BIFR)-recommended revival scheme, that had extended up to March 31, 2012, around Rs 5,500 crore was spent towards meeting various expenses, like clearing up outstanding statutory dues, one-time settlements (OTS) with financial institutions, interest payment, and compensation under modified VRS (MVRS).
Additionally, NTC has spent an amount of Rs 1,646 crore, under the revival scheme, on the modernisation of its mills. However, despite such an infusion of funds, the corporation has not been operationally profitable, partly due to the rise in raw material costs. The main business of NTC is the manufacturing of yarn and cloth.
