If media reports are to be believed, the Union Government is putting the loss-making company National Textile Corporation (NTC) on the block. The cabinet approval for the sale would be sought soon.
Incorporated in April 1968, the NTC is owned by Ministry of Textiles (MoT).
A report of Financial Express, a leading business daily, says that all through the last two decades and more, NTC has been incurring losses, but it made a technical profit of Rs. 969 crore in FY17 as it accounted for the capital gains from the sale of a clutch of prime properties and land parcels in Mumbai and elsewhere.
The report says that with unavailability of working capital and other financial constraints, operations at NTC mills are now under suspension.
Employees are, however, being paid wages and statutory dues as per an agreement between management and workers’ unions. Notably, it has 23 mills and more than 7,000 employees on its payroll.
It quoted a Government official, “Post-privatisation, NTC will benefit from new technologies and capital to be brought in by the private investor. This may help the firm to fully utilise the capacity as well as expand businesses.”
In the financial year 2019-20, the latest year for which financials are available, NTC has incurred a net loss of Rs. 350 crore, up 13 per cent on year. Its turnover during the same fiscal was Rs. 850 crore, a decline of 21 per cent on year, while net worth also fell by 20 per cent on year to Rs. 1,381 crore in FY20.
The latest attempt to revive the corporation was through 2012 package recommended by the then Board for Industrial and Financial Reconstruction (BIFR).
Around Rs. 5,500 crore was spent under the package towards meeting various expenses like clearing up outstanding statutory dues, one time settlements (OTS) with financial institutions, interest payment and compensation under modified VRS.
NTC has spent Rs. 1,646 crore on the modernisation of its mills under the revival scheme. However, despite such infusion of funds, the Corporation has not been operationally profitable, partly due to the rise in raw material costs.
Source : https://in.apparelresources.com/