2 Coimbatore mills to be put up for SPVs
India-NTC proposes special purpose vehicles for mill modernisatonIndia The National Textile Corporation (NTC) has proposed to undertake modernisation of its 18 mills under joint venture route through the creation of special purpose vehicle (SPV) to take advantage of the public-private partnerships (PPP) model Disclosing this to Business Line here, the Chairman and Managing Director, Mr K. Ramachandran Pillai, said that the Corporation would hive off the mills into SPV and make over the extant assets on an outright sale/long-term lease basis to the SPV. In respect of the land, the plot area as required for running the mills should be transferred to the SPVs.
Out of the 18 mills to be put up for SPVs, as much as 10 are in Maharashtra with Mumbai city alone holding four mills, while the balance of eight mills consists of two in West Bengal, one each in Kerala, Uttar Pradesh, Andhra Pradesh and Orissa with two in Tamil Nadu - Coimbatore Spinning & Weaving Mills and Sri Sarada Mills, Coimbatore. He said the strategic partners (SPs) are likely to contribute to the funds required for the modernisation and expansion of the mills and bring in the management expertise.
He said that one of the conditions for SPs is that asset-stripping would not be allowed under any pretext and that the valuation of the assets would be done in such a way that it is neither too low nor too high to deter prospective investors from pumping in funds to modernise these mills. He said that estimates of land value of each of these 18 mills hover between Rs 400 crore and Rs 450 crore. As the idea is to improve the viability of the mills, NTC would retain the existing liabilities and the employees would be offered a voluntary retirement scheme. In the proposed SPVs, NTC would hold 51 per cent of the share capital and would offer the lingering 49 per cent with management participation in the mills to the strategic partners.
Mr Pillai said that the Corporation has given VRS to 58,000 employees in just two and half years entailing Rs 1,800 crore which was purely spent out of the sale of surplus lands vested with the mills. Mr Pillai said that the Corporation would begin Expression of Interest (EoI) campaign on Wednesday, which would be valid till end of April 2007 by which the strategic partners would be identified for the SPVs. He said the EoIs might be submitted by domestic/global companies, either individually or as a consortium. He said the interested parties should have at least five years manufacturing experience in any industry or five years experience in the textile industry.
To a specific query about the modernisation of 22 mills the Corporation has been undertaking at an investment of Rs 530 crore, Mr Pillai said that this would be over by the end of 2007. He said that out of the 52 mills currently under its fold, the Corporation would modernise 22, another 18 would be modernised through joint ventures route and the balance 12 mills would be closed down. The dozen mills facing closure include one each in Andhra Pradesh, Karnataka, Bihar, Assam, Gujarat and Uttar Pradesh and two each in Punjab, Rajasthan, Maharashtra
