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Interministerial consultations are currently underway on the possible closure of the troubled National Textiles Corporation (NTC), which has 23 technologically backward factories that have been non-operational. However, media reports claim its land can be monetised.
Operations at all NTC plants are currently suspended due to a lack of working capital and other financial constraints. To protect the interests and welfare of employees, wages and statutory dues are paid to them according to a mutual agreement between management and factory worker representatives. NTC has 7,825 employees working in its factories.
“Following the consultation process, the cabinet will proceed to close the NTC,” an official said. Although NTC made a profit by monetising land in FY07, NTC has suffered operating losses since FY07. The main reasons for this loss are high input costs, high worker turnover/wage costs, and low market competitiveness.
In FY20, the latest year for which financial figures are available, the company reported a net loss of Rs 350 crore, up 13% year-on-year. According to the revival plan proposed by the Board of Industrial and Financial Reconstruction (BIFR), which is extended until March 31, 2012, approximately Rs 5,500 crore is used to cover various expenses such as clearing unpaid statutory dues, One Time Settlement (OTS) With financial institutions, interest payments and compensation under Modified VRS (MVRS).
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In addition, NTC spent Rs 1,646 crore for factory modernisation under the revival programme. However, despite the infusion of so much capital, the company is not profitable, partly because of rising raw material costs.
The main business of NTC is the manufacture of yarns and fabrics.
