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Million dollar question

Grim outlook National Textile Corporation spent Rs 148.70 crore on reviving three mills in the heart of Mumbai. But industry experts are not convinced the plan will work. NTC officials say mills’ earnings won’t even cover the wage bill.

mumbai Updated: Jan 21, 2010 00:35 IST
Naresh Kamath

The National Textile Corporation (NTC) may have modernised and reopened three mills in Mumbai but questions remain about how sustainable the effort is. The reason: their output would not be enough to even pay the salaries, forcing the mills to take on large debts.

On Tuesday, at the mills’ inauguration, Union Textiles Minister Dayanidhi Maran made it clear that NTC would raise its own resources and reduce its financial dependence on the Centre.

Take the example of Tata Mill, near Hindmata, which has to shell out Rs 80 lakh per month in salaries to its 1,126 employees. The projected shortfall, according to NTC officials, between earnings and the wage bill is Rs 20 lakh.

NTC will pay Rs 6.50 per watt of electricity consumed, while skilled staff will get Rs 400 each per day. What this would add up to, however, was not available.

It’s a similar story with Podar Mill. Its wage bill would be Rs 65 lakh per month and the projected shortfall Rs 10 lakh. For India United Mills No. 5, the wage bill is Rs 55 lakh and the shortfall Rs 8 lakh.

Also, the NTC spent Rs 148.70 crore to revive the mills and purchase machines from the US, Germany and Russia to speed up production and produce high-quality fabric.

“The business model is not one of revival at all as it projects a loss, but no solution to come out of the red,” said a mill expert, who requested anonymity.

Of its 25 mills, NTC planned to sell off 15 mills and modernise 10. However, only three mills have been revived so far. It has partnered with private firms for four others.

Critics call the plan an eyewash. “The scheme is doomed. It is designed merely to silence those who have been protesting against the indiscriminate sale of mill land and joblessness of the workers,” said advocate Nimesh Mehta, who has fought many cases against NTC for the workers rendered jobless after the mill shutdown of 1982. “NTC needs corporatisation. The mills don’t have a competent management team to harness their resources.”

NTC claimed it was serious about running the mills. “I accept that it’s a tough task as we have to pay high power costs and our wages are higher than others,” said K. Ramchandran Pillai, chairman and managing director of NTC.

But, asked Mehta, “how long will the NTC continue to finance these mills?”

Another problem is the shortage of skilled staff and low productivity among the old workers. At Tata Mill, about 500 of the 1,126 staffers are old workers. At Podar, the weaving unit has been shut down and 140 looms discarded. The mill will only have spinning operations to produce yarn, thereby reducing staff strength from 1,082 to 693.

An NTC official, requesting anonymity as he is not authorised to speak to the media, said weaving was stopped due to shortage of skilled personnel. “Youngsters are not interested in the hard labour the mills require. We are tapping various sources, like old workers and employment exchanges, to get people,” he said. He claimed there was such high demand for their cloth that they have orders to last till February.

Critics are unconvinced. They say it won’t be long before NTC throws up its hands and asks for the mills to be sold. Tata, Podar and India United Mills No. 5 collectively occupy 41 acres of prime land in South Central Mumbai, which would fetch NTC a minimum of Rs 2,143 crore.

“There is a conspiracy is to sell this land and build skyscrapers and malls. The shutdown will happen soon,” said Datta Ishwalkar, president, Girni Kamgar Bachao Samiti.