Just a way to get around the rules? | mumbai | Hindustan Times
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Just a way to get around the rules?

On the face of it, the National Textile Corporation’s (NTC’s) plan to revive three mills appears somewhat dubious.

mumbai Updated: Jan 21, 2010 00:39 IST

On the face of it, the National Textile Corporation’s (NTC’s) plan to revive three mills appears somewhat dubious. It is hardly a secret that the NTC wants to follow in the footsteps of private mills and sell its land. Following the Supreme Court’s green signal in 2006, the NTC planned to sell 18 mills to raise around Rs 4,000 crore. In 2005, it auctioned five for Rs 2,020 crore.

The three in question — Tata, Podar and India United No 5 — were part of the package of 18. The NTC has already gone in for joint ventures for four other mills — Apollo, Gold Mohur, India United No 1 and New City Mills — with three industrial groups, including Pantaloon, which is in the apparel business. Incidentally, India United No 1 has the best “ensemble” of mill heritage, according to conservation architects.

It may be entirely on the cards that the NTC is using this route to avoid adhering to the “one-third” formula, under which one-third of the vacant land to be sold has to be surrendered to the Brihanmumbai Municipal Corporation (BMC) for public amenities like parks and another one-third to the Maharashtra Housing and Area Development Agency (MHADA) for low-cost housing. In 1991, the state government for the first time permitted land to be sold under this one-third formula, which it surreptitiously modified in 2001 to allow parting with two-thirds of vacant land, thereby depriving the city of 400 acres for public use.

By entering into joint ventures, whereby the NTC retains ownership and leases the land out to private companies for up to 99 years, this may well provide an escape clause. Thus, the NTC and their lessees may avoid even the diluted one-third formula.

It is difficult to believe that the three mills now in the news, occupying 50 acres, can prove economical even with an infusion of Rs 148.70 crore. These will not be composite mills — comprising spinning, weaving and processing — but only accommodating the first two operations. Textile experts believe that spinning is the only operation that is still profitable, since powerlooms compete in weaving textiles.

Mills died because owners didn’t modernise them over decades. Whether mill hands will be able to operate modern machines is in some doubt. With real estate there upwards of Rs 12,000 a square foot, owners are tempted to sell their land and shift to locations outside Mumbai, as some have done. Can mills still prove profitable under these conditions?

The writer is the chairman, Forum of Environmental Journalists of India, International Federation of Environmental Journalists and author of ‘Ripping the Fabric — The Decline of Mumbai and its Mills’