National Textile Corporation stares at closure, blowing out 7,200 jobs; govt likely to monetise its land

National Textile Corporation is likely to be shut down by June 30, 2022. A letter titled ‘Closure of NTC’ was sent by the Union textile ministry to the Chairman and Managing Director Ashutosh Gupta.

The letter requested for details such as expenditure until June 30, 2022, existing and pending payments and cost of Voluntary Retirement Scheme (VRS) to all employees. This has led to the speculation that instead of being sold, NTC will be shutdown. NTC has 23 mills and at least 7,200 employees.

Earlier the government was keen to privatise NTC, but now they are talking about closure of NTC in the hope of monetising land available with the Corporation, said a source. This will add to the existing unemployment raging in the country.

National Buildings Construction Corporation had surveyed the lands available with NTC in 2021 and the valuation was reportedly submitted to the ministry. The NTC lands were surveyed in 2018-2019 too and it was valued at more than Rs 1 lakh crore. The valuation is likely to have increased, said the source.

NTC had stopped production activities on March 25, 2020, due to the nationwide lockdown as a result of Covid-19 pandemic. It hasn’t started functioning since then. A few mills in Maharashtra opened for a few days, but they also shut down production in a couple of months. After lifting of the lockdown, NTC restored operation of 14 mill units from January 2021 onwards, but it was shut down again in April 2021.

The government said in March 2022 that production activity in 23 working mills of National Textile Corporation was suspended due to Covid-19 pandemic and nationwide lockdown imposed by the various state governments from March, 2020. From January, 2021 onwards, normal operations were resumed in some of the NTC mills but could not be continued due to unavailability of working capital and other financial constraints.

In a written reply in March 2022 in Rajya Sabha to CPI MP Binoy Viswam, Minister of State for Textiles Darshana Jardosh said that in light of continued poor economic viability of NTC mills, Ministry of Textiles is preparing an action plan for the way forward in this matter in consultation with NITI Aayog and Department of Public Enterprises under Ministry of Finance. The ministry claimed that the employees were being paid wages and statutory dues as per mutual agreement between management and representing workers of the mill.

In another response in Lok Sabha in March 2022 to DMK MP S Gnanathiraviam, Jardosh had stated that despite huge investment on modernisation, NTC mills continue to remain unviable. However, several employees state otherwise.

Mismanagement at NTC

NTC has been running without a dedicated CMD or directors since 2017. The current chairman director CMD Ashutosh Gupta is also the director of human resources. Amisha Srivastava Gupt who is the Director(finance) at NTC, holds Director (finance and Accounting) position at National Institute of Fashion Technology too.

NTC produces mostly yarn and 10% of the production line includes fabric. India already produces an excess of yarn, so it was unlikely for the company to turn profitable as it continued its focus on yarn and fabric post modernisation.

Senior NTC management stated that several proposals were sent to the ministry seven years ago to begin production of technical textiles such as bullet proof vests, fighter clothing and clothing for use in foundries. There was a proposal sent to diverge to geo textiles, which can be used in roads to increase its life, on mountain slopes and river beds to prevent soil erosion. There was a proposal from a Japanese technical textile company, which offered a tie-up for production. But, the ministry showed no interest.

Even during the pandemic, the ministry did not show an interest in manufacturing masks or or technical textiles. Former NTC CMD Nihar Ranjan Dash had met the Chief General Manager-Technical A Sukumar on March 12, 2020, and had asked the technical team to come up with a plan to manufacture non-woven technical textiles. Masks, aprons and other surgical disposable items such as pillow-covers and bedsheets are considered as non-woven technical textiles.

In the follow-up meeting on March 18, a plan to manufacture medical textiles, surgical disposable items and non-woven fabric was submitted. But the CMD did not take any decision. The mills which manufacture sanitary napkins can also manufacture face masks and other surgical disposable items because the same fabric (polyester raw material) is used for these items. But no decision was taken on this either.

The South India Textile Research Association (SITRA), which falls under the Ministry of Textiles, has several labs on its 50-acre campus for testing and research of material and fabric. In one of its labs, it has a sanitary pad-making machine, which is mostly used for research purposes, but SITRA takes orders to manufacture sanitary napkins as and when they get orders.

This is even as the current textile minister Piyush Goyal and former minister Smriti Irani have been waxing eloquent on technical textiles. Goyal had said that it was time to target a five times increase in the export of technical textiles in three years, from the current $2 billion to $10 billion. In the meeting of the Indian Technical Textile Association, minister had suggested public-private participation for use of government funds in research and development in technical textiles. Irani had also echoed similar sentiments while speaking at the National Institute of Fashion Technology (NIFT) in March 2021.

In 2020, the union government had approved the proposal for the creation of National Technical Textiles Mission for a period of four years (2020-21 to 2023-24) with an outlay of Rs 1,480 crore.

According to the 2019-20 financial statement, NTC has a net loss of Rs 350.11 crore, up from Rs 310.22 crore in 2018-2019. The only year that the statement showed profit was in 2016-17 of Rs 969.38 crore, which was due to sale of NTC land.

In 2012, as per the recommendation of the Board for Industrial and Financial Reconstruction (BIFR) around Rs 5,500 crore was spent towards meeting various expenses like clearing up outstanding statutory dues, VRS and one-time settlements. NTC spent Rs 1,646 crore on the modernisation of its mills under the revival scheme, but it has not become operationally profitable.