Thursday, February 28, 2008

NTC Revival Plans

Twenty two mills will be modernized by National Textiles Corporation (NTC) itself by inducting new machineries, rationalization of manpower, capital restructuring etc. Out of forty mills, remaining 18 mills will be modernized through Joint Venture route. Private partners to run 5 of these mills have been finalized. This was stated by the Minister of State for Textiles, Shri E.V.K.S. Elangovan, in the Rajya Sabha today, in a written reply to a question by Shri Amir Alam Khan.

Giving further details of the Modified Rehabilitation Scheme, 2006 approved by BIFR and Group of Ministers (GOM), the Minister informed the House that out of the total 52 mills, 12 mills have been identified for further closure where there was no production activity and most of the employees opted for benefits of Modified Voluntary Retirement Scheme (MVRS). Out of these, 2 mills have been closed, raising the number of closed mills from 65 to 67.

National Textiles Corporation (NTC) was incorporated in 1968 with the main objective of managing the affairs of 16 sick textile mills taken over by the Government. NTC took over more sick textile mills under 3 Nationalization Acts. (1974, 1986 & 1995), raising its number upto 119 mills in 1995. As per the Rehabilitation Scheme, 2002, the Board for Industrial and Financial Reconstruction (BIFR) approved revival of 53 viable mills and closure of 66 unviable mills. 65 unviable mills were closed under the Act. 2 Mills (one viable and one unviable) located in the Union Territory of Puducherry have been transferred to the Government of Puducherry. With this, NTC was left with 117 sick mills, i.e. 52 viable mills and 65 closed mills.

Tuesday, February 19, 2008

Finmin opposes Indian Drugs and Pharmaceuticals revival plan

NEW DELHI: The finance ministry has opposed the chemicals and fertilisers ministry’s proposal to spend Rs 4,500 crore of taxpayer’s money to revive the Indian Drugs and Pharmaceuticals (IDPL), an anaemic state-owned company with massive real estate holdings.

The finance ministry has instead suggested that it would be more desirable if the amount is used to set up new sophisticated manufacturing plants. This amount would be sufficient to set up about 20 manufacturing units at a cost of more than Rs 200 crore per company, the finance ministry has said. The revival plan was earlier approved by the Board for Reconstruction of Public Sector Enterprises (BRPSE) and a group of ministers is now looking into it.

The finance ministry is of the view that earlier attempts to revive PSUs by infusion of fresh funds have not been successful. Revival of sick PSUs is a politically-sensitive issue and is often not based on sound economics.

The finance ministry is opposed to the plan as merely pumping public money into an archaic structure without a holistic approach will not turn around the company in a competitive environment. Bringing a strategic partner looks a little difficult as a possible private partner may be more interested in the real estate assets of the company than running the drug maker.

The real estate assets of the company at prime locations in Muzaffarpur, Chennai, Bhubaneshwar, Gurgaon, Hyderabad and Rishikesh are estimated to be worth more than the turnover of India’s about Rs 33,000-crore pharma industry. There could be very few buyers like DLF or Reliance, which could afford to buy such property.

If the land is sold, the taxpayer could look forward to malls and other facilities coming up there instead of a drug-manufacturing plant. One idea mooted by industry experts is to let the profit-making joint ventures of the company such as Karnataka Antibiotics & Pharmaceuticals (KAPL) or the Rajasthan Drugs and Pharmaceuticals (RDPL) to manage the loss-making parent company. They said a think-tank should be formed to explore innovative solutions by leveraging the company’s real estate strength.