Is NTC Heading Toward Closure as Ministry Plans to Monetise Land Assets?

Another public-sector enterprise is about to bite the dust as the National Textile Corporation (NTC) heads to its purported closure by June 30, 2022. A letter regarding the same-titled ‘Closure’ was sent by the Union textile ministry to the Chairman and Managing Director Ashutosh Gupta, the National Herald reported.

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

NTC had stopped production activities on March 25, 2020, due to the nationwide lockdown as a result of the COVID-19 pandemic. After the first wave, 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.

It appears that the government is keen to monetise the land assets owned by the NTC in 23 mills and corporate/marketing offices across 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, sources informed the NH.

In a response in Lok Sabha in March 2022 to DMK MP S Gnanathiraviam, Minister of State for Textiles Darshana Jardosh stated that despite huge investment in modernisation, NTC mills continue to remain unviable. Employees, however, contradict this view and blame ‘mismanagement’.

Senior NTC management stated that several proposals were sent to the ministry seven years ago to begin production of technical textiles such as bulletproof vests, fighter clothing and clothing for use in foundries. There was a proposal sent to diverge to geotextiles, which can be used on roads to increase their 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.

Furthermore, 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 the Director (Finance and Accounting) position at the National Institute of Fashion Technology too.

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 the sale of NTC land.

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.