NTC146;s plans to offload mills hits states146; roadblock

A sick PSU trying to reduce its losses should be a perfect match for state governments eager to generate extra revenue.

A sick PSU trying to reduce its losses should be a perfect match for state governments eager to generate extra revenue.

But that isn8217;t the case with National Textile Corporation8217;s NTC plea for approvals for the sale of its mills in Madhya Pradesh and Uttar Pradesh. This has been pending for over four years.

The corporation owns 11 mills in UP and another 7 in MP and Chhattisgarh. According to the BIFR-approved scheme for revival, NTC plans to sell off 9 mills in UP and 5 in MP. But the PSU has hit roadblocks in both states.

8216;8216;Currently, we are pursuing the sale of 5 mills in Kanpur which were closed in 2002. But even after four secretary-level talks in the last two years, nothing seems to be happening,8217;8217; said NTC CMD K Ramachandran Pillai.

Issues relating to payment of full-conversion rates from lease to freehold and conversion of clause for land use are the bone of contention. While the state government has been insisting on making NTC paying the full rates, the PSU argues it is eligible for exemption under the BIFR rules.

8216;8216;Under BIFR clauses for reliefs and exemptions we are not entitled to pay the conversion rates. Even then we offered to pay the amount based on the 1998 circle rates to expedite the process but the state government remains rigid,8217;8217; Pillai said.

Sources in the ministry of textiles said that under the 1998 rates, the PSU will have to pay one-third of what it will have to pay under the current rates. Assuming the current conversion rates were to apply, NTC would have to pay Rs 450 crore in taxes out of the Rs 500 crore it expects to raise from the sale of mills.

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In the case of MP, even after two successive governments gave cabinet approval for the sale of 5 mills in the state, the matter remains caught up in a bureaucratic web.

In an attempt to put the sale on a fast track, a memorandum of understanding was signed by the state government and NTC in October last year. Ten months on, the MoU has clearly failed to achieve the desired goals with various state departments erring on the timeline.

8216;8216;MP is the only state that has agreed to pay all the relief and concessions which are entitled to us according to BIFR. However, all the promises have remained on paper and nothing has been implemented yet,8217;8217; Pillai said.

The PSU is expected to get Rs 300 crore from the sale of the five mills and has already generated Rs 50.70 crore from the sale of plant and machinery there.