Textile leader the National Textile Corporation (NTC) informed that it has got 22 bids to run 29 of its mills as JVs.
Major Players keen on partnering with the textile company include KSL Industries, Eskay Knit Wear, Raghavendra Spinning as well as Jaybharat Textiles among others. These companies are understood to have bid for more than one unit. The mills are largely spinning facilities.
The bids closed on January 13, '05 and players will be finalised by January-end. This initiative is part of the NTC revival plan, which was approved by the BIFR in '02. As per this plan, 22 mills have been identified for modernisation by NTC itself; another 29 will be managed on a JV basis.
Though NTC uses the term 'joint venture', the arrangement envisaged with the private player is akin to a management contract.
NTC chairman K Ramachandran Pillai, said, “We are looking to lease the mills to these parties for a minimum 15 years. The sale is dependent on certain conditions, and the parties will be finalised once we evaluate their financial competence.”Once the contract is in place, players won't be allowed to sell the assets.
The minimum bid is Rs 50 crore. Industry sources, however, indicated that the mills are unlikely to receive very high bids, as the return on investment is not clear.
This is taking into consideration that the mills on the block are largely spinning facilities they don't enjoy very high margins.
NTC has already allocated Rs 600 crore for the modernisation of 22 mills. The company had taken up a techno-economic feasibility study and is looking to purchase Chinese machinery to replace the existing equipment in these mills.
During '02-04, NTC had mobilised Rs 2,000 crore from the debt market. It used the money raised to service its debt by January '07.
marketing@alchempro.com
