The textiles sector in the State is in for a thorough revamp. The 17 textile mills in the public and cooperative sectors would be revived and made self-reliant on the basis of a strategy worked out by an expert team.
The government has accorded in-principle clearance for the strategy drawn up by an expert committee headed by P. Nandakumar and comprising among others M.P. Sukumaran Nair, Chairman, Public Sector Restructuring and Internal Audit Board.
A working group meeting held at the behest of Industries Minister A.C. Moideen and Finance Minister T.M. Thomas Isaac has ironed out an action plan for mopping up resources for executing the strategy. It has been proposed to release the funds in instalments and bring the mills that provide direct employment to about 5,000 persons and indirect jobs to 15,000 back into action within 18 months.
Fund infusion
Mr. Nandakumar told The Hindu here that the sustainable development and modernisation strategy would bring about a remarkable change and help the State emerge as a major player in the sector. The committee had recommended a fund infusion of ₹494.81 crore, ₹317.89 crore for capital investment and ₹176.93 crore as working capital for putting the 17 mills in the State back on track.
Though the panel had recommended a one-time fund infusion considering the fact that earlier release of ₹521.09 crore in different tranches during the past one decade had not yielded the desired results, the current resource crunch is reported to have prompted the government to stagger the investment, but in a meaningful manner.
Though not in the pink of health, the mills continue earn an annual revenue of ₹100 crore, after making statutory payments to the exchequer.
Reasons for crisis
Supply and demand mismatch, high cotton prices, low realisation from yarn sales, labour absenteeism due to uncertainty, mounting dues to raw material supplies and other commitments have been cited for the crisis.
The committee had recommended retrospective conversion of loans into equity and waiver of accrued interest to improve the financial credit worthiness of the mills. It has proposed to slash the interest rate from 11.5% to 10.35%. It had proposed to bring the mills under government control and monitoring of RIAB and also constitution of centralised committees for purchase of capital goods and sales of used machinery and other things.
