National Textile Corporation Ltd, which raised Rs 2,200 crore (Rs 22 billion) from the auction of five mill lands in Mumbai, plans to take the same route for the remaining 13 mills in the city.
Ruling out the possibility of joint development of mill land with private partners, NTC CMD K Ramachandran Pillai said outright sale was the best option that lie in front of the textile manufacturer, which is undergoing a dramatic turnaround in performance.
"Why should we wait for two to three years to realise the capital of the mill land when we can get it in a much shorter span of time? Besides, what is the guarantee that the returns would be the same after a three-year period with the real estate market undergoing such fluctuations? We will only go for outright sale," Pillai told Business Standard in an interview.
The NTC Group, which has sold assets worth Rs 3,100 crore (Rs 31 billion), had accumulated losses of Rs 9,829 crore (Rs 98.29 billion) as of end-March.
Its plans to dispose of the other 13 mills it owns in and around Mumbai hit a roadblock when the Maharashtra government recently issued an order stalling development of mill land in the city, pending the resettlement of chawls on the premises.
According to the order, which came into effect on June 14, the land developer is bound to give 225 sq ft flat to each tenement holder as of January 1, 2000.
The order is likely to stall 30 million sq ft of development across both NTC and privately owned mill land that is currently coming up in the mill area, valued at Rs 15,000 crore (Rs 150 billion). Of this, the Corporation's land is valued at approximately Rs 4,000 crore (Rs 40 billion).
Queried on the hold-up in the process, Pillai said that he was hopeful of an early and amicable settlement of the issue so that the company could move on and focus on its modernisation process, which is expected to be completed by the end of 2007 at Rs 530 crore (Rs 5.3 billion).
He expressed confidence that the company would have a turnover in excess of Rs 2,000 crore (Rs 20 billion) by 2011 from its turnover of Rs 638 crore (Rs 6.38 billion) for 2004-05. The company is expected to announce its results for 2005-06 early next month.
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