Kerala state moots one time capital infusion for textile industry

Kerala state government’s expert committee headed by P. Nandakumar, comprising, among others, M.P. Sukumaran Nair, chairman, Public Sector Restructuring and Internal Audit Board, has recommended one time fund infusion of Rs. 494.81 crore, Rs. 317.89 crore for capital investment, and Rs. 176.93 crore as working capital for revival of 17 mills in the State with a sustainable development and modernization strategy.

The recommendation for one-time investment assumes significance as Rs. 521.09 crore granted in different phases during the past one decade has not done any good in bailing out the industry from the red.

The 17 mills, in the public and cooperative sectors, offer direct employment to 5,000 and indirect employment to 15,000. It earns an annual revenue of Rs. 100 crore, after making statutory payments to the exchequer.

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.

According to Mr. Nandakumar, a thorough government intervention, monitoring, and one-time financial assistance will increase the capacity utilisation of the mills from the present 55.40% to 98.50%.

Thorough modernisation, training, creation of a conducive milieu to win workers’ confidence, and creation of a central purchasing and monitoring system after implementing the reforms will improve internal efficacy and also equip the mills to face market competition. Time-bound execution of the recommendations will register instant palpable results and make them self-reliant. Moreover, the products can be channelised for distributing school uniforms and also other textile needs of various departments,,

The committee has 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 has 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.

A professional management system and creation of a Kerala brand are some of the key recommendations.