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If you are an NRI looking to park some loose change—say a few million dollars—in a rock solid investment that is virtually guaranteed to ensure steady returns, then watch out for the expressions of interest (EOI) to be notified by the National Textile Corporation. In a bid to uplift 16 depleted mills and cash in on the retail boom, the public sector company, which has an annual turnover of over Rs 1,000 crore, is planning joint ventures with large private corporations to develop manufacturing units and textile retail outlets. Deals to develop retail outlets have already been locked for five mills in Mumbai—Apollo Mills at Chinchpokli, United Mills No. 1 near Dadar, New City Mills at Kalachowkie, Aurangabad Mills, and Goldmohur Mills at
Parel.
NTC will partner with the Bhaskar Group, a media giant; Alok Group, a textile major; and retail major Future Group, which owns Pantaloons. The textile major will hold a 51 per cent stake in the joint venture, ensuring a steady stream of profits that can be funnelled back into the textiles sector.
The business model was developed as per Board of Industrial and Financial Reconstruction guidelines. The joint ventures are expected to boost the textile trade.
The joint venture partnerships for NTC mills was cleared by a group of ministers (GoM) constituted to look into the affairs of the corporation. Any partnership for the retail business would be on the lines of the existing ones, where the private partner will have management control, but NTC will have the majority on the board.
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Mills looking for JVs |
1. RBBA Mills, Hinganghat
2. Savatram Ramprasad Mills, Akola
3. Chalisgaon Textile Mills, Chalisgaon
4. Dhule Textile Mills, Dhule
5. Nanded Textile Mills, Nanded
6. Parvathi Mills, Quilon
7. Orissa Cotton Mill, Bhagatpur
8. Tirupathi Cotton Mill, Renigunta
9. Swadeshi Cotton Mill, Mau
10. Laxminarayan Cotton Mills, Rishra, Hoobli (West Bengal)
11. Sodepur Cotton Mills, Sodepur (West Bengal) |
After EOIs were invited through newspaper advertisements in March 2007, 14 parties responded. After presentations and mill visits by the parties for their due diligence exercise, a pre-bid conference was held and financial bids were invited from 10 shortlisted parties on September 14. The entire process was conducted with the advice of Deloitte Touche Tohmatsu India Pvt Ltd. Legal retainers were also engaged by both NTC and the consultant for drawing up the transaction documents, strictly in accordance with the mandate given to NTC. The broad terms and conditions in the proposed JV agreement are:
• The Board of Directors will constitute 8 members, of which 5 directors will be of NTC while 3 will of those of the JV partner.
• NTC will hold 51% stake in the company while 49% would be of the partner.
• The CEO of the company will be the nominee of the private partner to look after the day-to-day functioning.
• The land would be allowed only for the right to use. The land of the company cannot be sold and mortgaged or any charge created on it.
• The initial lease will be for a period of 33 years, extendable in another two phases of 33 years each.
• The private partner will make the entire investment for modernisation.
• NTC will receive dividend payouts on the performance of the venture in proportion to its 51% stake.
• All employees of the JV mills would be offered MVRS.
• The private partner will pay upfront consideration to the NTC for relinquishing its 49% stake.
NTC will soon be notifying an EOI for going in for JVs for the remaining 11 mills (see list).
The textile company is also diversifying into other areas in a big way. It will be looking for public private partnership for building a 70-storey Trade Tower in Mumbai, complete with hotel, commercial complex, office space, gems and jewellery centre, handicraft centre, water sports park, and horticulture park at the India United No. 6 complex in Mumbai. It will be by far India’s tallest building.
If interested, contact R. K. Sharma, Director, N.T.C.
on 91.98730.89068 or 91.11.2436.0814,
Email: cmdntc@bol.net.in, ntckrp@bol.net.in
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