Government to sell prime properties to fund spinning mills’ modernisation

Grappling with the mounting loss incurred by public sector units (PSUs), the state government is thinking out of the box to revive traditional industries.

KOCHI: Grappling with the mounting loss incurred by public sector units (PSUs), the state government is thinking out of the box to revive traditional industries. The plan is to sell prime properties in major cities and first in line is Sitaram Mills located at Poonkunnam in Thrissur.

The mill’s six-acre property alone is expected to fetch `60-100 crore. The government hopes to raise a total of at least `500 crore through the property sale in other locations.

The state government mooted the idea after the Planning Board rejected a `500-crore package for the modernisation of the state’s spinning mills. The plan is to relocate the mill to city’s outskirts and utilise the fund raised through the property’s sale for the revival of spinning mills.“The government has been providing working capital for these sick PSUs for decades. This is not a good financial management policy. Government funds should be utilised for the overall development of the state.

So we’re considering a proposal to sell off one or two prime properties of the spinning mills in the state and provide `494.81 crore as one-time capital investment for the revival of textile mills in the government sector. If we get more fund, it can be utilised for the revival of other public sector units. This shouldn’t be seen as a move to hand over government property to the private sector. Even Kinfra can take over the land and develop it in a productive manner,” a highly-placed government source told Express.

Finance Minister Thomas Isaac said the government was considering various options.
“The expert committee has proposed a one-time infusion of `494 crore for the revival of spinning mills. However, the government can’t invest such a huge amount for one sector and it isn’t a sustainable investment model. We’re considering various options including availing of loan from the National Cooperative Development Corporation,” said Isaac. An expert committee headed by P Nandakumar had submitted a `494.21-crore action plan for the revival of the textile mills in the state last June. However, the Planning Board opposed the idea of pumping public money into loss-making PSUs.

Public Sector Restructuring and Internal Audit Board Chairman M P Sukumaran Nair said the government has accepted the action plan submitted by the expert committee. “Our proposal is for a self-sustaining model. The plan is to provide the yarn produced by the public sector spinning mills to the weaving units in Kerala itself. The government has decided to provide the fund in phases and four public sector mills will start functioning within six months. The government will earmark adequate fund for the revival of these units in the state budget for 2018-19,” he said.

Sitaram Mills at a glance
 Location Poonkunnam
Extent of land 6 acres
Land value 
Around  G60-100 crore
Taken over by government in 1975
No of employees 
260  Capacity 14,800 spindles

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The New Indian Express