NTC set to redeem Rs 2,020-cr bonds

NEW DELHI: National Textile Corporation (NTC) will start redeeming its bonds worth Rs 2020 crore with the first instalment of Rs 250 crore to be made in January 2007.

These bonds, raised in nine series, are of five year maturity and carry interest at the rate between 6.1% to 10%. NTC plans to repay the entire amount in cash in two and a half years.

NTC had raised Rs 2020 crore through issue of bonds in 20 months starting January 2002. “We have to repay a total amount of Rs 2805 crore, including Rs 785 crore of interest. We have already paid Rs 485 crore as interest. NTC will repay the remaining amount in next two and a half years.

The first instalment of Rs 250 crore will be paid in January 2007,” chairman & managing director of NTC, K Ramachandran Pillai told ET.

NTC had issued these bonds to offer Voluntary Retirement Scheme (VRS) to its employees, and for the modernisation of its sick mills. These bonds were issued prior to the sale of its mill properties that generated an amount of about Rs 2,000 in 2005. The corporation has brought down its number of employees to 21,000 from around 3 lakh since 2000. It further plans to reduce it to 15,000.

“The redemption of bonds will be done through money generated from sale of mills last year on which we are getting interest between 10% to 15%. We are further planning sale of properties in Mumbai, Kanpur, Indore and Coimbatore. This sale is expected to generate an additional amount of Rs 5,000 crore,” said Mr Pillai.

NTC also has plans lined up to modernise its sick mills through partnership with private sector, and to leverage its retail network to sell products in the domestic market.

NTC has over 100 retail outlets in prime locations of major towns. Three companies namely, Ernst & Young, Deolite and Dhir & Dhir have shown interest in NTC’s plans to modernise its 22 sick mills at an estimated investment of Rs 530 crore.