Lucknow: Mau, the textile town of eastern Uttar Pradesh, recently devastated by bloody communal riots that killed 10 people and destroyed property worth billions of rupess, received another blow as two textile units in public sector have announced closure.

In first case, the State Government has approved the closure of loss making unit of the U.P. State Spinning Company Ltd, while in other the National Textile Corporation has announced the closure of loss making Swadeshi Cotton Mill from December 1. The NTC had acquired the Swedeshi Cotton Mill in 1978.

The State Government has approved VRS package for 701 workers and officers of Mau unit with cut off date of October 2005. The Mau unit had suspended production from June. The State government has sanctioned interest-free loan of Rs 15 crore to the Spinning Company for meeting the cost of VRS. Proposal for the privatisation of Mau unit has also been approved by the State Government.

Revival of Mau unit was not possible as working capital for resuming production is not available. The industries department in June had initiated the proceedings for the closure of units under provisions of the U.P. Industrial Disputes Act. The accumulated losses of the Mau unit in 2004-05 were nearly Rs 6 crore.

U.P. State Spinning Company had three units at Rai Bareli Mau and Barabanki, established in 1976 and 1977 respectively. The installed capacity of each unit was 50,000 spindles and the three units provided 5,852 direct job.

The company, incurring losses since 1983-84, was referred to BIFR after its net worth turned negative in 1992. IFCI was appointed as the operating agency for the sick unit. The accumulated loss of the company on March 2005 was over Rs 1,100 crore.

For the viability of the Kanpur based U.P. State spinning company, the government had provided Rs 6 crore in 2003-04 and Rs 12 crore in 2004-05 for VRS to surplus workers of Rai Bareli unit and at the head office.

For the viability of Barabanki unit, 12,500 spindles with low productivity are to be removed and surplus 224 workers would be given the benefit of VRS. For financing the VRS, state government has sanctioned a loan of Rs 6.23 crore to Barabanki unit.

The Swadeshi Cotton mill, once owned by the Jaipuria family of Kanpur, finally closed down on December 1. The 426 workers of the textile mill have been given VRS by the NTC. The Jaipuria family owned three units of Swedeshi Cotton mill, located in Kanpur, Mau and Pondichery, besides Paharpur cooling towers in Ghazaibad. -- UNI

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