Pantaloon Retail has entered into a joint venture (JV) with the National Textile Corporation (NTC) to revive and modernise the latter’s two mills in Mumbai. While NTC will hold 51 per cent in the venture, the rest will be owned by Pantaloon. The retail major has made an upfront payment of Rs 90 crore to run the mills for 33 years. It can also use the mills’ real estate for commercial development.
“We are working out a plan on the revival and modernisation of the mills. Currently, we do not have estimates on how much real estate we would be able to use,” a Pantaloon spokesman said.
The deal involves NTC’s Gold Mohur (at Dadar, with an area of 0.53 acres) and Apollo Mills (at Currey Road, with an area of 3.93 acres).
Both NTC and Pantaloon will form separate subsidiaries for their JV. Explaining the structure of the joint venture, NTC chairman R Pillai said, “The NTC chairman will head an eight-member board that will run the two mills. To oversee the day-to-day running of the business, a CEO will be appointed by the private partner (Pantaloon).”
He emphasised that the joint venture is in no way a sale.
“The new company will carry out textile-related activities like spinning, weaving, garmenting, etc. The board will also use its discretion on how much real estate can be permitted to be developed. The NTC has said that surplus land can be used for real estate development’’.
There is also a clause put in the JV that if the new company does not make profits in the first five years, the JV will be dissolved.
The joint venture is part of NTC’s plan to revive and modernize 16 sick mills through private partnerships. Last week the central government company signed a memorandum of understanding with Alok Industries for New City Mill (6.7 acre) and an Aurangabad-based mill.
The Pantaloon Retail board has also decided to spin off the sports business of its joint venture Planet Retail Holdings into a separate entity.
– Bangalore Bureau