In 1997-98, Kanoria Chemicals had sold 38,60,520 Aekta shares (face value Rs 10) worth Rs 4.78 crore to Nav-Jyoti Investments.

Ludlow, before being taken over by the Kanorias in 1979, was the only American-owned jute mill, in an industry dominated by the Scots and the British. The mill, with a capacity of 125 tonnes per day and spread over 70 acres, is situated in the Chengail region of Howrah district. It has a workforce of 5,000.

Kanoria Chemicals chairman SS Kanoria, however, denied that they are contemplating to sell the mill. He told The Financial Express that the stake hive-off was an in-house reshuffle.

"We have not hived off our stake in Aekta. Only Kanoria Chemicals has sold its Aekta shares to Nav-JyotiInvestment because we want the textile divisions of our group under one organisation," he said.

At present, Nav-Jyoti is running a cotton mill in Ahmedabad. Ludlow is the second textile unit within its fold.

Ludlow Jute Mill is one of the few jute mills to have diversified so as to survive the onslaught of plastics. Apart from manufacturing jute bags, the staple product of every jute mill, 50 per cent of its production is high-quality jute yarn and fabric, mostly for exports.

The Kanorias have invested over Rs 20 crore in the last decade in the mill. It also produces a denim substitute, which contains 55 per cent of jute. Incidentally, Arvind Mills also uses this technology and is blending jute with cotton in one of its famous denim brands targeted for the lower-strata of the market.

Denying that hiving of Aekta's stake is a first step towards a complete sell-off, Kanoria blamed a section of the jute market, with vested interests for spreading the rumour.

"No, we are not selling the mill. A coupleof months a rumour was spread by somebody with vested interests that we are looking for buyers to sell off the mill. This is not true," he said.

Instead, he added that the transfer is a mere exercise to make Kanoria Chemical focus on core activities.

"Kanoria Chemical's core competency area is chemicals, but the company had investments in Aekta. So we have cleared the company of non-core activities because the need of the hour for any company is to concentrate on its core activities," Kanoria said.

Ludlow Jute Mills is closed for the last four months owing to labour problems. Although sources in the jute industry said there are no signs of an end to the labour strife, Kanoria said the mill will open shortly."We are holding talks with leading workers' unions to find a solution to the deadlock," he said.