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| Saraf Agencies pulls out of Rs 1200-cr titanium project |
| BS Reporter / Kolkata/ Bhubaneswar Apr 24, 2010, 00:55 IST |
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The Kolkata based Saraf Agencies, the Indian partner of the Rs 1200 crore Indo-Russia joint venture to produce titanium dioxide at Chhatrapur in Ganjam district of Orissa, has decided to pull out of the project.
This follows a long spat between Saraf Agencies and its Russian partners, State Property Management Agency with 51 per cent stake in the JV and Tekhnokhim Holding (4 per cent stake) over the title of the land. Both the Russian companies are owned by their government.
While the lease of land for the project is held in the name of Saraf Agencies, the Russian companies wanted it to be in the name of the project. The total land requirement for the project was pegged at 250 acres.
Several rounds of negotiations between the two sides, some of them held with mediation of the state government, to resolve the issue had failed to yield any result.
Meanwhile, both parties have agreed to appoint an arbitrator within a fortnight to decide the compensation to be given to the Saraf Agencies for its exit from the project.
“The dispute over the proposed titanium project is over and Saraf Agencies has agreed to pull out from the titanium project in Ganjam district”, state industry minister, Raghunath Mohanty said.
Mohanty said, the Russian Federation would implement the project on its own. A tripartite meeting between the Orissa government, Saraf Agencies and the Russian partners would be held within a month in New Delhi where firm dates for commissioning the project would be decided.
Even if there is delay in the submission of the report by the arbitrator, the project work would be taken forward after this tripartite meeting.
Explaining the decision to pull out of the project, Rahul Saraf, director, Saraf Agencies, which held 45 per cent stake in the JV, said, both the partners were losing time and money and Orissa was losing a project. For an amicable solution to the problem, the company has decided to exit it. Saraf Agencies has invested about Rs 100 crore and wants the appointment of an independent arbitrator for deciding the amount of compensation.
Asked whether the company would set up a new titanium project in Orissa, Saraf said, the company is keen for such a project though no final decision has been taken in this regard. O A Popava, head of State Property Management Agency said, the Russian president had evinced interest in this project about five years back. “We would now implement it on our own”, she added.
The JV, which was accorded the status of sector specific Special Economic Zone (SEZ), envisaged setting up of an integrated chemical and metallurgical complex to produce titanium dioxide and other titanium products.
Saraf Agencies, the developer of the proposed SEZ, was initially allotted the land on 90-year lease basis by the state owned Industrial Infrastructure Development Corporation of Orissa Ltd. (Idco). The Kolkata company wanted to sub-lease the land to the JV company, Titanium Products Private Limited (TPPL). However, Russian partners objected to it and wanted the lease of land in the name of JV company instead of the sub-lease.
Though the Saraf Agencies argued that the sub-leasing was a part of the JV agreement, the Russian did not budge with the matter reaching the state government.
Saraf Agencies had accused the Russian partners of failing to comply with the terms of the agreement and the decisions by the JV's board of directors and demanded compensation for its investment in the project.
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