Jindal plans to buy Birla's paper unit

By SiliconIndia   |   Monday, 23 August 2004, 07:00 Hrs
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KOLKATA: The OP Jindal group is in advanced stage of negotiations with the CK Birla group company Orient Paper & Industries (OPIL) for acquisition of the latter’s paper manufacturing unit at Brajrajnagar in Orissa.

If talks do fructify, sale of the property including the township is expected to fetch the Birlas more than Rs 100 crore. Apart from reviving the paper unit, the Jindals propose to set up a sponge iron plant with in the same premises. u Jindals seek nod for iron-ore mining.

Those in know say the Jindals have already forwarded the proposal seeking Orissa government’s approval for the same. It is believed that the group also plans to undertake iron ore mining for which it has sought mining lease from the state government.

Orissa government officials confirmed receipt of the proposal from the Jindals. “They have also sought some concessions from us, but no decision has been taken as yet,” a source said. The proposal has been made by a small unlisted associate company of the OP Jindal group which has a sponge iron unit at Raigarh.

Jindal Stainless finance director Arvind Parakh refused to comment on the issue.
Industry officials were not too sure whether the Orissa government will grant iron-ore mining lease to the Jindals for the proposed project.

The state government has, through a recent circular, made granting of iron ore mining lease conditional. The circular states that iron ore mining lease will be given only if the company agrees to manufacture 2.5 lakh tonnes of steel or steel products per annum.

If the Birlas clinch the deal, proceeds from sale of OPIL’s Orissa property will be used to restructure its debts and lower interest burden.

Spread over some 900 acres of land, the Brajrajnagar land houses the paper unit and a township. While the manufacturing unit with a capacity of 70,000 tonnes per annum has been lying closed for years now, the township with the residential houses, educational institution, commercial banks, health care units and even temples have been thriving.

Apart from the Brajrajnagar paper unit, OPIL has another paper manufacturing unit at Amlai, Madhya Pradesh. The company also has two cement units — one each in Andhra Pradesh and Maharashtra and fan manufacturing units at West Bengal and Faridabad.

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