Jaiprakash Associates officials Pankaj Gaur and S. D. Nailwal (left) in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, March 18: Jaiprakash Associates Ltd, the flagship company of the Jaypee Group, has undertaken a green-field cement plant project in Himachal Pradesh.

?The capacity of the new plant will be 3 million tonnes and the total investment will be Rs 810 crore,? said Pankaj Gaur, director, Jaiprakash Associates. At present, the company has a cement complex in central India with a capacity of 7 million tonnes.

The project cost will be generated through external commercial borrowings worth Rs 100 crore and Rs 500 crore term-loan from banks. The rest of the funds would come from the company?s internal accruals, said S. D. Nailwal, director (finance), Jaypee Associates.

The deadline for the completion of the project is March 31, 2007. Nailwal said it is essential to meet the deadline as it will make the company eligible for the excise duty relief available to projects in Uttaranchal, Jammu and Kashmir, Himachal Pradesh and the Northeast. The company will get the duty relief for the next 10 years, if the project is completed within the deadline.

The excise duty relief is Rs 408 per tonne, which translates into a savings of Rs 1,200 crore for the next 10 years of operation starting April 2007.

The company is also offering a 36.66 per cent stake in subsidiary, Jaiprakash Hydro Power Ltd, through the book-building route. Jaiprakash Associates is offering 18 crore shares at a price band of Rs 27 to Rs 32 per share. The issue will be open for a week from March 22 to March 29.

Jaiprakash Hydro has been operating Baspa-II in Himachal Pradesh, the country?s largest private hydro-power project, since June 2003.

The proceeds from the issue will be utilised by Jaiprakash Associates in repaying a debt of Rs 160 crore. The rest of the funds will be used in the company?s 1000 MW Karcham Wangtoo hydro-electric project on river Sutlej in Himachal Pradesh. This project is expected to be commissioned by March 2010.

The total investment for the project will be Rs 5,500 crore. Of this, Rs 1,650 crore will come from equity proceeds, Rs 1,000 crore via external commercial borrowings and Rs 2,900 crore worth of term loans.