Calcutta, May 19: Tata Metaliks Ltd has brought down the curtain on its proposed steel plant in Bengal.
The Calcutta-headquartered company, which operates a large pig iron plant in Kharagpur, today formally informed the state government about its decision.
Just two months ago, the company had announced its desire to scrap the Rs 1,000-crore mini steel plant project. But the Bengal government prevailed upon it to reconsider the decision.
The company board met on May 7 where the issue was taken up once again for discussion.
The management was so far tight-lipped about the decision taken at the meeting. We will formally inform the government in the next few days, managing director Harsh K. Jha had said after the meeting.
However, the state government received the quit letter only today, almost two weeks after the meeting but only three days after the results of the Lok Sabha polls.
Bengals Left Front suffered a humiliating defeat in this years election, signalling a change in the states political landscape.
Left parties are also out of the reckoning at the Centre, losing the bargaining power it enjoyed during the better part of the UPA regime between 2004 and 2009.
During that period many steel companies had promised large investments in Bengal, but Tata Metaliks was the first to do so.
It had sought 500 acres adjacent to its pig iron and ductile iron pipe plant in Kharagpur in early 2005. The state government was ready to offer 350 acres, to which the company agreed.
However, the government could acquire only 192 acres so far. In the meantime, land prices have gone up from Rs 4 lakh an acre in 2005 to Rs 8-9 lakh now. Tata Metaliks had reservations on that.
The West Bengal Industrial Development Corporation, a shareholder in Tata Metaliks having a board representation, was entrusted with the job to acquire land for many other big industrial projects.
The company might have stuck to its decision to quit as it feared the state government would not be able to deliver the land in the near future.
Government sources had earlier indicated that the company was shelving the project as the steel sector had turned bearish following the global economic slowdown.
Steel prices have crashed from a high of $1,250 a tonne to $450 a tonne now, taking a toll on several expansion projects.
Tata Metaliks is now pursuing a similar project on a larger scale in Karnataka.
The state has identified 900 acres, some 300 km from Bangalore in the iron-ore rich Bellary-Hospet region.