Calcutta, June 17: The Jindals have decided to push back their Salboni project as Maoist rage singes the region slated to house Bengals biggest industrial project in terms of investment.
A JSW Steel official said the beginning of construction for the first phase of the steel plant in 2011 — when it was supposed to start production — could be the best-case scenario.
The official cited low profitability from the steel business and the companys high debt burden for the pushback, but it is difficult to miss the political coincidence.
Bengal will go to the Assembly polls in 2011 and many industrialists are believed to be waiting for the political haze to lift in the next two years before putting money on the ground.
For the Jindals, the Maoist threat to the project enjoying special economic zone (SEZ) status has further complicated matters.
The Lalgarh unrest began last year after a landmine targeting Buddhadeb Bhattacharjee went off in front of Sajjan Jindals car as they were returning after laying the foundation stone for the project.
Jindal, vice-chairman and managing director of JSW Steel, did not reply to repeated calls.
But Biswadip Gupta, CEO of JSW Bengal, the company executing the Salboni project, denied the role of politics or Maoists behind the go-slow decision. The market is yet to rebound despite talks of a revival. As I see it, the best- case scenario for work on the plant to start is 2011, he said.
He sought to allay apprehensions that Jindal might abandon the project. He hasnt spent Rs 200 crore for nothing, Gupta said.
The Jindals decision to put the project on hold for so long raised eyebrows within the state government. A senior bureaucrat said it was a matter of concern. The company had told us it was facing difficulty achieving financial closure, but it is now a matter of concern.
JSW Bengals Rs 35,000-crore steel and power project had the unique distinction of meeting all the conditions — political consensus, unencumbered trouble-free land, coal block allocations — to take off. It has also received the final nod for the SEZ status.
Gupta said the project had walked into a global downturn beyond the companys control. While we wait for the market to revive, JSW Bengal plans to carry on some of the preliminary work like coal block development and putting up the boundary wall.
Industry observers believe JSWs focus is on expanding the Bellary plant in Karnataka to 10 million tonnes by 2010-11 and reduce its debt, which has ballooned to over Rs 11,000 crore, 49 per cent more than the last fiscal.
In Bengal, JSW plans to put up a 3-million tonne plant in the first phase and ramp it up to 10 million tonnes by 2020.