ITC in talks with four state governments

Andhra wants Rs 2500-crore greenfield paper plant to be located in state

Tobacco major ITC Limited is currently holding discussions with the governments of Andhra Pradesh, Madhya Pradesh, Gujarat and Maharashtra over the location of its proposed Rs 2,500-crore greenfield paper manufacturing plant.

"While discussions are in an advanced stage with the Madhya Pradesh government, talks with Andhra Pradesh, Maharashtra and Gujarat governments are currently in progress," said Pradeep Dhobale, chief executive of ITC's Paperboards and Specialty Division, adding that a decision in this regard was expected to be taken during the next three months.

The proposed 2 lakh tonnes per year capacity paper plant requires 1,000 hectares of land for the factory premises and an additional 75,000 hectares area for plantations. It needs 2 lakh of tonnes of coal and 50,000 cubic metres of water per day. Hence, Dhobale said, the plant has to be located by the side of a river.

In the light of the plant's potential to create 2 lakh jobs, mostly in plantations, the Madhya Pradesh government went ahead in offering necessary assistance including provision of the required land to the company. Following this, it is learnt, the Andhra Pradesh government also approached the company to set up the plant in the state where ITC already has a paper unit at Bhadrachalam.

According to government sources, Andhra Pradesh is asking ITC to locate its plant in Vizianagaram. The state minister for major industries, B Satyanarayana, held discussions with ITC officials in this regard on Thursday.

Dhobale told Business Standard that ITC was seeking large extent of land both for the manufacturing unit and for plantations as the company intends to further expand the capacity to about 5 lakh tonnes per year, five to seven years down the line. At Bhadrachalam, ITC's paper plant, which is producing 2.8 lakh tonnes of paper annually, is located in an extent of 600 hectares. It has a plantation area off 30,000 hectares.

Further expansion of the proposed plant was planned to achieve economies of scale as "we have to compete with China," Dhobale said.

ITC feels that the Indian industry will witness heightened competitive activity in the ensuing years, especially in the light of most international majors viewing Asia including India as a key growth market. This, coupled with the rise in input costs, according to ITC, would call for increased focus on cost competitiveness.