Grasim rejig awaits MP nod

The Rs 53-crore proposal of Gwalior-based Grasim Ltd's excel fibre division to switch to manufacturing solvent spun cellulosic fibre, an environment-friendly product, is under further consideration since two departments of the MP government have turned down the proposal.

Recently, the firm asked for sops and concessions for the new unit.

"The commercial tax department has suggested that the industry department should check if it will be a separate unit or a fresh investment. In case if it has a separate unit the company will have to maintain a separate profit and loss account," a government source told Business Standard.

The matter had been discussed in a recent meeting of the Apex Committee on Investment. The department has also said if it was confirmed it is a new unit, the concessions and sops can be offered to the company. Grasim officials were not available for comments.

The company has viscose staple fibre manufacturing unit in Nagda with a combined installed capacity of 2,51,850 tonnes per annum. Nagda is its largest unit producing a wide range of Viscose Staple Fibre (VSF).

Finance department has turned down the company's demand for tax concessions, "since it is technology upgrade and no concession should be granted."

However industry department had said, in the meeting, the company has obtained separate commercial tax and production tax licenses and also the Pollution Control Board's nod. The Apex committee should decide about the project.

The new unit will produce 3,650 metric tones of solvent spun cellulosic fibre. The firm demanded concessions and sops including 100 per cent investment assistance for 10 years instead of seven years offered in industry promotion policy. It also has demanded entry tax exemption for 10 years.

The new unit will use methyl 'morpholine-n-oxide' as solvent, which is recyclable, non-toxic and makes the product biodegradable. Wood pulp will also be used in the manufacturing process.

Since the state government clearance is yet to be given, the project may go late since it is scheduled to be completed by 2007. The project is expected to generate 115 direct jobs.