A tax free project?

A tax free project?

The Hindu Business Line

July 2 2005

JINDAL South West Steel Ltd (JSW), part of the Rs 18,000-crore OP Jindal group, will set up a major aluminium project involving a refinery and smelter plant near Visakhapatnam at a total capital outlay of Rs 9,000 crore. JSW entered into a MoU with the State Government to this effect on Friday.

The MoU was signed by the Industries & Commerce Secretary, Mr B. Kripanandam, and the JSW Joint Managing Director and CEO, Mr Raman Madhok, in the presence of the Chief Minister, Dr Y.S. Rajasekhara Reddy, and the JSW Vice-Chairman and Managing Director, Mr Sajjan Jindal.

The production capacity would be 1.5 million tonnes a year for the refinery and 0.25 million tonnes a year for the smelter.

The raw material - bauxite ore - would be sourced from AP Mineral Development Corporation (APMDC), which would mine the bauxite independently.

The time-span between the project plan to production take-off is expected to be about three years.

According to a release, the AP Government and the OP Jindal group have agreed to incorporate and promote an alumina and aluminium refinery and smelter to produce about 2.5 lakh tonnes of aluminium a year initially, with provision for suitable expansion in the State at the locations mutually agreed to by the two parties.

JSW Steel is the country's third largest integrated steel plant with a capacity of 2.5 million tonnes a year, which is currently being enhanced to four million tonnes a year by March 2006.

The expanded capacity includes one million tonnes of value-added products comprising galvanised steel and colour coated products.

The company has three plants - two in Maharashtra and one in Karnataka.

In a release, the company said that it currently commands 15 per cent share in the Indian market.

The Chief Minister said that the Government would consider providing exemptions to the project from octroi/entry tax, etc., and tax incentives and exemptions as being extended to mega fast track projects.

According to the MoU, APMDC should not sell or export bauxite from these deposits allocated to it in the Araku area near Visakhapatnam to any other party without meeting the requirements of JSW Steel.

The aluminium company has to offer equity to APMDC at the percentage as may be decided by the Committee appointed by the State Government.