Tata Group's Tuticorin project on track
Business Standard — August 16, 2007

Tata Steel managing director B Muthuraman today said that the company's Rs2,500-crore integrated titanium dioxide project in Tamil Nadu's Tuticorin district was on track and only a "reasonable price" would have to be paid to acquire land.

Addressing a press conference, he said the project was definitely moving ahead and the company was keen on setting up the project with popular support. While three-quarters of the people supported the project, the company was ready to clear any misgivings in the minds of the others, he added.

"We are ready in all respects except for the land. The moment the land is ready we can start the project, " he added.

He, however, also hinted that the company had alternative plans of relocating the Rs2,500-crore project in the backward district of Tuticorin in Tamil Nadu. "Tata Steel is a Rs1,00,000-crore company after the acquisition of Corus and this is a Rs2,500-crore project. So please understand that such a company will have alternative plans. It is for the people of Tamil Nadu to decide whether they want the project here or not," Muthuraman said.

He pointed out that the company was willing to pay a reasonable price for the land, with the state government reportedly fixing a price in the range of Rs40,000-Rs50,000 per acre, far higher than prevailing market prices.

The company has earmarked Rs50 crore for the land out of the total project cost, also indicating that offering unreasonable prices would result in the project becoming unviable.

Stating out that the group was not averse to buying the land directly, Muthuraman stressed the need to buy large swathes of land through the government. "Large tracts of the land can be acquired only by the government owing to several factors like ownership issues, land titles being common for 4-5 people, and fluctation in land prices, among others. We expect the government to carry out the purchase, and believe that it will do a good job, " he added.

About 10,000 acres of land are expected to be acquired in six villages for the titanium project. While about 8,900 acres are expected to be used for the main operations, the remainder will be employed in auxiliary activity.

Muthuraman said that these 8,900 acres of land were owned by 7,500 people and most of them had migrated to other places in search of employment.

Referring to the financial viability of the project, Muthuraman pointed out that IRR (internal rate of return) on the project was 12-13 per cent, making it a low-yielding project.

The project is likely to generate jobs for 4,000 people, 1,000 jobs directly and 3,000 indirectly.

"We would like to hire people from the nearby villages for the 1,000 direct jobs. We will also set up a training school to train them at our cost and make them ready before the project takes off in three years," Muthuraman added.

Outlining the wide-ranging benefits that could be reaped out of the project, Muthuraman said that the entire region would benefit from the corporate social philosophy of the Tatas through a slew of initiatives to ensure better living standards.

He stressed that this would be the first titanium project in the world to feature a desalination plant, being put up owing to paucity of water in the area.

As the plant expands, the company will also look at supplying water to nearby areas, he added.