Five months after Tata Motors [Get Quote] shifted its Nano plant to Gujarat, another Tata company has decided to move a project out of West Bengal. Tata Metaliks [Get Quote] has scrapped its 500,000-tonne billet project, proposed to be built with an investment of Rs 700-800 crore (Rs 7-8 billion), in the state and is likely to put it up in Karnataka.

Tata Metaliks Managing Director Harsh K Jha said that the West Bengal Industrial Development Corporation, which was acquiring land for the project, had requested the company to reconsider its decision. "We reconsidered and thereafter decided not to do the project here," he said.

Jha said that the company had initiated talks with both West Bengal and Karnataka some time in 2005, asking for 500 acres from each. However, the Karnataka project has now been scaled up to 900 acres. The company recently received a letter from the Karnataka government confirming 900 acres along with water and power connectivity.

However, the project is conditional. "We have told the Karnataka government that we will start work on the project only if the state recommends iron ore mines for the project. It is conditional," Jha said. The company has applied for 16 blocks and the land has been identified close to the iron ore belt of Hospet-Bellary. "It is an integrated project. We will manufacture pig iron, may be ductile pipe and steel also," said Jha.

West Bengal Chief Minister Buddhadeb Bhattacharjee had promised Tata Metaliks on February 26, 2005, that the state would allocate land on priority. The company, accordingly, had applied for land on March 15, 2005. Though it was initially looking at 500 acres of contiguous land, Tata Metaliks, subsequently, scaled its demand down to 350 acres.

Land prices in the interim more than doubled and the company was asked to pay the higher price. When WBIDC started acquiring land three years back, prices were Rs 350,000-450,000 an acre and are now around Rs 800,000-900,000 an acre. WBIDC had acquired more than 150 acres and Tata Metaliks had made an advance payment of Rs 9.5 crore (Rs 95 million). However, Jha said, price was not the only issue behind relocating the project.

Jha was speaking to mediapersons on the occasion of the inauguration of a ductile pipe plant of Tata Metaliks Kubota Pipes, a three-way venture between Tata Metaliks, Kubota Corporation and Metal One Corporation.

Even though the diversification project would not come up in Bengal, the company plans to more than double the capacity of the ductile pipe unit, as also increase capacity of its existing pig iron plant. Tata Metaliks' plant at Kharagpur is spread over 200 acres and there is scope for expansion of existing facilities.