Zuari Industries, which is in talks with UB Group Chairman Vijay Mallya to buy Mangalore Chemicals and Fertilisers, has shelved its Rs 5,000-crore urea manufacturing project in Karnataka.
An official with the Karnataka Government as also one in the company confirmed the development, stating that the project was put on the backburner because of land acquisition issues.
In 2010, Zuari and the Karnataka Government had signed an MoU (memorandum of understanding) to explore the possibility of setting up the project near Belgaum in north Karnataka. The MoU was signed during the Global Investors' Meet organised by the Karnataka Government when B. S. Yeddyurappa was the chief minister. Zuari Industries was planning to set up a 1.3 million tonne per annum (mtpa) gas-based urea project, which was expected to go on stream in 2015-16.
Last week, South Korean steel giant Posco pulled out of its proposed Rs 36,000-crore, 6 mtpa project in Karnataka.
The only big steel project which is expected to see the light of day in Karnataka now is ArcelorMittal's Rs 30,000-crore, 6 mtpa plant. The Karnataka Government is learnt to have already handed over 1,800 acres to the L. N. Mittal-owned company last year.
It is learnt that following the MoU, Zuari had started talks with the State Government to identify land for the project and for supply of natural gas from the Dabhol-Bangalore gas pipeline. But the project, which required about 400 acres, ran into trouble after local leaders started questioning the merit of allotting land for the project.
This is not the first time they have opposed the land acquisition for such projects.
The ArcelorMittal project too got slightly delayed because of this issue, but was resolved later.
Posco and Zuari Industries, however, could not swing the deal their way.
Another Zuari project, a one million tonne fertiliser plant at Karwar in west Karnataka with a capex of Rs 750 crore has also not been pursued so far, the Karnataka Government official said. The promoters are yet to hold talks with the Government for land acquisition, he added.
Zuari Industries is part of the $3-billion Adventz Group which sells products under the brand name, 'Jai Kissan'.
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