NEW DELHI, June 20: Mitsubishi Corporation, the $175-billion Japanese conglomerate, has obtained government approval to set up a Rs 1,400-crore, 3.5-lakh-tpa purified terepthalic acid (PTA) project.

The Foreign Investment Promotion Board cleared the proposal a week ago.The department of chemicals and petrochemicals has also cleared the project, subject to two conditions. First, the company has been directed to surrender the approval it obtained from the Reserve Bank of India on March 31 this year for establishing a joint venture with a 51 per cent foreign equity. Second, it has been asked to try and set up a internationally competitive manufacturing facility.

The project involves 95 per cent equity participation by Mitsubishi Chemical Corporation, leaving only five per cent for the West Bengal Industrial Development Corporation (WBIDC). The project is to be located at Haldia.

The FIPB has forwarded the proposal to the Cabinet Committee on Foreign Investment (CCFI) for its approval. The joint venture company will have an equity capital of $160 million (over Rs 550 crore). Mitsubishi will bring in $152 million, while the rest will come from WBIDC.

Mitsubishi will be the first multinational to challenge Reliance Industries' monopoly in the PTA segment. Reliance Industries has an installed capacity of six lakh tpa. A 3.5 lakh tpa expansion project is under implementation. By the middle of next year, Reliance PTA manufacturing capacity is expected to touch 9.5 lakh tpa.

Mitsubishi, too, has been contemplating setting up a PTA project for quite some time.

The West Bengal government has allotted over 500 acres land to Mitsubishi for the project. The company is likely to take possession of the land in the next two months.

Mitsubishi has hired a UK-based consultancy firm Humphrey & Glasgow for advisory services for its project.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.