MUMBAI, November 4: A Generous dose of incentives has lured Indo Rama Synthetics to set up a Rs 350-crore composite textile unit in Maharashtra and not Karnataka as planned earlier. The Rs 1,200-crore textile group will set up its project at Shendre near Aurangabad in Marathwada region.

Top government sources said on Tuesday that Indo Rama's project would be devoted to shirtings based on Japanese technology and texturising. The company has requested the Maharashtra Industrial Development Corporation to reserve 200 acres of land. Shendre has been developed as a `five-star' industrial estate by MIDC on 927 hectares (2,307 acres).

The government has offered a host of concessions to Indo Rama will would invest Rs 350 crore during the first phase and a similar amount in the second phase.The sops include 200 acres at Rs 50 per sq mt (100 acres for the first phase), Rs 8 per 1,000 litres of water, 5 per cent electricity duty exemption and concessional power tariff slabs.

Moreover, the government has agreed to repay 50 per cent of the total additional excise duty paid by Indo Rama. According to the present norms, textile units were not entitled to pay sales tax but a cover under the additional excise duty to be paid to the centre.

The state government gets 50 per cent of the total additional excise duty collection from the centre. In the case of Indo Rama, the state government has decided to transfer its 50 per cent share to the company. The firm would be entitled to get this incentive for a record 18 years, almost four more than the prevailing norm of 14 years.

The government has also decided to issue sales tax vouchers which would be tradable. The company will be allowed to sell these vouchers to other companies which pay sales tax.

Indo Rama already has a presence in Maharashtra. It has set up a Rs 555-crore plant at Buti Bori near Nagpur for production of synthetic yarn, polyester staple fibre and partially-oriented yarn.It may be recalled that Indo Rama has already finalised a technology tie-up with Mitsui Petrochemicals for setting up a Rs 1,190-crore pure terephthalic acid (PTA) project at Vishakhapatnam. This project would be funded by a 2:1 debt, equity ratio. Forty per cent was proposed to be brought in by Mitsui and Itochu Corporation of Japan and the balance by the company. Indo Rama plans to start commercial production in the first quarter of the year 2000.

The company also plans to set up a weaving and processing unit with an estimated investment of Rs 200 crore. The plant will produce 30 million metres per annum of polyester cotton blended fabric for use in shirtings and materials.Indo Rama has already completed its second phase of expansion without any time and cost overruns, raising its polyester capacity from 69,300 tonnes to 2,38,000 tonnes per annum.

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