The wagon and steelmaker, which entered paper in 1995 by acquiring two sick units from the Board for Industrial & Financial Reconstruction, plans to set up a newsprint plant. Top company officials said it will need Rs 100 crore to salvage its earlier investment.

Industrial Finance Corp of India Ltd, one of the institutional lenders to Titagarh, has identified it as one of its top ten non-performing assets, with an outstanding of around Rs 100 crore.

Titagarh recently submitted a fresh revival proposal for the paper division, calling for a newsprint plant at Titagarh paper mill 1. The company says the current production capacity of writing and printing paper is economically unviable.

Joint managing director Umesh Chowdhary, son of JP Chowdhary, said the company is in talks for a second-hand newsprint plant.

``Only last week a team from a UK-based company visited our plant. We will take a decision soon. The total cost of the project would be around Rs 100 crore,'' he told The Financial Express

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However, he did not mention the loan component in the project. ``It is a crucial issue as we have placed the proposal to the FIs for their nod,'' Umesh Chowdhary said.

Titagarh Industries, which till 1995 was known as Titagarh Steels Ltd, has one paper mill each in Kakinara and Titagarh near Calcutta. The mills were taken over in 1994 from the BIFR after submitting a Rs 480-crore two-phase revival package revival.

Recently, the company decided to restructure its operations and float a separate company for its steel and engineering operations. Only the paper production facilities will remain with the company.

Umesh Chowdhary said the proposed change was decided on the basis of the report by Finnish management consultant Jaako Poyry, and it has been accepted by the financial institutions -- ICICI, IDBI, IIBI and IFCI.

In the original revival package, the first phase was worth Rs 275 crore and included a public issue of Rs 60 crore and a rights issue of Rs 27 crore.

In the fresh proposal the company wants to increase the capacity of Titagarh mill 1 from 90,000 tonnes per annum (tpa) to 1,10,000 tpa with the newsprint plant. A de-inking plant adjoining the proposed newsprint plant has already been set up.

The company is also looking for a strategic partner in paper. Umesh Chowdhary said: ``We are working on certain options. We will request the seller of the newsprint unit to take up an equity stake in the new paper company.''

However, he was critical of IFCI's decision to put the company on the NPA hit list. ``How could they do it, the revival project is not yet over,'' he said.

He said the revival had been affected by the poor primary capital market and the falling prices of paper in the world market. He refused to comment on the revival period. ``Going by the market conditions it is anybody's guess,'' he said.

However, the director's report for fiscal 1997-98 had noted that company was in a position to start its paper project in four months. It said: ``...the position in respect of the project has been satisfactory and with the completion of pollution control and other facilities in another four months time, your Company should be in a position to start the first phase of regular production.''