Confirming the development, Sandur Manganese general manager (projects and personnel) RS Rohidekar told The Financial Express that preliminary discussions with the Bhilwara group are already on. ``We have also initiated talks with other domestic firms and a final decision is likely next month,'' he added.

Interestingly, the ailing Sandur Manganese will have to submit a revival package to the Board for Industrial and Financial Restructuring (BIFR) by November.

Sandur Manganese is aiming to invest around Rs 200 crore over a period of two years in hydel power projects in Karnataka as part of its diversification plans. ``Once the company zeroes in on the joint venture partner, it will hive off its power business into a separate entity called Sandur Power Company Ltd,'' added Rohidekar.

The company has recently commissioned a 8 mw hydel power project on the Hemavathy Left Bank Canal in Hassan. It is also planning to set up an additional 8 mw hydel plant adjacent to the same location with a total investment of Rs 50 crore soon.

Officials of the MY Ghorpade-promoted firm said that all these businesses would be transferred into the new subsidiary being floated in association with the joint venture partner. The Rs 50 crore project was financed by a loan of Rs 35 crore from the Indian Renewable Energy Development Agency Ltd (IREDA) with the balance coming from the promoters by way of equity.

Sandur Manganese has also received the green signal from the Karnataka government to set up hydel plants in Varahi Tail Race and Hemavathy River Bed with an investment of Rs 150 crore.

To part-fund the projects, the company is looking at the external commercial borrowing route and talks are on with some foreign financial institutions in this regard. ``This is one of the options available with the company to bring in additional funds,'' the officials said.

Sandur Manganese became a sick company and went into the BIFR last year due to factors like fall in international prices of manganese ore. ``Drastic reduction in the import duty on ferro alloys from 85 to 20 per cent over the last seven years and a liberal import entitlement to the domestic steel industry under the advance licence scheme have made import of ferro alloys attractive,'' the official added.

As per the restructuring plan, Sandur Manganese was planning to relocate its ferro alloy furnace unit, which was closed recently, to Iran where the company would float another joint venture with a minority stake. ``However, the proposal is subject to the approval of IDBI, the operating agency,'' the official said.

The company had posted a net loss of Rs 97.40 crore on a turnover of Rs 60.65 crore for the year ending December 31, 1998. The company's liabilities to Karnataka Power Transmission Corporation Ltd (KPTCL) and financial institutions stand at Rs 60 crore and Rs 50 crore respectively.