The wagon and steelmaker entered the paper industry in 1995, when it acquired two sick units from the Board for Industrial & Financial Reconstruction, after submitting a Rs 480-crore two-phase revival plan.The company is desperately looking for a strategic partner who will bring in funds and modern technology.

"The revival of the paper units is solely dependent on these two factors now. There are not enough funds to go ahead with the revival process. Modern technology is also needed," industry sources said. Chowdhary said that Titagarh Industries has decided to appoint a consultant, but did not elaborate. "Yes, we are talking to some consultancy firms who will help us find a suitable partner for our paper unit, but nothing has been finalised yet," he said.

The relationship with the proposed partner was also not discussed. "The partner may bring in both funds and technology, or either of them. Nothing has been decided. The consultant will find out the best option, and we will act on their advice," Chowdhary said.

After the acquisition of the paper units in 1995, a gradual investment of Rs 180 crore has been made in the plant. Trial runs were conducted, but commercial production did not take place.

Industry sources said the financial institutions were not happy with the progress of the revival plan, but Chowdhary said another Rs 100 crore was needed to restart activities.

A fresh revival plan was submitted to the financial institutions, in which the promoters proposed a newsprint plant, as the present production capacity for writing and printing papers is economically unviable.

Industrial Finance Corporation of India, one of the lending institutions, has identified Titagarh Industries as one of its top 10 non-performing assets (NPAs), with an outstanding of over Rs 100 crore. It was, however, strongly protested. "The revival project is yet to be over. How could it term the investment as an NPA?," Chowdhary asked.

Recently, the company decided to restructure operations, and floated a separate company for its steel and engineering operations. Only the paper activities have been retained with Titagarh Industries. The restructuring was done on the basis of a report submitted by Finnish consultant Jaako Poyry.

"The restructuring was aimed at finding a partner exclusively for the paper division. Thereafter, the Chowdharys started looking for a partner but it failed," the industry sources said.

The turnaround of the paper division was also affected by two external factors - the weak primary capital market and global recession in the paper industry.

The first phase of the initial revival package of Titagarh Industries was worth Rs 275 crore, which included a public issue of Rs 60 crore and a rights issue of Rs 27 crore. However, the company could not go ahead with either of the issues.

"The sluggish paper market was a major obstacle. The paper industry the world over was suffering from overcapacity. Not a single player wanted to increase its production base. This only made things difficult for finding a suitable partner," Chowdhary said.