State government sources told The Financial Express that the government was likely to decide in favour of closing down the unit as it was not in a position to revive it. The government was awaiting the final decision of the Board for Industrial & Financial Reconstruction (BIFR) in this regard, the sources added.

Set up by Orissa's legendary political leader the late Biju Patnaik in the early sixties, the mill at Choudwar near Cuttack was referred to the BIFR when it turned sick in the early nineties. The BIFR approved a revival package of Rs 35.67 crore in 1997 and the government put in the money by 1999-2000. But, despite the infusion of fresh capital, the unit failed to recover.

Then in October 2000, the BIFR suggested privatising the mill. However, the state government's attempts to sell the plant came a cropper as not a single offer was received despite repeated advertisements in newspapers inviting tenders from interested parties.

The cumulative loss of the mill reached Rs 98.39 crore on March 2000. Because of the huge losses, it is unable to repay the loans, gratuity of the employees and power bills. It is now going without power as the distribution company has stopped supply pending clearance of dues of Rs 11.90 crore.