During the five quarters since Indian Rayon''s sea water magnesia project was commissioned, it has incurred operating losses of Rs.25 crore. Operations of the plant were suspended in end-1998, and P C Gandhi and Associates have been appointed as valuers for determining the realisable value of the assets of the business.

The A V Birla group Indian Rayon wants to sell the plant to other companies in the sea water magnesia business or to end users in the steel and refractory business.

Birla Periclase, a division of Indian Rayon, started commercial production at the 50,000 tonnes per annum sea water magnesia plant in August 1998. The plant, built at a cost of Rs.360 crore, is located near Bheemunipatnam, 34 km from Vishakapatnam. It has a technology licence from RCE of Austria.

The plant can produce magnesia by using sea water and limestone. The company has built a 21-metre diameter sea water well in the Bay of Bengal for this purpose.

The company was to procure raw material from the Ampavalli mines in Orissa. It ran into protests from local tribals, who took the company and others to court in 1994. The company was forced to change its plans.

In the year ended 31 March 1999, the plant was supposed to achieve a targeted 75 per cent capacity utilisation. Indian Rayon expected to sell magnesia at about Rs.20,000 per tonne. This would have converted into a revenue of Rs.75 crore, at 75 per cent capacity utilisation.

  also see : Go to Indian Rayon buyback article