NEW DELHI, September 19 (RIA Novosti) - Russian and Indian shareholders in a $260 million titanium project have announced a split amid mutual accusations of contract violations, but will continue building a factory in east India each on their own, the Russian partner said on Saturday.
Yury Medvedev, deputy head of Russia's State Property Management Agency that holds 51% in the joint venture, said the agency made a decision to end cooperation with India's Saraf after visiting the Orissa State, where the factory is planned to be built, on Thursday and meeting the local industry minister.
"The Russian side has received the Indian partner's notification that it wants to withdraw from the project and gave its consent," Medvedev said.
"The Orissa government has reaffirmed its interest in the project and pledged its support," he added.
Saraf Agencies Private Ltd. holds a 45% stake in the Titanium Products Private Ltd. (TPPL), a joint venture set up to build an integrated chemical and metallurgical complex to produce titanium dioxide and other titanium products in Orissa.
Another Russian company, Tekhnokhim Holding, controls 4% in the venture.
Medvedev said Orissa authorities had proposed the shareholders meet with the state's administration to decide on further activities. The meeting will take place in India on October 5.
The Russian partners accused Saraf of managing to take the land site intended for the titanium factory on lease for 90 years. The land plot, contrary to the terms of the investment agreement with the Orissa authorities, was later offered to TPPL for sublease at exorbitant rates.
Russia plans to conduct an audit of the project before October 5.
The Indian shareholder has also accused the Russian partners of failing to comply with the terms of the agreement and the decisions by the venture's board of directors and demanded compensation for its spending on the project it estimated at about $10 million.
"The project is at the stage it was two years ago. We have already informed the Russian side that we are exiting the project. We intend to carry on further on our own," SM Shroff, Saraf head and chairman of the TPPL board of directors, said early this month.
The joint venture, which was intended to supply 30,000 tons of titanium dioxide and up to 45,000 tons of titanium slag a year, was planned as a pilot project to use India's Soviet-era rupee debt to Russia to finance joint projects in India.
Russia transferred 2.5 billion rupees (more than $50 million) for the needs of the joint venture in 2008. Saraf and Tekhnokhim Holding have not made their contributions. Only the joint venture's Indian shareholder has access to these funds, earlier reports said citing a person close to the issue.
