CHENNAI: The Murugappa Group has dropped its plan to set up a greenfield steel project in Orissa. It has shelved its proposed foray into steel production citing the "present steel scenario".

A release from Tube Investments of India Ltd., a group outfit, said the company "has decided not to proceed with the steel project." It has since announced its withdrawal from the MoU (memorandum of understanding) signed with the Orissa Government sometime ago.

Sources in the Murugappa Group said nothing much had happened on the project beyond the MoU stage. Tube Investments was to promote the project and implement it through an independent company in tandem with an overseas partner who had competency in steel making.

With mergers and acquisitions happening on the global steel front, the overseas company with which TII was in talks had dragged its feet. Taking into account various other compelling factors, TII had chosen to spike its plan to enter steel production, these sources added.

Meanwhile, TII has reported a first quarter sales of Rs. 413.06 crore, marginally higher than in the corresponding quarter of the previous year at Rs. 410.90 crore.

The profit before tax (PBT) is placed at Rs. 98.65 crore (Rs. 31.14 crore). The substantial increase in PBT is on account of profit on sale of some of the long-term investments of the company amounting to Rs. 71.30 core. The profit after tax (PAT) is placed at Rs. 89.46 crore (Rs. 23.41 crore).

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