State chief secretary P Subramaniam told The Financial Express that the firm's move has come as a shot in the arm for the state government. He told the state government would extend its cooperation to the project.

The company is entitled to fiscal incentives as the project is located in the less-developed Vidarbha region. State government sources said the company would get sales tax and electricity duty exemption.

"We are working on the project and the details will be finalised soon," said Bilt vice-president Vinod Sharma. He declined to give further information.

Bilt has proposed a capacity addition from 33,000 tonnes to 66,000 tonnes at its Gadchiroli plant and 55,000 tonnes to 1,05,000 tonnes at its Chandrapur plant. The Gadchiroli plant has a turnover of Rs 120crore, while the Chandrapur plant's turnover stood at Rs 415 crore till September, 1998. The two units manufacture paper and quoted paper.

According to the Bilt's unaudited financial results for the quarter ended September 30, total revenue was Rs 559.36 crore down from Rs 687.85 crore during the year-ago period. Net sales have also dropped to Rs 529.79 crore from Rs 677.03 crore last year.

The company posted a net profit of Rs 15.48 crore, compared with the year-ago period's Rs 7.62 crore. The company's paid-up capital was Rs 59.67 crore. The company has extended its financial year 1997-98 to cover a period of 18 months from April 1, 1997 to September 30, 1998.

Sources said the firm's decision to expand the two unit's capacity was important since the paper market is showing signs of stability.

The Thapar group has initiated a massive restructuring under which Gautam Thapar will be the full-time Bilt Paper managing director. At present, Gautam thapar and Vikram Thapar, nephews of LM Thapar are jointmanaging directors of Bilt Paper.

During the first phase of restructuring, Bilt Paper's 15 per cent equity was sold to a Gulf trading company Al Murjan. In the second phase, Bilt hived off its chemicals division to group firm AP Rayons for Rs 125 crore. Also, Bilt hived off its glass business to Owens, pulled out of a joint venture with DuPont to manufacture nylon 66 and sold off its interests in the media by shedding The Pioneer newspaper published from Delhi and Lucknow.

In the second restructuring exercise, Bilt set up three distinct corporate identities, namely, Bilt Paper, Bilt Chemicals and Bilt Investment, with LM Thapar as chairman and Gautam and Vikram Thapar as joint managing directors.