The reasons cited by both the Tatas and the Birlas appear to be quite similar - ``poor infrastructure'' and ``indifference'' of the state government.

There are also significant similarities between the two proposed projects: both were to cost their respective promoters around Rs 10,000 crore when complete, and would have provided employment to over 5,000 each.

While the Tatas squarely blamed the Orissa government for the scrapping of the project, the Aditya Birla group has been more discreet with the official reason cited being: ``the project will not lead to significant shareholder value creation.''

Hindalco insiders, under condition of anonymity, said that in the two yearssince the project was announced, the company has not been alloted ``even an inch of land'' by the state government.

``It is not that the project would have been financially unviable but the risk involved with the project, considering the amount of investment that was to be made, is immense given the volatile political environment,'' they added.

There have also been serious objections raised in Orissa against the project by environmentalists, and even violent demonstrations were reported to have taken place.

``Going in for a greenfield project of this scale, it is understood that the gestation period will be high and that the share price will take a hit. When a company starts a major project, it pre-supposes such possibilities,'' the sources added.

The official response from the company is that following the submission of the full report of the techno-economic feasibility consultants Kaiser-Bechtel, a detailed evaluation by the company found that the project, in its present configuration, would notgenerate returns to shareholders commensurate with the size and risk.

The Financial Express had earlier reported that since January this year, Kaiser-Bechtel had twice submitted the report but had been asked by Hindalco to rework on it.

It is believed that the company and its consultants could not come to a final agreement on the configuration of the project, with the consultants having suggested that parts of the project be hived off into separate companies, and not as a division of Hindalco.

Hindalco had ruled out the possibility of hiving off the captive power plant as the present guidelines of the Orissa government in this regard did not favour such a decision. Also, hiving off the alumina refinery and the captive port is believed to have been considered.

The greenfield venture was to be set up in two phases with the final configuration being a one million tonne alumina refinery, a 2.5 lakh tonne per annum smelter, a coal-fired 650 mw power plant, a captive jetty and bauxite mines withannual capacity of three million tonnes.

Hindalco's president A Agrawala had earlier told this paper that the proposed debt-equity ratio for the project was 0.9:1, and that the cost of production of a tonne of aluminium would have been 15 per cent lower than at the existing smelter in Renukoot, Uttar Pradesh, of around $1,000 a tonne.

The company has till date received the environmental clearance from the Centre and mining rights had also been approved. The mining lease is now likely to be surrendered by the company, and the existing staff for the project redeployed elsewhere in the company.

Hindalco said it will continue with its proposed brownfield expansion at Renukoot. The company's scrip on the Bombay Stock Exchange dipped to close at Rs 628.50 a share on Wednesday against the previous close of Rs 636.