Bajaj Auto Limited, the two wheeler and three wheeler major has been a big player in Pune’s Pimpri Chinchwad and Chakan area when it comes to manufacturing.
Rajiv Bajaj
Bajaj Auto Limited, the two wheeler and three wheeler major has been a big player in Pune’s Pimpri Chinchwad and Chakan area when it comes to manufacturing. This however might not last for long as Bajaj seems to be having some major trouble with finances with the Maharashtra government over payment of sales tax.
While Bajaj Auto is locked in a dispute with the Maharashtra government over a 1,100 Crore Rupee sales tax refund from April 2010, the Maharashtra government has hit the two wheeler major with a 600 Crore Rupee notice for non payment of sales tax for the year 2009-10.
While Bajaj will contest this notice in the tax tribunal, the firm is also quite upset at the way things are shaping up at Maharashtra, of which the tax issue is just one of the problems it is having to face. Lack of skilled labour at its Chakan plant is another grouse of Bajaj, which it thinks that the Maharashtra government should sort out at the earliest.
This apart, Bajaj’s plant at Chakan has reached saturation level and Bajaj Auto wants to expand operations by setting up a new manufacturing facility. However, the government’s policies, Bajaj feels, aren’t too favorable for it to make new investment in the state.
Bajaj Avenger 220 DTSi
Therefore Bajaj is said to be mulling a plant at Gujarat, near the Mundra port, where it will invest over 1,000 Crore Rupees to set up a manufacturing facility that churn out 5 million two wheelers per annum. This plant will also produce Bajaj Auto’s upcoming Renault-Bajaj-Nissan ULC car and the Light Commercial Vehicle.
Here’s is what Mr Rajiv Bajaj, the Managing Director of Bajaj Auto has had to say about Bajaj’s troubles at Maharashtra.
If the Maharashtra Government is going to be erratic, one has to look at other States. We will consider going to Gujarat. In May, we were told to give a bank guarantee, which we did. But still no dues have been received from the Government. We are likely to review our investments in Maharashtra as we are finding it tough to do business here. It is a mess here. The chairman of the company (Rahul Bajaj) wrote to Ajit Pawar, who looks after the finance portfolio of the state, in January. We did not get even an acknowledgement of the letter. We are not such a big company that we can take a hit of over Rs 1,000 crore. We extended a Rs 200-crore bank guarantee to the state government from State Bank of India in May so that it could release a part of the amount. This did not happen. We were told that their computers can process only up to Rs 99 crore. Tthe company is losing Rs 153 crore per annum interest on the money, which is reflected in lower non-operating revenues and profits. The money, could have been used as working capital, for which the company is paying a huge interest.
It clearly seems that Maharashtra’s loss could be Gujarat’s gain as Bajaj Auto’s new 5 million vehicles/year production unit being set up in Gujarat would result in a lot of jobs being generated in India’s most industrialized state. Gujarat, for its part continues to attract major investment from the auto sector due to it’s pro-industry policies.
It would be a shame really if other Indian states like Maharashtra, which already has a good presence in the auto sector, don’t buck up to encourage industrial growth, to ensure that industrial development occurs in a balanced manner across the nation.
Via WheelsUnplugged
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