Bajaj's Expansion Plans Outside Maharastra

Published: Friday, July 15, 2011, 18:49 [IST]

Bajaj Auto Limited, India's second largest two wheeler manufacturer has expressed its plans to set up its plant outside Maharastra. The Pune based company has only one plant outside Maharastra in Uttarkhand. Bajaj Auto is said to be disappointed by the Maharastra Government failure to pay it Rs.1,100 crore in sales tax refunds.

Volkswagen India chief Dr John Chacko had also expressed his displeasure about the Maharastra government. The German carmaker also needs to be paid by the government and it has withheld its expansion plans until it gets a proper response.

The Maharastra government has failed to provide VAT refunds to Bajaj since the past five quarters. With each quarter accounting for RS.220 crores in tax refunds, the Maharastra government owes Bajaj Auto Rs.1,100 crores. Bajaj Auto MD Rajiv Bajaj is clearly irked by the government. He said : “If the Maharastra Government is going to be erratic, one has to look at other States."

He also pointed out that the company was also facing the issue of acute labour problem in the Chakan region. According to Mr Bajaj the Gujarat Government was more proactive to industry. adding, “We will consider going to Gujarat."

Bajaj Auto has to expand its production as production has already hit five million units. The company currently has two manufacturing plants in Maharastra at Chakan and Aurangabad, and one at Pant Nagar.

Kevin D'Sa, President, Finance at Bajaj Auto said that around 90 per cent of BAL's suppliers were from Maharastra so VAT was paid on the supplies. The company exported 30 per cent of the production and sold only 10-12 per cent in the State leading to a gap of Rs.220 crore per quarter that the Government had to refund. “In May, we were told to give a bank guarantee, which we did. But still no dues have been received from the Government," he said.

If the Maharastra government continues to ignore the warnings of automakers, it will not remain the auto hub that it is currently.