A little over two years after Mahindra and Mahindra (M&M) inaugurated its state-of-the art Greenfield manufacturing facility at Chakan, the automaker is readying for its next round of investment, and says it is being forced to evaluate alternatives outside of the State to implement these plans.
Maharashtra could end up losing Rs 3000 crore investment required for its expansion, in addition to indirect economic benefits like job creation. It may be mentioned that till date around Rs 5000 crore has already been invested at Chakan, making this the largest single investment in the auto sector in India.
Change in VAT rules
M&M's disenchantment stems not only from an change in VAT rules in March 2011 that has affected several auto companies in the belt adversely, but the failure of the State to act on proposals it had made to compensate for the loss nearly six months ago. “Any further delay in responding to these proposals is forcing us to evaluate other alternatives for the next phase of investment,” the company has said in a recent letter to the Government.
Speaking to
According to a reliable source, real estate firm Cushman and Wakefield recently did an exercise to appraise vacant land on the 700-acre plot at Chakan. Dr Goenka, however, categorically said there were no plans to sell any land.
With an installed capacity to manufacture 300,000 vehicles annually, Chakan is where M&M at present makes its Maxximo range of pick ups, the recently launched XUV 500 and trucks made under its JV with Navistar Inc of the US.
At present, the company makes around 15,000 units a month, translating into nearly 200,000 vehicles per annum, which is around two-third the installed capacity. That explains why the company has to make a decision on selection of the site for expansion urgently.
In the past other companies affected by the change in VAT rules like Volkswagen and General Motors have also spoken of implementing expansion plans outside of Maharashtra.