Maruti Suzuki India (MSIL) has no plans to pull out of Manesar despite troubles with land-owners.
“How can you shift a running plant to a new location after so much of investments?,” MSIL Chairman R.C. Bhargava asked, adding that the matter was sub judice and the company would pay land-owners if the court says so.
For over a year Maruti has been facing trouble at its Manesar plant. First it was labour-related issues and now land-owners claim they have not got enough compensation for the property. Maruti had acquired 500 acres to set up its plant in 2004 and another 100 acres was allotted to it in 2005.
No direct dealing
According to one of the persons involved in the land deal, Maruti paid around Rs 20 lakh an acre to the Haryana State Industrial and Infrastructural Development Corporation (HSIIDC). However, land-owners were given only Rs 3.50 lakh per acre at that point in time.
The land-owners have taken legal recourse seeking more compensation while Maruti and HSIIDC are pointing fingers at each other. Maruti says it paid a total of around Rs 120 crore to HSIIDC, as per the agreement, and was never involved with the land-owners directly. In 2011 the Punjab and Haryana High Court raised the compensation amount to Rs 37.40 lakh (per acre). Based on this ruling HSIIDC raised a Rs 500 crore-plus demand on Maruti.
But the land-owners took the case to the Supreme Court, seeking more money. This was contested by HSIIDC. The apex court has asked the high court for a fresh determination of the compensation amount payable to the land-owners.
According to industry estimates the compensation amount may rise to around Rs 800 crore, compared with the Rs 501 crore sought by HSIIDC.
“The matter is sub judice now and whatever amount we have to pay, we will pay the land-owners whenever the court comes out with a judgment,” Bhargava said.
He added that the company may be hiring more at the Manesar plant to meet expansion plans.
The 600-acres houses three plants, producing around 5.5 lakh cars annually, including a diesel engine plant under the Suzuki Powertrain venture. The company plans to produce 7 lakh diesel cars annually from the plant, where key models including Swift, Dzire, A-Star and SX4 are being rolled out.
Maruti’s legal counsel had earlier in court said the company would look at moving the plant to another region if land-owners press for more compensation.
Unfair demand
Abhishek Manu Singhvi, one of the company’s counsels, said: “It was a contention in court and any argument can be made in a court. That’s all. Maruti or its CMD never said that they will be shifting out of Manesar.”
He, however, argued that it was unfair for the land-owners to come back after 10 years and ask for compensation.
Singhvi said that retrospectively, he has argued that the fight was between HSIIDC and the land-owners (as MSIL had purchased the land from HSIIDC and not individual land-owners) and, therefore, Maruti has nothing to do with it.