Less than a week after Volkswagen India Chief, Dr John Chacko, said that expansion plans will be put into motion only after pending issues with the Government are sorted out, Bajaj Auto (BAL), the country's second largest two-wheeler in terms of numbers, has said that it will consider putting up a plant in another State.

At the core of BAL's disenchantment is the Government's failure to pay up Rs 1,100 crore in sales tax refunds that are outstanding for the last five quarters. These are refunds on account of value added tax, the last instalment of which was paid on April 30, 2010.

“If the Maharashtra Government is gong to be erratic, one has to look at other States,” the Managing Director, Mr Rajiv Bajaj, said, pointing out that another issue was the acute labour problem in the Chakan region. The Gujarat Government was proactive to industry, he said, adding, “We will consider going to Gujarat.”

The company currently has two manufacturing plants in Maharashtra at Chakan and Aurangabad, and one at Pant Nagar. With production coming close to installed capacity of around 5 million units, expansion with another plant can be a distinct requirement in the near future.

Explaining the issue of value added tax refunds due from the Government, Mr Kevin D'Sa, President, Finance, said that around 90 per cent of BAL's suppliers were from Maharashtra 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.

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