Hind Motors seeks tax exemption for Avtec

Hindustan Motors, a CK Birla group company has demanded tax exemptions and other benefits for Avtec Ltd, a Hindustan Motors Ltd, Actis and CK Birla group collaboration.

The firm plans to invest Rs 15 crore for the modernisation of its Pithampur facility, which manufactures engines, transmissions and other automobile components.

Hindustan Motors has written to the state government seeking sales tax and entry tax exemptions on the purchase of raw material. However, the Pithampur unit has already been provided certain benefits.

"The firm has demanded for a 75 per cent convertion of the commercial tax and central sales tax, paid by Hindustan Motors as financial assistance to the government for a period of 10 years," government officials said.

On April 1, the state government has exempted the entry tax on raw material for five years for Hindustan Motors Limited.

The state government has also proposed to provide a 100 per cent set-off on tax paid by the company on the purchase of raw material as part of a special economic package.

However, according to the government, the company will have to earmark 30 per cent of its product sale for state or for intra-state exports.

Further, the new firm has to employ 65 per cent executive staff and 100 per cent clerical staff locally, a state government official said, adding, "The apex committee on investment promotion has discussed the matter and a decision is awaited soon."

The Pithampur unit of Hindustan Motors involves an investment of Rs 237.65 crore. Avtec has begun the modernisation and expansion of power unit plant in Pithampur.

The first phase expansion plan includes an investment of Rs 15 crore. Hindustan Motors, after hiving off its component business to Avtec in June 2006, immediately sold a part of its stake in Avtec to Actis and the promoter group of Hindustan Motors Ltd.