New auto projects of big guns on low gear

At a time when the automobile industry is eyeing a market of 2 million cars by 2010, various automobile projects of industry majors, including Tata Motors and Mahindra and Mahindra (M&M), are running behind schedule.

Tata Motors' Rs 1 lakh car project has been delayed by an unspecified number of days. At a recent annual general meeting of Tata Tea, group chairman Ratan Tata admitted that the small car project was running behind schedule for a host of reasons, a local controversy over land acquisition being a key one.

The plant for the project is due to come up at Singur, West Bengal, at a cost of over Rs 2,000 crore.

M&M's tripartite joint venture in Chennai with Renault and Nissan has already been deferred by three months following a delay in land acquisition. 
 

IN THE SLOW LANE
Company	Project in	Cost	Delay
Tata Motors	West Bengal	2,000	2
Mahindra-Renault and Nissan	Chennai	4,000	3
Mahindra	Uttarakhand	1,500	1
Hero Honda	Uttarakhand	400	12
Ashok Leyland	Uttarakhand	1,000	NA
Cost in Rs crore ; Delay in months

Pawan Goenka, president-automotive sector, M&M, said, "The land in Chennai was supposed to have been handed over to us by June but we will get it only by the end of September".

However, according to Tamil Nadu Industries Secretary Shaktikanta Das, the land acquisition should have been completed and land handed over to the company by April following a two-month waiting period after the joint venture was signed in February.

All three companies had signed a three-way joint venture agreement and had promised to pump Rs 4,000 crore into the project, which will produce 400,000 vehicles annually.

The Chennai plant of M&M, Renault and Nissan was set up to cater not only to the domestic market but also the export market. The commissioning of phase I of the project with a capacity of 400,000 units is supposed to happen in the second half of 2009.

With a subsequent delay in land acquisition, the company's target of achieving 1 million sales in the next five years seems a distant objective.

Meanwhile, all automobile projects due to come up in Uttarakhand were halted following a withdrawal of the mandatory environmental clearance by the state pollution control board.

Companies like Hero Honda, Bajaj Auto, Tata Motors, M&M and Ashok Leyland had announced setting up manufacturing facilities in the state, which would collectively entail an investment worth more than Rs 6,000 crore.

Tata Motors Managing Director Ravi Kant had said: "There has been a bit of delay at the Uttarakhand manufacturing facility, not only for Tata Motors but for all the automobile projects of other companies due to a delay in clearance from the state's pollution control board. But now the Supreme Court has given the go-ahead for the projects for the moment".

Hero Honda has put off its plans for its Haridwar plant, which the company said was "ready" for production but will use only by the start of 2008-09. This is primarily due to a managerial decision to postpone commencement as a result of falling sales in the domestic market.

S Ravikumar, vice-president, business development, Bajaj Auto, said there had been an issue raised by the Uttarakhand Pollution Control Board, and there was a stay order on all the auto projects. "Even as there was a halt in various projects, Bajaj Auto was largely unaffected," he said.

The Supreme Court ban was following a petition filed by a former employee of the pollution control board, which stated that the board was flouting norms to grant clearances to automobile projects in the state.

The final hearing of the case will be held by the Supreme Court on October 1, until which all the projects have been allowed to run on a temporary basis.