Moving out of Singur will not be easy for Tata Motors. The company has already invested Rs 1,500 crore at the plant and will be answerable to its shareholders at a time when the sliding stock markets and a steady decline in its share price have already raised questions over the management’s wisdom in making an expensive acquisition like Jaguar-Land Rover.
Besides, the relocation cost will make it even more difficult for the company to keep Group Chairman Ratan Tata’s promise to limit the price of Nano within Rs 1 lakh. Tata, however, told reporters that the Rs 1,500 crore investment would not be a factor in deciding the company’s future course of action.
Analysts said in case the situation worsens at Singur, Tata Motors could look at setting up the Nano plant on the land bank it has near its existing plants at Dharwad in Karnataka or Jamshedpur or Lucknow.
Tata also has a relatively newer plant at Pantnagar in Uttarakhand, where a new line could be introduced to make Nano.
The company could also explore the possibility of building a plant in states like Uttarakhand and Himachal Pradesh which would be happy to give tax benefits.
In Jamshedpur, the company has 822 acres of land for manufacturing trucks and 1,000 acres at Pantnagar for making its minitruck, Ace. Vendors for the vehicle are making additional investments to set up their plants in the park adjoining the plant.
The Pune unit, where it makes cars and commercial vehicles, is spread over two geographical regions - Pimpri (800 acre) and Chinchwad (130 acre). The plant in Lucknow is manufacturing trucks. In Dharwad, the company is building a bus-making unit over 900 acres of land.
The best option obviously is political diplomacy. The Tatas would have to initiate fresh talks with the Trinamul Congress led by Mamata Banerjee and address her concerns.
“If giving back the 400 acre land as demanded by Banerjee can solve the problem, the Tatas could start initial production on the remaining 597 acres and wait for the political storm to blow over,” an analyst said.
