Mahindra & Mahindra is in the process of expanding its product line to light commercial vehicles (LCVs) at its manufacturing plant at Zaheerabad in Andhra Pradesh with an investment outlay of Rs 250 crore.
According to an official order, M&M has approached the government seeking sops as the existing plant will be expanded to make four wheeler sub-one ton light commercial and passenger vehicles with a capacity of 92,000 vehicles per year.
Based on the request from the automaker and the recommendation by the State Investment Promotion Board, the government said it would allow incentives based on certain conditions.
"In view of the recommendations of the State Investment Promotion Board, we hereby extend the following incentives to Mahindra & Mahindra Ltd for their proposal to set up four wheeler sub one ton light commercial and passenger vehicles manufacturing facility at Zaheerabad, Medak district, by producing 92,000 vehicles per year with an investment of Rs 250 crore and to provide employment to 500 people...100 per cent Net VAT/CST reimbursement for a period of 10 years from the date of commencement of commercial production or to the extent of 100 per cent of investment made whichever is earlier," the government order (GO) said.
The government further said out of the 500 jobs that the company is expected to provide, at least 80 per cent of employment should be given to the candidates belonging to the state for becoming eligible to the incentives specified.
The state government also allowed fixed power cost reimbursement of Rs 0.75 per unit (upper ceiling) on the rates (2010-11) for five years from the date of commencement of commercial production.
The facility which currently manufactures tractors has been set up with an investment of Rs 300 crore and with an installed capacity of one lakh tractors per annum which can be scaled up to meet additional demand.
Pawan Goenka - President Automotive & Farm Equipment Sectors of M&M recently said they intend to focus on running the LCV, Truck and Bus business as a separate division with the objective of growing their presence in the Indian commercial vehicle industry.
