Now, Bajaj wants to set up a plant in Gujarat

Bajaj Auto is planning to set up its fourth and largest plant near the Mundra port in Gujarat. The plant will also manufacture the long-awaited passenger car the company is developing with Nissan-Renault.

The five million unit per annum plant will initially require an investment of over Rs 1,000 crore. Bajaj plans to export at least 60 per cent production from there.

The company is already looking for land. It needs 400-500 acres, including for vendors.

A team led by Managing Director Rajiv Bajaj will visit Gujarat towards the end of the month for talks with the officials there.

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"We are looking to build our fourth plant in Gujarat near the Mundra port. Our capacity is enough till only the middle of the year and we need to expand. We will build our four-wheeler facility, including for passenger cars, there," said Bajaj.

Bajaj Auto's move to look outside Maharashtra, its base, comes after a 15-month dispute with the state government, which has held back its Rs 1,100-crore sales tax refund from April 2010.

Instead, last week, the government slapped a Rs 600-crore notice on the company for non-payment of sales tax for 2009-10. Bajaj executives say the company has challenged the notice in the tribunal.

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Bajaj Auto, which started in Maharashtra 50 years ago, can make 3.5 million two- and three-wheelers at its plants in Chakan and Aurangabad. Its unit in Pantnagar in Uttarakhand can make 1.5 million vehicles.

It is the third large automobile company that is upbeat on Gujarat. Tata Motors already makes Nano in Sanand. Maruti Suzuki is looking at the state for its foray outside north India. Ford India has kept the state in its shortlist for expanding outside south India.

Bajaj said the company's move was prodded by the non-payment of the refund. "The chairman of the company (Rahul Bajaj) wrote to Ajit Pawar, who looks after the finance portfolio of the state, in January. We did not get even an acknowledgement of the letter. We are not such a big company that we can take a hit of over Rs 1,000 crore (Rs 10 billion)," said Bajaj.

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Bajaj says the company is losing Rs 153 crore (Rs 1.53 billion) per annum interest on the money, which is reflected in lower non-operating revenues and profits.

The money, he said, could have been used as working capital, for which the company was paying a huge interest.

"We extended a Rs 200-crore (Rs 2-billion) bank guarantee to the state government from State Bank of India in May so that it could release a part of the amount. This did not happen. We were told that their computers can process only up to Rs 99 crore (Rs 990 million)," said Bajaj.