Tatas to finalise deal with Nano vendors at Singur

The majority of vendors to the erstwhile Tata car plant at Singur in West Bengal, accounting for 95 per cent of supplies to the Nano project, have taken allotment of plots at Sanand in Gujarat, the new location. However, the vendor park there may not be ready before December, the internal production target for the Tata Motors' plant.

The vendor park was directly linked to a mutually acceptable compensation package being worked out for the sunk cost at Singur, said some of the vendors. The package was in the final stages of discussion and though the details were yet to be worked out, a soft loan for the sunk cost was likely.

"Part of the interest rate will be borne by Tata Motors and part by us," said a vendor. At a recent meeting, the vendors indicated the sunk cost at Singur would have to be compensated for, or they would supply from the existing location.

A Tata Motors spokesperson said, "The company has been in discussions with vendors who are moving from Singur to Sanand to support them with mutually acceptable terms, which will be implemented."

Some of the vendors, like Tata Ryerson and Caparo Engineering, had almost completed their facility at Singur, when the decision to pull out was announced last October.

The original investments at Singur roughly involved the 55 suppliers paying Rs 15 lakh (Rs 1.5 million) an acre for land, with an additional Rs 23 lakh (Rs 2.3 million) an acre payable to Tata Motors towards provision of infrastructure such as roads and electricity.

The 290 acres became the bone of contention during the protests led by Trinamool Congress chief Mamata Banerjee. Each supplier spent Rs 7-10 crore (Rs 70-100 million) on land and buildings. Only a handful had installed machinery, but the majority had completed land filling at the site.

Vendors like Exide Industries Ltd, that has developed customised batteries for the Nano, were an exception. Exide booked land but did not invest in installing machinery at the site, preferring to feed the plant from its nearby Shyamnagar facility. Exide's director, automotive, Paban K Kataky told Business Standard it now wanted to return the land to the West Bengal Industrial Development Corporation.

The company had paid Rs 80 lakh (Rs 8 million) for its plot in the ancillary park in Singur and had signed a direct lease agreement with WBIDC.

State government sources said, only a couple of vendors had asked for return of land. Most of them had renewed the land for the year.