Pune-based motorcycle maker Bajaj Auto is ready to forgo a part of the land it acquired in Chakan around eight years ago rather than pay the “extension charges” necessary to retain the plot.
The new proposal comes in the wake of the failure of the company to utilise the land in accordance with the guidelines laid down by Maharashtra Industrial Development Corporation (MIDC).
As land acquired from MIDC in this region comes with a “use-by” clause, companies must build within three years, or surrender the land.
The other option is to pay “extension charges” amounting to 10 per cent of the prevailing MIDC rate of the land every year.
“Bajaj Auto has sent us a letter stating that it will surrender some of the land in lieu of the extension charges,” Bhushan Gagrani, CEO, MIDC, told BusinessLine .
“The company appears to be very serious about using the land, so the proposal will be put before the MIDC Board,” he said, adding Bajaj Auto had proposed surrendering 20-25 acres of the 250-odd acres it owns. The company had originally planned to house the Bajaj-Renault four-wheeler project on this land.
Since that was aborted, Bajaj informed MIDC some years ago that it will change the utilisation from four-wheelers to two-wheelers. In the wake of motorcycle sales not quite growing as per projections, and an existing installed capacity across three plants of around five million bikes, there may not be an immediate need for a fourth plant to make bikes. So, the company may set up a vendor park here to start with.
Responding to an e-mail on the subject, Rajiv Bajaj, MD, Bajaj Auto, said: “The Chakan land is for the de-bottlenecking of motorcycle capacity.” He refused to share more details stating that these were confidential at the moment.
Scooters, a no-noBajaj also vehemently refuted a source’s contention that it planned to re-enter the scooter business and was developing a scooter to take on competitors in this two-wheeler segment.