Bajaj Auto is contemplating steering clear of Maharashtra for its future expansion projects running into over a Rs 1,000 crore. It has now set its sights firmly on neighbouring Gujarat.

“I have requested our Chairman, Mr Rahul Bajaj, to set up a meeting with the Gujarat Government including, hopefully, the Chief Minister, Mr Narendra Modi. We would be happy to have a nice piece of land which is close to a port so that it helps ship out our large export volumes,” Mr Rajiv Bajaj, Managing Director, told Business Line .

Doubling capacity

The company has outlined a vision to double capacity to 10 million units in the next few years. It is clearly at the end of its tether in Maharashtra, which has been home to its facilities in Aurangabad and Chakan for decades.

Tax refund

However, things have turned sour lately thanks largely to the State Government's delay in refunding sales tax dues worth Rs 1,110 crore since April 2010. A weary Bajaj Auto decided to bring the issue into the open with the media on July 14 soon after its annual general meeting. Events moved rapidly since then.

“The very next day, we were levied a penalty for 2008-09 and FY '10 with the Government alleging that we owed them Rs 300 crore for each of these years. As far as I was concerned, this kind of retaliatory tactic was childish and ridiculous,” Mr Bajaj said.

The company appealed to the Tribunal which, in turn, shot down the State's claim. While granting Bajaj Auto a stay, it also asked Maharashtra to respond to the long-pending issue of sales tax refunds. The State's bureaucrats have now sought a meeting with the company's officials to discuss the issue.

“Our Chairman had already written a letter to Mr Ajit Pawar, the Deputy Chief Minister who also holds the Finance portfolio, in January this year, bringing to his notice that the sales tax refunds were due since April 2010. Unfortunately, let alone any action, we did not even get an acknowledgment of the letter,” Mr Bajaj said.

What has been particularly intriguing is that this entire issue of the delay in refunds has cropped up only over the last 15 months. Till March 2010, the script worked like a charm with Bajaj Auto getting its dues on time.

“I have no clue why things took such a nosedive subsequently. Today, it is a pathetic state of affairs where this is the kind of reward we are getting for making Maharashtra a global hub for motorcycles,” he said.

Two months ago, the company was advised to furnish a Rs 200-crore bank guarantee for the sales tax dues, which was promptly done. However, there was complete silence after that. “We learnt to our shock that the systems in the Government could not process any amount beyond Rs 99 crore. This was the last straw as far as I was concerned,” Mr Bajaj said.

Labour issue

The other catalyst that has spurred the shift from Maharashtra is the labour issue. According to the Managing Director, Chakan takes the cake in this department. This is a well developed auto hub where Bajaj Auto has for company other top names such as Volkswagen and Mahindra & Mahindra. Despite this, there is just no police outpost in the vicinity.

“Recently, our Chief Operating Officer, Mr Pradeep Shrivastava, met the cops to discuss this problem and was told that it would cost us auto companies Rs 50 lakh to put up an outpost. It was shocking to hear that we were now being roped in for something like this,” Mr Bajaj said.

Clearly, the company is serious about its decision to move out of Maharashtra. “It is not as if I am putting any pressure on the State by planning for the future elsewhere. Nor am I dying for any special incentives from Gujarat. All we are looking for is good governance by the end of the day,” he said.

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