MLR Motors Ltd, part of the Lokesh Machines Ltd, which is in the process of setting up a car manufacturing unit about 30 km from here, has been granted time till March 2012 to execute the project.

The Department of Industries and Commerce, Andhra Pradesh Government, today said it has agreed to a request by the promoter of the company, Mr M. Lokeshwara Rao, seeking additional time to take up the project.

The promoters had cited several difficulties and hurdles in implementing the project — including land acquisition, as it had got into some litigations after allotment, and also due to the general economic slowdown, which had made raising the requisite funding a challenge. The company had indicated that it would require about Rs 1,200 crore for the project.

Speaking to Business Line , Mr Rao, said that the company was keen to develop the car plant. But it had to contend with several implementation issues, such as land acquisition as also the challenge of mobilising the requisite funds in the current environment.

Mr B. Sam Bob, Principal Secretary, Commissioner for Industrial Promotion, said in a report after visiting the site that the company had already taken up some construction work. It has also got letters of in-principle sanction of loans from Union Bank of India, Bank of India and Bank of Maharashtra, he said.

“The company promoter said that the banks have agreed to sanction the necessary funds for the car project and we have invested Rs 70 crore through internal resources. We have developed a model car and hope we would be able to launch the project once all formalities are completed,” he said.

The company has engaged the services of a European design house and a model car is ready.

While calling upon the company management to take up specific action plan and implement the project on time, the Government has stated that failure to implement the project according to schedule will lead to the cancellation of land allotment and also the concessions that come with it.

MLR Motors had indicated that they would take up manufacturing of a small car initially from the plant and later develop other variants on the same platform. It had also struck a deal with a European car maker for purchase of design of one of its models.

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