The West Bengal Government and the CK Birla Group outfit Hind Motors Ltd (HML), are at loggerheads over a claim of Rs 200 crore by the former.
Madan Mitra, West Bengal Minister in charge of Transport and Sports Departments, who was present at a HML function on Tuesday, told Business Line that the issue is still alive.
Uttam Bose, MD of HML, disputed the claim and said it was not acceptable to the company. Last year, the State Government had made the claim and asked the company to return the additional sale proceeds of around Rs 200 crore from its Uttarpara plant’s surplus land (314 acres) development deal in 2006.
The Minister said the previous Left Front Government had allowed the land sale. Now, the Government wants the money under the provisions of the West Bengal Land Reforms (Amendment) Act, 2012.
Bose said HML had acted on the “Government order,” a valid legal document. HML had gone ahead on the basis of the order and executed the development contract with Sriram Group.
The State Government, according to sources, now feels that the company had not followed the agreed terms on utilisation of the sale proceeds and has made “additional profits.” The Government had allowed the sale of the land on certain conditions.
The West Bengal Government’s land reforms department in an order had allowed the auto-maker in September 2006 to transfer a portion of the land at Uttarpara for the company’s revival.
This had followed a revival roadmap, submitted by the company, which detailed a schedule for the first years. The company had committed to reach the break-even timeframe for the Uttarpara unit.
But the 2006 Government order that allowed the company to sell land did not mention the ‘zero date,’ crucial for calculation of break-even timeline.
The State Government also raised objection to Kolkata-headquartered HML’s plan to hive-off its Chennai manufacturing asset to its subsidiary, Hindustan Motors Finance Corporation Ltd.
“The Calcutta High Court heard the Government’s point of view but allowed to demerger process to move on. We are going ahead with our plans,” Bose said.
Hind Motors had sold 314 acres for Rs 295 crore, of which, a major portion was to be used for revival of the Uttarpara unit. The company had projected to make a profit of Rs 18 crore and a turnover of Rs 644 crore in the sixth year from 2006.
Though the Uttapara unit is functional, the company is yet to turnaround.