Top officials of the Maruti Suzuki India Limited (MSIL), including chairman RC Bhargava met the new Gujarat Chief Minister Anandi Patel and other senior representatives of the state government on Wednesday and sought a clarity on the tax laws applicable to the company’s upcoming car manufacturing plant at Hansalpur in Ahmedabad district.
This is the first time that officials of MSIL held a meeting with state government officials in Gandhinagar after Narendra Modi moved to the Centre.
Officials of the company were keen to clear the air on the issues related to taxes, especially Value-Added Tax (VAT). The MSIL officials held detailed discussion with the chief minister, state finance minister Saurbh Patel and other senior IAS officials from the industry and the revenue departments including DJ Pandian and Hasmukh Adia.
“We apprised both the chief minister and the finance minister of Gujarat about the changed model — from a single company model to a two-company model — and discussed with them this change to a two parent company. Everything else planned for Gujarat, like setting up of training etc remains the same. They have told us about their commitment for the project,” Bhargava told media persons.
In March, under pressure from institutional investors, MSIL had decided to seek the approval of minority shareholders after tweaking some of the earlier proposals for the controversial Gujarat plant, which parent Suzuki Motor Corp (SMC) had decided to take over. MSIL had stated that investments in the Gujarat plant would be funded by SMC via a wholly owned subsidiary through depreciation and equity brought in by the parent without a ‘mark-up’ on cost of production, as was proposed before.
MSIL had also stated that the impact of any direct or indirect taxes on account of the contract manufacturing agreement would be assessed before finalising the accord. In January, SMC announced it would invest Rs 4000 crore to build the Gujarat plant, which Maruti had earlier proposed to set up. SMC proposed to invest in the plant through a wholly owned unit Suzuki Motor Gujarat (SMGPL). The plant, which would be the first fully owned factory of SMC in India, is being planned with an initial capacity of 1,00,000 units a year, all of which will be supplied to Maruti.
On being asked if the project is on slow mode, Bhargava said, “The market conditions will change now. They have put it in a slow track, but in any case we started the implementation and we remain committed with the first start of production in 2017.”