MUMBAI: West Bengal chief minister Buddhadeb Bhattarcharjee is absolutely right when he says that returning the 400 acres to Singur farmers will sound the death knell for Tata Motors Nano project.
This is the land allotted to the 55 component suppliers who have already invested money in constructing buildings on their sites. A fraction of them has also installed their machinery here which only means additional costs. If they have to be moved elsewhere, it means compensating them to the tune of Rs500 crore or more.
For instance, Tata Ryerson, which is supplying six key parts for the Nano, has already invested Rs70 crore while lighting company, Lumax has put in close to Rs40 crore. Sources say that other suppliers like Rasandik, Endurance, Rane, Sona, Subros and Caparo have also committed significant investments which would all have to be written off in the event of relocating within Singur.
Each supplier paid Rs15 lakh for per acre of land and will additionally have to pay Tata Motors Rs23 lakh per acre for infrastructure-related costs on roads, electricity and the like. Some of them have taken up large tracts of land, which could be 10 acres or more, while a few have been content with up to two acres. The actual cost spiral begins with the construction of the buildings followed by installation of equipment.
Interestingly, nearly two-thirds of the suppliers have not moved their machinery to Singur yet, anticipating the likelihood of the Nano project being shifted to Uttarakhand. "We do not want to risk losing more money and would rather wait till the 400-acre issue has been sorted out. If need be, we will supply components from our other plants in the west and south," sources told DNA.
Optimists believe that the situation will ease out in the following days, which means that the Nano will debut in October. The cynics, on the other hand, are convinced that Tata Motors will be compelled to pull out simply because Mamata Banerjee is not going to compromise on her stand.
If a relocation of the project is inevitable, both the company and its suppliers are going to lose over Rs1,000 crore (costs incurred on land and buildings) and at least six more months in putting the Nano out on the roads. An April launch, in that case, seems more realistic unless a few hundred Nanos emerge from Tata Motors Uttarakhand plant by Diwali. g_murali@dnaindia.net
