Tata Motors to meet Nano vendors on 16 October

Mumbai: While Ratan Tata chairman of Tata Motors may be heaving a sigh of relief in relocating to Sanand in Gujarat, as this will enable the company to roll out the small car on the promised date and price point, the company's vendors are a worried lot.

These auto parts suppliers basically want to be compensated for having to relocate their ancillary units from west Bengal to Gujarat. Failing that they feel the company should agree to increase the price of parts to be supplied for Nano. For Tata Motors, these options would increase the cost of making the Nano or push the break-even point further than what was originally expected.

The monetary damage to ancillary units is estimated by market sources to be collectively between Rs250 and Rs500 crore. This includes the price paid for the land by the vendors, and also investments for the plant and machinery many of them have made.

Vendors are currently said to be collecting information on losses suffered by them that could lead to Tata Motors making a claim with the West Bengal government. Tata Motors has not said anything until now about compensation for the vendors for the losses they suffered on account of moving out of Singur saying that the Nano project is as much theirs as it is Tata Motors' a Tata spokesperson said.

According to industry sources, the vendors entered into an agreement with the West Bengal Industrial Development Corporation (WBIDC), and were given two years to set up buildings at the plant site. A 'building' under the terms of the agreement is a four-walled structure. The vendors coming to West Bengal built such structures much ahead of time as the two year period expires on September 2009 and spent quite a decent sum for this. The vendors had taken land directly from WBIDC on lease.

The vendors may also approach the state government for compensation.