After having resolved all compensation issues with its component vendors, Tata Motors has now started signing land deals with them at Sanand in Gujarat for its Rs 1-lakh car, Nano. According to the package prepared by the company, it is offering to buy land for the vendors at Rs 2.5 lakh per acre with an external development charge of Rs 50,000 per acre on a 20-year lease. Vendors have also been given the option of paying the due amount after a lag of five years. However, the company will offer discounts to vendors who opt to pay upfront or start paying before five years.

?We have agreed to the price offered by Tata Motors. The company has taken care of us after it was forced to pull out of Singur following severe protests,? said a Delhi-based vendor, who is a prime supplier to Tata Motors and has started construction at the vendor park site in Sanand.

Another vendor, who plans to set up shop at the Tata facility soon, told FE while confirming the move, ?More or less, all vendors have agreed to the company?s offer?. So far, component suppliers like Caparo, Amtek, JBM, and Rico have started construction at the site. Tata Motor has got the land at Sanand at a very cheap price with the option of deferred payment from the Gujarat government.

Simultaneously, Tata Motors has also expedited the preparation for the compensation package for 25-30 suppliers who had to move out from Singur. The total payout on this front, which would be combination of land and cash is expected to be around Rs 200 crore and would be finalised by January-end.

When contacted, a Tata Motor?s spokesperson said vendors have been and are very supportive in the development and manufacturing of Nano and appropriate solutions are being worked out regarding compensation and cost of shifting. ?The Singur vendor park was to have about 53 vendors, among them 46 tier-I and seven tier-II vendors. An overwhelming majority of these vendors have already been allotted plots, and several have already started construction?, the spokesman said.

?If any vendor is not ready to supply from his Sanand facility when we begin production, he will be obligated to supply from any other facility as per the company?s production plans and terms. Such a vendor will eventually supply from his Sanand facility, as it gets ready,? he added.

The company plans to set up an initial annual production capacity of around 2.5 lakh units at Sanand, which can be expanded to 5 lakh units. The current makeshift production site for the Nano at Pantnagar in Uttarakhand, is churning out around 3000-4000 units per month.

The company had moved to Sanand in October last year where it will set up a mother plant for the budget car, apart from vendor park, on an area of about 1,100 acre.