Mumbai:
Great Wall Motors, China’s largest SUV maker, has extended its term sheet to acquire General Motors India’s Talegaon plant in Pune by another three months to March 2022.The maker of Haval SUV has also kept the term sheet window open to extend the timeline further to acquire the facility by June of 2022, said people in the know, even as US automaker GM continues its bitter legal battle with protesting workers in India.
This is the second time the agreement has been extended by the two companies. Prior to this, the term sheet was extended in the first half of 2021 to the end of the year.
Great Wall Motors had committed close to $1 billion for the Indian market, but its plan has been stuck due to regulatory hurdles.
Originally planned to acquire the Talegaon factory by December 2020, Great Wall Motors is still awaiting the Indian government’s approval for its foreign direct investment proposal. India’s current rules require FDI from any country it shares a land border with, like China, to be first approved by the government.
Due to the regulatory hurdles, the head of Indian operation for Great Wall Motors India has already been shifted to the Brazilian subsidiary, and the head of sales and marketing has moved out of the company.
The Great Wall Motors Spokesperson in an email response said, “GWM continues its commitment to India with no change in our strategy for the Indian market.”
In response to ET’s questions, director of communications at GM International George Svigos said: “The term sheet has been extended as we remain committed to our plans in relation to the site.”
The extension of the term sheet happens at a time when the legal challenges for GM India is mounting as the Pune Industrial Court on January 5 directed the local unit of the US car maker to pay 50% remuneration for 1,086 employees who were retrenched in the middle of 2021.
On the recent industrial court verdict and the legal stand of the company, Svigos said: “We do not intend to provide a running commentary on legal matters. However, as we have said previously, the company remains very confident of its legal position and has acted in accordance with the law and the Certified Standing Orders agreed between union and management.”
General Motors had exited the Indian market in 2017. It used the Talegaon plant to produce cars for exports till 2020 and since then it has been non-functional.
In July last year, the company retrenched employees who had not accepted its voluntary separation package. The workers’ union challenged the move in the Industrial Court of Pune.
Nitin A Kulkarni, the union’s lawyer, told ET that GM India had terminated the services of these employee without complying with the provisions of the Industrial Dispute Act, which required it to obtain prior permission of the state government, and also committed an unfair labour practice which was recognised by the industrial court in its interim order.
The industrial court has directed the company to pay 50% wages to all the 1,086 employees till it makes a final decision on the complaint, he said.
The workers’ union has also separately claimed in the Bombay High Court that GM had entered into a sale agreement with Great Wall Motors without the approval of the Maharashtra Industrial Development Corporation (MIDC), the owner of the land. The MIDC had tendered the property to GM on a long-term lease. According to the Urban Land Ceiling Act, the party holding the land (GM) needs to take permission from the corporation before entering into an agreement to transfer a leased land.
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The Industry Ministry said in a statement the Chinese company had said it would not proceed with the project. Last week, national and regional authorities sent an improved proposal when GWM reportedly cast doubts on its initial interest in the plant.
The term sheet, which was set to expire in the middle of 2021, has been extended to December, giving more breathing space to both Great Wall and General Motors to conclude the deal, several people in the know said.
