Govt heaves a sigh of relief

Volkswagen to compensate Rs 11cr

The decision of Volkswagen to compensate the missing Rs 11-crore deposited in Vasishta Wahan towards equity by Andhra Pradesh has come as a vindication of the state government's stand that it acted only on the advise of the company's India representative Helmuth Schuster.

In the midst of accusations in vernacular press over the payment made to Vasishta Wahan for the past 10 days, chief minister Y S Rajasekhara Reddy and minister B Satyanarayana, who was shifted from Industries portfolio on account of raging controversy, maintained that they were more worried about the project than the money as it was given only on the advise of the VW's official. They had to disclose the letter written by Schuster to prove their point.

While it is now up to the CBI to track the money taken out from Vasishta Wahan account besides unearthing the conspiracy if any, involving people in the state government, the decision to own up the actions of Schuster cleared the allegations that the government was so far only dealing with some middlemen and not with the company itself.

Besides, the company press release also said that Vasishta Wahan was created as a special company to set up a plant in India, if and when it decides to proceed with such a project.

Following yesterday's VW announcement for payment of Euro 2 million to Andhra Pradesh, Laxmi Parthasarthi, principal secretary of Industries department, received a confirmation of the same from Thomas Mickeleit, head of corporate communications of the company, who attached the press release with his email message on Friday.

Besides assuming responsibility for the damage caused by the suspected illegal dealings of the former head of HR at Skoda, the company said that Schuster acted in India without authority and misled the state of Andhra Pradesh.

Earlier, the officials contacted Alfred Stroehlein, company's legal head over phone. The state government is expecting an official communication from the company by tomorrow.

This apart, Jagadish Alag Raja, one of the promoters of Vasishta Wahan, also sent an e-mail message from Germany on Friday to Ramgopal, executive director of Andhra Pradesh Industrial Infrastructure Corporation (APIIC), informing about VW announcement on the issue of missing money.

In his message, Raja thanked the state leadership for its support and also reiterated that he would strive to bring the project to Andhra Pradesh.

Elated by the prompt response, the Andhra Pradesh authorities have stepped up their initiative to re-enter the negotiations with the company on the proposed car manufacturing project in India.

The Industries department has already sought an appointment with the chief executive of VW for the purpose. A four-member delegation has been tentatively formed to visit Germany for consultations beside exchange of files and information.

According to sources, the viability gap of Euros 300 to Euros 500 per car, in case the project is set up in Vizag, is to be addressed by the state government to persuade the company to take a decision in favour of Andhra Pradesh.

A rough financial estimate of such a viability gap, which was said to have indicated by the VW team in May 2005, basing on a capacity of 5 lakh cars per year has also been worked out, sources said.

It is learnt that officials are also in touch with a senior bureaucrat, who was formerly associated with Maruti Udyog Limited, to help them find ways of filing the viability gap of the proposed project. The company in its press release said that it remained interested in entering the Indian market.