In the wake of taking measures to restore the Group's competitiveness in Europe, French carmaker PSA Peugeot Citroen has entered into discussions with the government of Gujarat regarding the future of the company's proposed manufacturing plant at Sanand as well the issue of possession of 600 acres of land allotted to the company for the purpose.
Senior government officials here confirmed that the company,which is undergoing a financial crisis at its parent operations in Europe, has failed to make periodic payments to the state government for the land parcel allotted to it. When asked if the state government would cancel the allocation in the wake of non-payment of installments, the official said, "We are in discussions with the company on the issue of land. They are in bad shape financially in Europe, and we are discussing the issue with them", clarifying at the same time that no official surrender of land has yet taken place.
During the last financial year Peugeot recorded a loss of euro 439 million (around Rs 3,000 crore), and had predicted a five% drop in sales in Europe.
Peugeot had signed a state support agreement with the Gujarat government in September last year and was allotted 600 acres of land at Sanand for its proposed manufacturing plant for 165,000 vehicles per annum. The company had announced an investment of Rs 4,000 crore on the Sanand plant.
Another source close to the development claimed that a decision on the issue was unlikely soon. "It would take some time before a final decision is taken", he said.
The company, on the other hand, said in an e-mailed response, "PSA Peugeot Citroen has moved its offices to Ahmedabad and there are no plans to close this office. A Group representative is based out of Gujarat and we continue to maintain a strong and positive association with our partner- the Government of Gujarat." The company spokesperson also added that the Group is currently focussing on reorganizing and streamlining its operations in Europe and implementing strategic measures in order to restore the Group’s competitiveness and to secure its future. "This in turn will help the Group to focus on its potential markets like India in the long term", the statement said.
Amidst speculations rife that the company has decided to shelve the Sanand project and surrender the land allotted thereby, Peugeot claimed that "The Indian market remains strategic for PSA Peugeot Citroën, fitting well into the mid-term international development of the brand. The timing of the introduction of Peugeot is currently being revised in line with the rescheduling of the project."
