M & M Close To Clinching Deal For Pal Plant

Tractors and utility vehicles major Mahindra & Mahindra has emerged as the only serious contender for the Kalyan-based facilities of PAL-Peugeot Ltd. Though M&M is keen to take over the Kalyan plant, it is reportedly holding back due to PAL-Peugeots labour problems.

M&M is keen but is not willing to inherit PAL-Peugeots long history of labour trouble, which is responsible for the current state of affairs in that company, industry sources told Business Standard.

M&M was approached by Premier Auto after Peugeot quit the venture last year. Other companies, including Bajaj Auto, were also offered the facilities.

A possible solution to the labour problem, which is being considered by the present management in consultation with M&M, is to offer a voluntary retirement scheme to the present workforce. The workers would then be allowed to enter into a new wage agreement with the new M&M-run management and resume their jobs, the sources said. It would be in the workers interest to accept this formula, as otherwise, with no other buyer in the fray, the company could well be wound up, thereby jeopardising their jobs, the sources said.

 

A flexible stand on the unions part could result in a win-win situation. The companys assets would immediately turn productive; M&M would expand its assets at little cost; and the workers too would benefit once the company resumes operations.

The Kalyan plant would offer M&M a readymade facility near Mumbai, close to its existing facility in Kandivli. If M&M was to take over the Kalyan facilities, it would give a fillip to the auto industry in Maharashtra, the sources pointed out.

PAL-Peugeot, a 32:32 venture between Peugeot and Premier Automobiles, had reported a loss of Rs 92 crore last year. The company has had repeated labour problems, which resulted in the two partners falling out and Peugeot deciding to exit from the venture.