India: Govt imposes diesel tax on vehicles: Mahindra could cut its growth plans image

Mahindra and Mahindra could cut its expansion plans further if the government is imposing extra tax on diesel vehicles. This has been reported by the company, the biggest sports utility vehicle maker in India.

Pawan Goenka, the president of M&M has shared his thoughts stating that the tax on diesel vehicles would affect the company’s productions further no matter whether the tax is imposing for three months or more. As of now no one can predict whether the tax would be imposed permanently or temporarily, but the company would reduce its forecast at least for the next year if it is done.

Considering the projects undertaken by the company, around 99 percent units of this Mumbai-based manufacturer are produced in diesel powered. The manufacturer is specialized in building sedans, multi-purpose vehicles and utility vehicles.

Accordingly, if this has to be done then the sales as well as productions will go down. The company has to slow down its schedule for the next fiscal year as said by a senior official of Mahindra & Mahindra.

The company has so far witnessed a 35 percent sales growth in 10 months till the end of January 2012. In this duration, total 197,000 units were sold.

The company is more concerned about people dropping their plans to buy a diesel vehicle altogether or shifting from their interest in diesel vehicles. Currently, the company is working on its expansion plans under second phase which is similar to first phase of expansions.
It is a plan scheduled to be undertaken at Chakan which is located off Pune where talks regarding developments on value-added expansions of the company will be done.

For this, Mahindra & Mahindra expects to shell out an added amount ranges from Rs. 3,000 to Rs. 4,000 crore.