How Tata Motors Won 15-Year Old Singur Nano Case? Auto Giant To Get Rs 766 Crore Compensation With Interests

Auto giant, Tata Motors and its DVR shares traded in green for a second consecutive day on Wednesday after the Tata Group-backed company made a big win in a 15-year-old case involving the Nano factory in Singur, West Bengal. Tata Motors will get nearly Rs 766 crore of compensation along with 11% interest per annum.

Tata Motors stock gained as much as 0.74% to touch an intraday high of Rs 633.15 apiece on BSE in the early deals of Wednesday's trade. Its market cap is over Rs 2.10 lakh crore. Also, Tata Motors DVR advanced by over 0.5% to trade at an intraday high of Rs 422 apiece.

Both the stocks were in green on Tuesday as well.

The big win in the Singur case was announced on October 30th.

Big Win:

As per the regulatory filing on October 30th, Tata Motors and West Bengal Industrial Development Corporation Limited ('WBIDC') were in arbitration proceedings related to the company's claim of compensation from WBIDC under various heads, on account of the loss of capital investments, with regard to the automobile manufacturing facility at Singur (West Bengal).

In the matter, Tata Motors informed that a three-member Arbitral Tribunal has now been finally disposed of by a unanimous Award dated October 30, 2023, in favour of TML whereby the claimant (TML) has been held to be entitled to recover from the respondent (WBIDC) a sum of Rs.765.78 crore with interest thereon @ 11% p.a. from September 1, 2016 till actual recovery thereof.

Also, Tata Motors is awarded to recover from the respondent (WBIDC) a sum of Rs 1 crore towards the cost of the proceedings.

The Singur Nano case:

Tata Motors and Singur Nano case begins way back almost 15 years ago when the company declared its plans to build a manufacturing facility in Singur, West Bengal in 2006. The facility was meant to be for its hatchback, Nano.

The deal involved a Rs 1,800 crore investment by Tata Motors for the manufacturing unit which was expected to generate 2,000 jobs directly and 10,000 employees indirectly through vendors and service providers.

Also, for the project, the West Bengal government purchased 1,000 acres of land.

The construction of the manufacturing unit along with the vendor park, a normal feature in modern world-class auto plants, was commenced in January 2007. The work was nearing its completion in line with planned schedules. During the time of construction, Tata Motors had employed about 4,000 employees at its peak including several hundred young residents from and around the region.

However, the project's operations were disrupted after protests spilt over the land acquisition driven by the President of All India Trinamool Congress, Mamta Banerjee. The political agitation resulted in damage to property and threats to personnel working on the project.

In early September 2008, Tata Motors suspended the construction and commissioning work at the Nano Plant in Singur given continued confrontation and agitation at the site. This decision was taken to ensure the safety of its employees and contract labour, who have continued to be violently obstructed from reporting to work.

Later on, a bill was passed in the West Bengal state assembly where it was alleged that Tata Motors had abandoned the manufacturing project in Singur, however, this was condemned by Tata Motors. This eventually led to a legal battle between Tata Motors and the West Bengal government.

In October 2008, after a brief discussion with the then chief Ratan Tata, the company decided to move out its Nano project from West Bengal. Once Tata was out of West Bengal, their chief Ratan Tata received an SMS from the Gujarat CM Narendra Modi, who is now the current Prime Minister of India. Modi, the then CM, simply said 'Suswagatham' in the message and persuaded Tata to develop a Nano factory in Gujarat.

Tata Motors did exactly that building a manufacturing unit in 14 months in Sanand, about 35 km from the city of Ahmedabad in Gujarat. The facility produced various models like Nano, Tigor and Tiago, with a capacity of 400 vehicles per day. It had over 4,000 direct and indirect employees.

While the Sanand plant was a success for both Tata and Modi along with the citizens in Gujarat, the company continued to battle over the dispute in West Bengal until October 30, 2023, when the Singur plant case was announced in favour of Tata Motors.

On October 30th, 2023, Tata Motors in its filing said, "With the making of the final arbitral award as mentioned above, the Arbitral proceedings have come to an end."