India’s second largest motorcycle manufacturer, Bajaj Auto Ltd, will not make any further investments or new products at its Waluj plant in Aurangabad, which produces about one million motorcycles and 350,000 three-wheelers every year.

The company will also not recommence production at its Akurdi plant near Pune, said managing director Rajiv Bajaj even as he plans to participate in a meeting convened by Union minister Sharad Pawar on 5 November to resolve a bitter labor stand-off there.

Rough ride:Bajaj Auto managing director Rajiv Bajaj.

Bajaj said the management is unhappy with the work culture at the Aurangabad plant, which employs 3,200 workers, of whom 701 availed of a voluntary retirement scheme last week. Bajaj will pay some Rs75 crore for the scheme, which will include a one-time compensation and a pension scheme for the workers, company officials said .

Bajaj said he had no complaints against the workforce at Akurdi but said it was not financially viable to continue manufacturing there.

“We lose Rs1,000 on every vehicle we produce here due to sales tax and octroi issue and we can’t afford that," he said. Company officials said the firm would pay an average of Rs163,000 in salary annually to some 1,600 workers who have been asked to stay at home as vehicle production is shut at Akurdi.

Meanwhile, the company will set up a Rs100 crore individual development centre for employees and others on a 20-acre space at its Akurdi campus, Bajaj said. The company’s application for demolition of the production shops is still pending with the local government, said Bajaj. He accused politicians of misleading public opinion into believing that the company wanted to commercially exploit its land.

“Politicians and bureaucrats are the ones who are allowing the conversion of industrial land into commercial properties but Bajaj Auto has no intention of using its land for any other purpose than its automotive business," he insisted. Bajaj pointed out that the company had spent Rs20 crore on upgrading Akurdi last year and had repeatedly tried to resolve the octroi issue.

The local government is now proposing to waive octroi on new vehicles produced by the company but Bajaj said he is not in a position to bring back production to the plant after having invested in other locations. “We are responsible for the vendors and suppliers who have invested in setting up operations for our plants elsewhere and it is not possible to shift back now," he said.