16-09-2021 The Asian Independent

www.theasianindependent.co.uk
NEWS
16-09-2021 to 30-09-2021
25
Ford India owes Rs 602 cr as deferred sales tax liability
Chennai : The US automobile
major Ford Motor Company that had
announced the closure of manufacturing
facilities in Tamil Nadu and in
Gujarat owes about Rs 602.3 crore as
deferred sales tax liability, as per a
research report.
Ford Motor Company’s Indian
manufacturing operation is carried out
by its subsidiary Ford India Private
Ltd with two manufacturing plants --
one at Chennai and Sanand in Gujarat.
The Rs 13,520 crore revenueFord
India set up its first plant near Chennai
with Tamil Nadu offering tax incentives
like sales tax waiver/ deferral.
Similarly, the Gujarat government
too offered tax incentives to Ford
India when it decided to set up a plant
in Sanand.
A day before the Ganesh Chaturthi
festival -- September 9 -- Ford India
announced that it will wind down
vehicle assembly in Sanand by the
fourth quarter of 2021, and vehicle
and engine manufacturing in Chennai
by the second quarter of 2022.
Ford India has four plants in the
country -- vehicle and engine plants in
Chennai and Sanand.
Ford India has decided to continue
operating the engine plant in Sanand
while closing down
the other three.
In its report, credit
rating agency India
Ratings and Research
last month said Ford
India’s unguaranteed
external debt was
largely in the form of
a deferred sales tax
liability of Rs.602.3
crore.
Queried on payment
of the dues to
the governments and
the timeline following the decision to
close down the plants the company
told IANS: "We continue to work
closely with the relevant governmental
agencies in relation to the restructuring
and are thankful to
Governments in Tamil Nadu and
Gujarat, as well as the Centre, for their
support and understanding."
According to India Ratings, Ford
India has strong legal linkages with its
ultimate parent, Ford Motor Company
that has extended corporate guarantees
to 85 per cent of the former’s sanctioned
working capital facilities at the
end of FY21.
The credit rating agency said it
expects a major portion of Ford India’s
future external debt will continue to be
backed by a guarantee from Ford
Motor Company.
Announcing its decision to shut
down Indian plants, Ford Motor
Company said it currently expects to
record pre-tax special item charges of
about $2.0 billion, including about
$0.6 billion in 2021, about $1.2 billion
in 2022 and the balance in subsequent
years.
"Within that total will be about $0.3
billion of non-cash charges, including
accelerated depreciation and amortization.
The remaining cash charges of
about $1.7 billion will be paid primarily
in 2022 and are attributable to settlements
and other payments," the
company said.
According to India Ratings, Ford
group companies accounted for over
49 per cent of the sales volumes of
Ford India, which exports to various
countries on a cost-plus basis, during
FY21 (FY20: 66 per cent).
"Furthermore, FIPL (Ford India) is
the sole manufacturer of the Ecosport
model sold in the US; and the Aspire
and Figo models sold in Mexico and
South Africa," the credit rating agency
said. "However, in FY21, FIPL’s total
sales volume constituted only 4.6 per
cent of FMC’s (Ford Motor Company)
total global volumes during the year.
Moreover, FIPL is also one of the two
manufacturers of powertrains for the
top selling Rangers model sold in the
Asia Pacific region (excluding China),
Middle East and Africa," India Ratings
said. The credit rating agency said
Ford Motor Company has infused
equity of Rs 8,748 crore in Ford India
since its inception.
Further Ford Motor Company has
been supporting its Indian subsidiary
through intercompany loans, which
stood at Rs 4,396 crore in FY21 constituting
79 per cent of Ford India’s
total debt. India Ratings said 94 per
cent of Ford India’s total capital
employed (before accumulated losses)
has been infused by Ford Motor
Company in the form of equity or
inter-company loans or supported
through guaranteed debt.
According to the rating agency,
Ford India’s credit metrics like interest
coverage deteriorated in FY21 due to
weakened operational performance.
Ford India’s net debt increased marginally
to about Rs 5,163 crore in
FY21 from about Rs 5,003 crore in
FY20. On the other hand the interest
expenses fell to about Rs 459 crore in
FY21 from Rs 483 crore in FY20.
The company declined to answer,
when queried by IANS about Ford
India’s total borrowings, its lenders
and the timeline to settle the dues.
As regards the liquidity India
Ratings said the company had strong
cash and equivalents balance of
around Rs.379.7 crore at end of FY21.
On the reported interest shown by
MG Motor in its two facilities Ford
India told IANS: "We continue to
explore alternatives for our manufacturing
facilities and have nothing to
comment on the ongoing speculations."
Gritty K’taka woman on her
mission to get road to her village
Davanagere (Karnataka) : Bindu R.D. (26), who shot to fame
after she got the system moving
by writing a letter to the
Chief Minister’s Office saying
she will not marry until her
villahge, H Rampura in
Davanagere district, gets roads
and buses, told IANS on
Friday that the letter was not
about her marriage, but it was
all about getting the necessities for her village.
"The letter was not about my marriage, which can happen at a
later point in time. I wanted to highlight the pathetic condition of
the road in our village, which was hampering the movement of
people besides affecting the education of girls. Now that the government
is building the road, girls who would have earlier dropped
out from schools after Class 5 now stand a better chance of getting
educated," Bindu told IANS. Bindu had mailed a letter to Chief
Minister Basavaraj Bommai’s office on September 9. Highlighting
the pathetic condition of the road in her village, she had pledged
that she wouldn’t marry until a new road is built in her village.
Stating that for more than 70 years the road has not been laid,
she had said in the letter that it is impossible to commute on bikes
or in any other vehicle. The condition is such that only bullock
carts could move on the muddy road, she had said.
"My parents had sent me to a hostel as they felt that it is not safe
to come back to the village after 4 pm by foot. There is fear of wild
animals attacking us and other safety issues. My parents could
afford it. I thought of those daughters of labourers and poor people
who cannot think of sending their children out of the village. I
surfed on the net and got the email address of the Chief Minister
and shot a mail," Bindu said.
After her letter, Davanagere District Commissioner Mahantesh
Bilagi has visited the village and spoke to the villagers. The Zilla
Panchayat officials too came down, and started the work to build
the road from Thursday. However, Bindu, a teacher at a private
school in Koodalasangama town, was not present at that time.
"The villagers are calling me and thanking me. They are sending
me pictures of the road being built. I am extremely happy. The
government bus will also come to the village from Saturday
onwards. Now I can see many of my friends going to schools to
study after 5th standard," she explained.
When asked what motivated her to write the letter, Bindu said
that her constitutional right empowered her to do so.
"As we have voted, we have every right to ask for development.
What is the use of being educated if we do not ask questions? I
appeal to everyone who put up with difficulties for years to start
questioning for development," she said.
Bindu had also taken special classes for children during the
Covid lockdown, besides campaigning to increase the attendance
of students when schools were on the verge of closure.