The Hindu : Business : Ashok Leyland floats 3 JVs with Nissan

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Tuesday, Oct 30, 2007
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Ashok Leyland floats 3 JVs with Nissan

Special Correspondent

To invest $500 m to make LCVs, assembly of engines and components

— PHOTO: PTI

THREE-in-one: R. Seshasayee, (right) MD, Ashok Leyland, exchanging documents with Carlos Ghosn, (centre) Chairman, Nissan, in Chennai on Monday. Hinduja Group Chairman Gopichand Hinduja looks on.

CHENNAI: Ashok Leyland, the flagship company of the Hinduja group, and Nissan Motor Company Ltd. have drawn up a $500 million investment plan to set up three independent joint ventures in India to make light commercial vehicles (LCVs), assembly of engines and develop LCV components, respectively.

A master co-operation agreement to this effect was signed here on Monday by R. Seshasayee, Managing Director of Ashok Leyland, and Carlos Ghosn, President and CEO of Nissan Motor Company.

Addressing a press conference here, Mr. Seshasayee said the joint venture partners had zeroed in on Tamil Nadu, Andhra Pradesh and Uttranchal for the LCV project. “A decision on the location (of the LCV project) will be taken in the next few weeks,” he added.

The LCV venture would have 51 per cent equity holding by Ashok Leyland and the balance would be held by the Hinduja group. Mr. Ghosn said the joint venture would commence new generation Nissan Atlas F24 light duty truck production in 2010. Further, it would make a range of products in the 2.5 to 8 tonne gross weight category. “In the medium term, the production volume will go grow beyond one lakh units a year,” he said.

The Nissan CEO also announced that the proposed 50:50 joint venture technology development company would be located in Chennai and would manufacture LCV components and related power trains.

The products would be sold under Ashok Leyland and Nissan brands. In the joint venture for assembly engines, Nissan would hold a majority stake of 51 per cent and the Indian company the balance. The location of this joint venture was still to be worked out. Mr. Ghosn said the two partners would co-operate to leverage each other’s dealer networks in specific global markets.

The press conference also saw G. P. Hinduja, President of the Hinduja group, his son Dheeraj G. Hinduja, Co-Chairman of Ashok Leyland, and Ashok Hinduja present.

New journey

Mr. Dheeraj Hinduja said the tie-up with Nissan “marks a new journey for Ashok Leyland.” The company had for long been focussed on medium and heavy commercial vehicles and was now expanding to 1.80 lakh units, he added.

With Nissan tie-up, Mr. Dheeraj Hinduja said, the group had set a sales target of Rs. 30,000 crore by 2011-12.

Mr. Ghosn said Nissan “is looking forward for pioneering a new era in LCV.”

He was confident that the Hinduja group’s company would contribute a new perspective to the frugal engineering concept pursed by Nissan.

“Partnering is a key to our approach in India,” he said, citing India’s potential for high skill, high knowledge and ability to participate in global opportunity. In this context, he pointed out a couple of other joint ventures that Nissan had initialled in India — with Mahindras and Renault for passenger car in Tamil Nadu and with Bajaj to make car in the price category of $2,500.

On heavy duty vehicles production in India, Mr. Ghosn said Nissan had no plan at the moment.

The LCV joint venture would aim at exporting 20 per cent of its production over a period, he added.

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