New venture can make 24,000 vehicles annually and entails Rs. 700 crore investment
Products will range from 16 to 32-tonne vehiclesHalf of production envisaged for domestic market
MUMBAI: Force Motors (formerly Bajaj Tempo) has signed a joint venture agreement with German major MAN Nutzfahrzeuge AG for the manufacture of heavy trucks. The joint venture, Man Force Trucks Pvt. Ltd. (MFTL), will make the first vehicles for the Indian market at its Pithampur plant near Indore in Madhya Pradesh.
Force Motors has a 70 per cent stake in the new venture with MAN holding the balance. The plant, at full capacity, can make 24,000 vehicles annually and entails an investment of about Rs. 700 crore (150 million euros).
The production will achieve full local content by the last quarter of 2006. MAN will provide the Chief Technical Officer (CTO) and three of the nine members of the board of directors of the new venture.
The products will range from 16 to 32-tonne vehicles and half of the production is envisaged for the domestic market. Around 12,000 vehicles are to be exported from 2007 onwards to the Asian and African markets.
The joint venture covers production of heavy trucks under the MAN and Force brands for India and the MAN brand for overseas markets.
Within India, the vehicles will be sold by the joint venture, while MAN's sales organisation will cater to the export markets.
The new product family for export will bear the name `MAN Cargo Line' and the vehicles will include long-haul trucks, semi trailer tractors and tippers and special purpose vehicles with different axle variants.
The vehicles will be powered by the MAN D08 engines and will satisfy the Euro-3 standards.
In addition to cabs, Force Motors will build axles and engines for the joint venture.
The existing infrastructure at its Pithampur plant is being extended and will be used for the production of the joint venture vehicles.
Abhay Firodia, Chairman and Managing Director, Force Motors, said, "in the long term, the Asian region will achieve high rates of growth and invest a great deal in transport infrastructure. The demand for heavy trucks will, therefore, continue to develop dynamically. By the end of the current year, we will also introduce a new common rail engine for our existing products, the Tempo and the Trax.''
Hakan Samuelsson, Chairman, MAN, said, "we have activated the component suppliers which could also be a source for our European operations later. This joint venture is a strategic step for MAN as we get an important low cost production base.'' The cooperation between MAN and Force will be extended to the bus sector.
MAN's Neoman Bus Group intends to set up a separate joint venture for the bus business with Force Motors. A letter of intent on the joint venture for the production of chassis and complete buses for the Indian and Asian markets has been signed and is similar to the trucks joint venture of 70:30.
Although the manufacturing location for the buses could not be confirmed, according to Mr. Samuelsson, "over the next nine months, we should be able to produce around 4,000 buses for the Indian market and for export.''
Other than the current joint venture, MAN has been in India for a while and is in the areas of diesel engines, turbo engines and printing machines. The company now plans to set up a design centre in Aurangabad for diesel engines.
Mr. Samuelsson, said, "the design centre will house 50 engineers working on CAD machines to design diesel engines. We could bring in more in design here to get high quality and cost efficiency.
We cannot rule out the same for trucks and buses. If that happens it could be either through the joint venture or on our own like in the diesel engines.''