Mahindra & Mahindra (M&M) will buy U.S.-based Navistar Group’s stake in their joint ventures (JVs) in India, Mahindra Navistar Automotives Ltd. (MNAL) and Mahindra Navistar Engines Pvt. Ltd. (MNEPL), for $33 million (around Rs. 175 crore). A joint statement by M&M and Navistar said that after the purchase, both the JVs would become wholly-owned subsidiaries of M&M. The sale requires regulatory approval, and is expected to be completed by early 2013. The Mahindra-Navistar 51:49 per cent stake JV makes trucks from M&M’s Chakan facility, near Pune.
As per the agreement, Navistar could continue sourcing components from India while Mahindra would continue to provide engineering services to Navistar. Further, the statement said Navistar Group would continue to support M&M through a licence agreement, and extend necessary support to MNAL and MNEPL for the purposes of business continuity.
“While the Indian market has not expanded as we had originally expected, and industry challenges there continue in the near term, we still see promise in India going forward. But given Navistar’s 2013 priorities, our capital and focus needs to be allocated to other business opportunities in the near term,” Troy Clarke, President and Chief Operating Officer, Navistar, said in a statement.
“Since it was established in 2005, MNAL has created a niche for itself in the Indian CV industry,” Pawan Goenka, President, Automotive and Farm equipment Sectors, M&M, said in a statement. “MNAL has set up a world class dealer and service network for trucks, which coupled with synergies with Mahindra’s dealer network gives us a significant opportunity to grow our presence in the truck market,” he said.
According to the Society of Indian Automobile Manufacturers, Mahindra Navistar sold 7,904 units in the current year for the period ended November, a drop of 7 per cent over the year-ago period.
