BUSINESS

M&M-ITEC joint venture to invest Rs. 2,500 crore

ON FAST TRACK: Ashok Chavan (left), Minister, Industries, Government of Maharashtra, and Anand Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, at the signing of a memorandum of understanding between Mahindra & Mahindra and the Maharashtra Government in Mumbai on Tuesday.

ON FAST TRACK: Ashok Chavan (left), Minister, Industries, Government of Maharashtra, and Anand Mahindra, Vice-Chairman and Managing Director, Mahindra & Mahindra, at the signing of a memorandum of understanding between Mahindra & Mahindra and the Maharashtra Government in Mumbai on Tuesday.   | Photo Credit: PHOTO: VIVEK BENDRE

Staff Correspondent

The commercial vehicle venture will leverage M&M's extensive dealer network

A fifth of production to be exported in the long-termU.S. company to source more auto components from India

MUMBAI: Mahindra & Mahindra (M&M), through its joint venture with the U.S.-based truck major International Truck and Engine Corp (ITEC), will set up a greenfield plant in Pune in Maharashtra to make commercial trucks.

The joint venture will invest Rs. 2,500 crore in the next five to six years in the plant, which will cover an area of 700 acres.

The exact location of the plant is still to be decided but M&M on Tuesday said it would make medium & heavy commercial vehicles, which would be designed and developed with in-house capabilities. It would have an initial capacity to 2.50 lakh vehicles annually.

While production at the plant is expected to commence in two years, it will also make new generation M&M vehicles that will principally be used for commercial purposes, including making of engines, transmission and other aggregates for vehicles.

The vehicles will have 90 per cent local content from the start. Addressing the media here, Anand Mahindra, Vice Chairman and Managing Director, M&M, said, "the ITEC joint venture is a significant step in our evolution as an integrated player in the global automotive market.''

Pawan Goenka, President, Automotive Sector, M&M, said, "From the new plant, our long term objective is to export 20 per cent of production but we will initially focus on the domestic market. Initially, we are planning a capacity of 70,000 commercial vehicles annually with 20,000 coming up at the Zaheerabad light commercial vehicle (LCV) unit and 50,000 annually coming up in Pune.''

The remaining two lakh units annual capacity in Pune will be for newer products.

Meanwhile, ITEC is working on its plans of sourcing products and aggregates from India and according to John Lamoureux, Vice President, Global Business Development, ITEC, the company is now sourcing around $3-million worth products annually from India and with the joint venture, this is likely to go up to $150-200 million over the next two to three years.

Hemant Luthra, President, Systech, M&M's auto components & forging division, said, that while engineering services earned the company $10 million last year, this year, it was likely to go up to $15 million and component sourcing is likely to touch $45 million this financial year.

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