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Ashok Leyland and Nissan agree to form partnership for LCV

30th August 2007 Print
Ashok Leyland and Nissan Motor Co., Ltd, today signed a Heads of Agreement (HoA) for the formation of three joint venture companies supporting the Light Commercial Vehicle (LCV) business. This first stage of the partnership between the companies will include the development, manufacture and cooperation for distribution of LCV products under both the Ashok Leyland and Nissan brands. These are subject to various corporate and statutory approvals from both sides.

The three joint venture companies detailed in the HoA are to cover the following business areas:

Vehicle Manufacturing Company – a company with exclusive rights to manufacture LCV products in India for both the partners. Manufacturing facilities will be located in India and the company will be majority owned by Ashok Leyland. In the medium term, production volume (for Indian and export markets) is expected to be above 100,000 units annually.

Powertrain Manufacturing Company – responsible for the manufacture and assembly of engines and other drivetrain components to be fitted in the LCV products and for exports. Manufacturing will be located in India and the company will be majority owned by Nissan Motor Company.

Technology Development Company – responsible for the development of LCV products and related powertrains, destined for the Indian and identified emerging markets. This JV company will be owned 50:50 by the two partners. The products developed will be sold under both the Ashok Leyland and Nissan brands.

In addition, the two partners are also studying cooperation in the area of sales and distribution. This includes providing access for Nissan to Ashok Leyland’s dealer network in India and for Ashok Leyland to use Nissan dealer networks in identified export markets outside India.

Commenting on this proposed co-operation, Mr Gopichand P. Hinduja, President of the Hinduja Group of Companies observed that “By signing this Heads of Agreement, both Ashok Leyland and Nissan Motors seek to fulfill their aspirations to address the growing light commercial vehicle market jointly by leveraging their mutual strengths.”

Underlining the synergy, said Mr Dheeraj G Hinduja, Co-Chairman, Ashok Leyland, “Possibilities are immense, for a win-win collaboration, by bringing together Nissan’s tradition of engineering excellence with Ashok Leyland’s intimate knowledge of the market and cost efficient value addition in India.”

Said Mr R Seshasayee, Managing Director of Ashok Leyland: “Ashok Leyland has been consolidating its growth in Medium and Heavy Commercial Vehicles even while exploring suitable opportunities to expand the total product portfolio. This partnership with Nissan, renowned for their product engineering and a wide range of LCV products, will allow Ashok Leyland to expand into the fast growing LCV segments in India. We look forward to harvest the full potential of the two organisations.”

Mr Carlos Ghosn, Nissan President and CEO: “Our LCV business and overall expansion into India represents two of the biggest growth opportunities for Nissan in the medium and long term. Following previous announcements relating to expanding our passenger car business in India, this latest investment will broaden our coverage of this market in addition to providing new LCV products for emerging markets. In this regard, we very much look forward to the partnership with Ashok Leyland.”

Mr Andy Palmer, Corporate Vice President, Nissan: “With the LCV Breakthrough in Nissan completed one year early, we are now moving to the next phase of growth – India will be fundamental in this. Ashok Leyland represents the perfect partner for augmenting this growth and we are pleased to have reached this HoA milestone.”

Following the signing of the HoA, both companies will now embark on a detailed feasibility study covering all proposed areas of cooperation. This study will lead to the signing of a Memorandum of Understanding and the subsequent formation of the legal partnership. This study is expected to conclude by October 2007.

The Hinduja Group is an investment and banking group with a diversified global portfolio of holdings across the manufacturing services and banking sectors. The Group, founded by Shri P.D. Hinduja in 1914, has activities across three core areas: Investment Banking, International Trading and Global Investments. As part of its Global investments, the Group owns businesses in Automotive, Information Technology, Media, Entertainment & Communications, Banking & Finance, Infrastructure Project Development, Chemicals & Agri business, Energy, Real Estate and Healthcare.

The Hinduja Group also supports charitable and philanthropic activities across the world through the Hinduja Foundation.

Ashok Leyland is the flagship of the Hinduja Group and a leading manufacturer of commercial vehicles in India with 06-07 sales turnover of more than US $2 billion. With six manufacturing locations at Chennai, Hosur (three plants), Alwar and Bhandara, the Company has an annual production capacity of 84,000 vehicles which is being enhanced to 100,000 in the current year. The Company has associate companies in the Czech Republic and the UAE and joint ventures in Sri Lanka and Bangladesh, and also exports to over 20 countries worldwide.

Nissan Motor Company’s global operations include automotive styling, engineering, consumer and corporate financing, sales and marketing, distribution and manufacturing. Since its establishment in 1933, Nissan has gained confidence and trust of customers around the world through its distinguished design and quality of its automobiles not only in Japan but also in the United States, Europe and other markets of the world. Nissan currently has manufacturing sites in Japan, United States, United Kingdom, Spain, Mexico, China, South Africa, Thailand, Egypt, etc. and the sales volume of Nissan brand vehicles in the world for the fiscal year 2006 exceeded 3.5 million vehicles. Nissan currently employs 182,273 people worldwide.

Nissan also manufactures, sells and distributes the luxury line-up under the Infiniti brand in the United States, GCC, Taiwan, Korea, China and Russia. Nissan’s presence in the world is even more enhanced through the Renault-Nissan Alliance that was established in 1999 with the view to create synergies in any part of the world.