Flagship company of the Hinduja group, Ashok Leyland and its joint venture partner Nissan of Japan are in the process of reviewing business plans for three new ventures involving an investment of Rs2,300 crore for manufacture of light commercial vehicles, powertrains and technology development.
According to Ashok Leyland's chief financial officer K Sridharan the move is aimed to review the business plans not the joint venture. He said both partners are going back to the board to work out ways to scale back the initially planned capacity considering the downturn and to decide on the capacity to start with.
Last year the two companies entered into an alliance forming three joint ventures for manufacturing LCVs, powertrains and technology development. The initial target for the LCVs was set at 1,00,000 units to be scaled up over time.
In a statement, Nissan also said that their alliance ''is not called into question''.
''However, in today's environment of financial and economic crisis, Nissan is studying the optimisation of its investments for its LCV business unit. Studies are on and at this stage, we have no comment to make on the timing or outcomes. Nissan is committed to ensuring that the project's development is managed in the optimum way for all parties involved,'' it said.
The two companies have signed an MoU with the government of Tamil Nadu for setting up of an integrated facility for the manufacture of vehicle and power train and setting up a technology development unit. The plant will be set up at Pillaipakkam, 40 km off Chennai on a 380acres plot.
Under the plan the first vehicle would roll out by 2010-11. The first phase capacity was pegged at 100,000 units of LCVs of which 20 per cent of the production was meant for export.
Ashok Leyland, earlier this week said it was scaling down its planned investment of Rs3,200 crore over the next three years to Rs2,000 crore, as demand slump hit the commercial vechicles market.
Meanwhile, the company reported a reported a 73.17 per cent decline in commercial vehicles sales in January 2009 at 2,444 units compared with 9,112 units sold in the same month last year.
Domestic sales for the month were down by 76.10 per cent at 2,026 units against 8,477 units in corresponding month last year
Exports during the month declined by 34.17 per cent to 418 units compared with 635 units in the same period last year.