Ashok Leyland to buy Nissan Motor stakes in their loss making joint ventures

Ashok Leyland yesterday struck a deal to buy Japan's Nissan Motor Co stake in three of their loss making joint ventures for an undisclosed sum.

"We have decided to acquire Nissan's stake in the three joint venture companies, and this will help focus our efforts to concentrate on our core business initiatives and our customers. We will continue our relationship with Nissan under the new arrangement," said, Vinod Dasari, Ashok Leyland managing director.

In 2008, Nissan Motor and Ashok Leyland signed three joint ventures for light commercial vehicles business, power train manufacturing and technology development. These are Ashok Leyland Nissan Vehicles Ltd for vehicle manufacturing; Nissan Ashok Leyland Power Train Ltd for making power trains and Nissan Ashok Leyland Technologies Ltd, a technology joint venture.

While Ashok Leyland has 51 per cent and Nissan has 49 per cent in both vehicle manufacturing and power train companies, they are 50:50 partners in the technology development company.

Both companies had invested about Rs1,000 crore as equity between them.

Ashok Leyland had earlier said it had written off Rs214 crore from the joint venture, which reported a loss of Rs791 crore in the last fiscal.

Under the terms of the new arrangement, both companies have agreed for a licensing pact for select vehicles.

"The new phase of business interaction will begin immediately. Ashok Leyland will continue to build, under a licensing agreement, the successful Dost and Partner light commercial vehicles, which are based on Nissan's design, engineering and technology," the statement said.

Servicing and parts availability for customers will be ensured by a technical support arrangement. In addition, the two companies have agreed to continue a deal to procure made-in-India parts to Nissan, the statement added.

The parting of ways comes six months after Nissan sent a termination notice to Ashok Leyland over the technology joint venture, after Ashok Leyland moved a district court near Chennai against Renault Nissan Automotive India Pvt Ltd over alleged violations of contract agreement and flouting of Export Promotion Capital Goods (EPCG) scheme regulations. (See: Nissan sends JV termination notice to Ashok Leyland)

Ashok Leyland had alleged that Nissan was using the manufacturing assets from the joint venture company for producing Nissan brand of cars instead of passenger vehicles developed and produced out of the joint venture.