Ashok Leyland and Nissan review JV plans amid downturn

05 February 2009

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.