Ashok Leyland, Nissan revisit biz plan for JVs

Hinduja flagship company Ashok Leyland and Japan's Nissan are reviewing business plans for their three joint ventures that envisaged an investment of Rs 2,300 crore for manufacturing of light commercial vehicles, powertrains and technology development.

"We are reviewing the business plans, not the joint venture. Both the partners are going back to the drawing board on how to scale back the initially envisaged capacity in view of the downturn and with how much capacity to start with," Ashok Leyland Chief Financial Officer K Sridharan told PTI.

Last year the two companies announced forming of an alliance, under which three JVs were formed for manufacturing LCVs, powertrains and technology development, with an initial target to produce 1,00,000 units of LCVs and to be scaled up subsequently.

He said the partners were in discussion on how to optimise resources and what kind of products to be introduced first stating that the investments would also be scaled down.

"What will be the scaled down version will be known in the next few months," Sridharan said.

"We are seriously discussing the issues now. We are looking at what products to be introduced and what products to be deferred in the first phase. So we are revisiting the business plans," he added.

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 ongoing 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 Tamil Nadu government to set up their integrated plant at Pillaipakkam, 40 kms off Chennai over 380 acres of land for production of vehicle and powertrain and setting up of a technology development unit.

The joint venture had planned to roll out the first vehicle by 2010-2011 with exports expected to account for 20 per cent of the first phase capacity of 100,000 units of LCVs.

Earlier this week, Ashok Leyland had said it was cutting its planned investment of Rs 3,200 crore in the next three years to Rs 2,000 crore as it continued to reel under a demand slump of commercial vehicles. Last year, it had announced an investment of Rs 3,200 crore for setting up of a commercial vehicle plant and a new engine and gearbox plant at Ennore.