With Rs 172 cr net worth eroding, Nissan-Leyland Tech knocks on BIFR doors

The decision does not affect production of Nissan and Ashok Leyland vehicles, says Nissan; the board will take up the case for hearing on Feb 22, 2016

Nissan Ashok Leyland Technologies (NALT) has filed an application with the Bureau of Industrial and Financial Regulation (BIFR). The technology development company is owned 50:50 by the two partners.

Nissan's spokesperson said that NALT has filed an application with BIFR as per the Indian statutory process.

“This decision is routine and does not affect production of Nissan and Ashok Leyland vehicles now nor in the future. It also does not affect our existing customers. NALT is one of three joint ventures between Nissan and Ashok Leyland and is responsible for new vehicle development,” said the spokesperson.

According to the document filed with BIFR, the company was engaged in manufacture of automobile (LCVs). The company, which as per Form A, employed 57 workers, was established on May 22, 2008 and owns a factory located in Kanchipuram district. The company's Audited Balance Sheet (ABS) for Fiscal ended March 31, 2014 showed its networth (NW) as Rs 52.05 crore consisting of paid up share capital Rs 52.05 crore.

The entire net worth was claimed to have been fully eroded due to the accumulated losses, which stood at Rs 172.37 crore. The company's investment in plant and machinery was Rs 9.29 crore.

During the hearing held on October 8, 2014, counsel appeared for the company stated that the company is domiciled in India under the provision of Companies Act, 1956.

The company is engaged in the business of providing engineering design and development services for LCVs.

In 2008, Hinduja Group flagship Ashok Leyland and Nissan Motor Co., Ltd., announced three JV companies for the Light Commercial Vehicle (LCV) business in India for vehicle manufacturing, powertrain manufacturing and technology development.

The three companies include Ashok Leyland Nissan Vehicles Pvt Ltd, the vehicle manufacturing company in which Ashok Leyland has 51% Nissan has 49% stake in, Nissan Ashok Leyland Powertrain Pvt Ltd, the powertrain manufacturing company owned 51% by Nissan and 49% by Ashok Leyland and Nissan Ashok Leyland Technologies Pvt Ltd, the technology development company owned 50:50 by the two partners.

The aggregate investment in all three companies was planned to be around Rs 2,300 crore (around $575 million). The enterprise then announced that it will involve a capacity of 100,000 vehicles in the first phase, to be scaled up subsequently.

The venture was announced to develop and manufacture LCVs under both the Ashok Leyland and Nissan brands, in the 2.5-7.5 tonne segment.

The JV is going through a rough ride. In May this year, Ashok Leyland said that it has decided to stop production of its manufacturing commercial passenger vehicle STILE, which has been produced by the JV company, with Nissan. The company decided to write down its investment in the vehicle JV by around Rs 224.19 crore. The joint venture reported a loss of Rs 791 crore in 2014-15.

In a press conference after announcing company's results, when reporters queried about the performance of JVs, Gopal Mahadevan, CFO, Ashok Leyland said that in automobile industry it is not strange to withdraw the product if it is not doing well. He added the company had invested around Rs 500 crore in the joint venture, which was reduced by Rs 214 crore.