The Hindu Business Line : Mahindra inks deal with US co to make trucks, buses in India

MAHINDRA & Mahindra Ltd (M&M) and International Truck & Engine Corporation of the US formally signed on Thursday their earlier announced agreement for a 51:49 joint venture to manufacture trucks and buses in India.

According to Mr Anand Mahindra, Vice-Chairman & Managing Director, the move will widen M&M's presence in the transport industry and scale up its business.

"We want to be the most skilled automobile company out of India," he said of the business verticals, including car and truck manufacturing joint ventures that the company had created in the recent past.

Transfer of LCV facility: M&M has transferred its light commercial vehicle (LCV) manufacturing facility at Zaheerabad as part of its contribution to the new venture, Mahindra International.

The facility was valued at Rs 48 crore and the transfer would be reflected in M&M's third quarter accounts. The total investment proposed at Mahindra International was $80 million (Rs 370 crore), typical debt-equity ratio at M&M projects being 0.5:1. Investment break-up was not final yet.

The money will primarily go towards truck production, cab building and engine testing facilities, Mr Arun Pande, appointed managing director of Mahindra International, said at a press briefing. The total capacity planned was 70,000 units per annum, composed of 20,000 LCVs and 50,000 medium and heavy commercial vehicles. As with its joint venture for car manufacturing with Renault, here too, M&M will earn a contract-manufacturing fee from Mahindra International.

To suit Indian conditions: The new trucks are slated for rollout in 2007. The company aims to be in every segment of the truck market, from 6-tonne to 35-tonne gross vehicle weight (GVW), with variants for passenger transport, cargo and specialised load applications.

Mr Pande said the products would be largely based on existing models but engineered for Indian conditions.

The joint venture is targeting a 15 per cent domestic market share in its relevant market segment, over a period of 5-6 years.

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