The Hindu Business Line : M&M to form joint venture with Navistar

Mumbai, Nov 2 Mahindra and Mahindra Ltd said on Friday that it would be setting up a joint venture with equity participation from a US company for manufacturing diesel engines in India.

The company has signed agreement with International Truck and Engine Corporation, a wholly owned affiliate of Navistar International Corporation, to manufacture engines for medium and heavy commercial vehicles.

The joint venture, to be named Mahindra International Engines Ltd (MIEL), will be 51 percent owned by the M & M and 49 percent owned by Navistar, the largest combined commercial truck, school bus and mid-range diesel engine producer in the US.

The combined investment of the two companies will be around $90 million over the next five years.

Greenfield project

The new company will set up a greenfield project with a capacity to make 25,000 units per annum, ramping up to 40,000 within five years. The plant is scheduled to start production by April 2009.

“Our plant will produce world-class engine models for both the Indian and global export markets,” said Mr Anand Mahindra, Vice-Chairman and Managing Director, Mahindra Group.

For Navistar, this is part of its global strategy to leverage technologies and manufacturing expertise to achieve a competitive cost structure. Also,“ this represents an opportunity to enter India and a regional export market with trucks and engines,” said Mr Daniel C. Ustian, Navistar Chairman, President and CEO.

Both M&M and the Navistar affiliate will have five directors each on the board of Mahindra International Engines Ltd. Mahindra will appoint the chairman and Navistar International the managing director.

This is Mahindra’s second joint venture with Navistar, following a 2005 joint venture to make light, medium and heavy commercial vehicles for India and export markets.

Mahindra & Mahindra Ltd’s shares fell 1.23 per cent to Rs 755.55 on the BSE.