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Ashok Leyland will buy out all of Japanese auto-maker Nissan’s shares in their three LCV joint venture companies formed in 2008, ending an impasse that had strained relations between them and triggered a legal tussle.
According to a joint press release, Ashok Leyland will continue to focus on the LCV business and the three joint ventures will become its wholly-owned subsidiaries. The process is expected to be completed later this year.
“We have decided to acquire Nissan’s stake in the three joint venture companies, and this will help focus our efforts on our core business initiatives and our customers. We will continue our relationship with Nissan under the new arrangement,” said Vinod Dasari, Managing Director, Ashok Leyland.
Ashok Leyland will continue to build, under a licensing agreement, the successful Dost and Partner light commercial vehicles, which are based on Nissan’s design, engineering and technology.
Servicing and parts availability for customers will be ensured by a technical support arrangement. In addition, the companies have agreed to continue a deal to procure made-in-India parts for Nissan, said a statement from Nissan.
“We are pleased to be moving forward into a new phase of our business with Ashok Leyland,” said Philippe Guérin-Boutaud, Nissan’s vice-president in charge of the Global LCV Business Unit.
The two firms had invested about ₹1,000 crore in the three joint ventures: Ashok Leyland Nissan Vehicles Ltd, Nissan Ashok Leyland Powertrain Ltd, and Nissan Ashok Leyland Technologies Ltd. But in the past couple of years, the partners accused each other of violating the agreements relating to the LCV business.
In its 2015-16 annual report, Ashok Leyland said the financial statements of the three companies had not been adopted by the board of directors of the respective companies.
Considering the significant uncertainty in the continuity of the joint venture operations and the accumulated losses of the entities, it had provided for the carrying value of the investment in the companies, aggregating ₹296 crore.
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