Mumbai, June 14
MAHINDRA & Mahindra Ltd (M&M) on Tuesday announced a 51:49 joint venture with the US-based International Truck and Engine Corporation to manufacture trucks and buses in India. The project cost would be about Rs 400 crore.
The debt-equity ratio is yet to be decided but M&M's light commercial vehicle business would be transferred to the joint venture and factored in as part of its equity contribution (M&M's notice to the BSE on the matter included its transport solutions group also in the transfer). Senior officials said that in this transfer, the facility's manufacturing assets would continue to vest with M&M while the joint venture would own product designs.
M&M's current commercial vehicle-capacity of 10,000-15,000 units would be raised to 50,000 units, the additional capacity also adhering to M&M with manufacturing being done for the joint venture against a fee.
The facility would include cab assembly, vehicle assembly and paint shop. Assets such as the latter can be optimally utilised if vested with M&M as it has other products too to run through them, officials explained. The new trucks / buses would have 90 per cent local content from the start and the joint venture would leverage M&M's local distribution network and tap into the overseas distribution channels of M&M and International for exports.
The Mahindra-International tie-up would begin rolling out its products in 2007. "Focus would be on medium and heavy commercial vehicles," Dr Pawan Goenka, Chief Operating Officer (Automotive Sector), M&M, said after a press briefing addressed by Mr Anand Mahindra, Managing Director, M&M, and Mr Deepak T. Kapur, President (Truck Group), International Trucks and Engine Corporation.
While products available for introduction here include International commercial vehicles in the 12, 16, 33 and 44-tonne categories, the exact platform has not been chosen. Once chosen, it would be redesigned for Indian conditions.
The business model resembles the structure adopted earlier for M&M's 51:49 partnership with Renault to manufacture the Logan car.
Mirroring trends from that venture, in the M&M-International tie-up too, M&M will appoint the new company's chairman, managing director and chief financial officer. International will appoint the heads of sourcing and engineering.