Ashok Leyland puts off Nissan JV for the moment

Bus manufacturer Ashok Leyland Ltd has decided to put on the back burner, for the time being, its joint venture with Japanese major Nissan Motor Company.

The Chennai-based company had recently entered into a joint venture agreement with Nissan Motor to build and sell light commercial vehicles in the country. It is being said that the company has decided to put off the JV agreement for at least six months.

As per sources, the decision to postpone the joint venture has come about due to delays in acquisition of land for the proposed project. It is now believed that the project might get kicked off during the middle of 2011, instead of early 2011 as had been planned earlier.

It was in October 2007 that Ashok Leyland entered into a cooperation agreement with Nissan Motor Company to set up three joint venture companies for its light commercial vehicle business. The investment that was to flow into the business was estimated at about Rs 2,300 crore.

As per the agreement, three companies were given shape for vehicle manufacturing, power train manufacturing and technology development. The JV is said to be planning to produce the new generation Nissan Atlas F24 light-duty truck, and covering applications from 2.5 to 8 tonne gross vehicle weights.

The Nissan-Ashok Leyland LCV venture had a couple of months ago inked a Memorandum of Understanding with the Tamil Nadu government with regard to acquisition of around 380 acres of land to locate the facilities of the joint venture companies at Pillaipakkam, not too far off from Chennai city. It is expected that the Pillaipakkam plant will roll out its first vehicle in 2011-12. The investment is expected to be in the range of Rs. 4,000 crore.

Though the joint venture has been postponed, sources said that Nissan and Ashok Leyland have begun sprucing up their management teams so that the JV gets on track smooth later on.