Daimler-Hero LCV truck venture in Chennai, Tamil Nadu

Tamil Nadu, India will soon see more investment in the automobile sector soon. A joint venture between Daimler and Hero Group of India, worth Rs 4,400 crore, is all set to come up in Chennai, capital of the southern state.

Christened Daimler Hero Motor Corporation (DHMC), the joint venture is expected to set up a manufacturing plant which would roll out light and medium commercial vehicles – that’s small trucks for you. The Chennai plant would focus initially on light and medium commercial vehicles.

DHMC plans to produce 70,00 trucks a year, Daimler announced yesterday.

While Daimler will invest Rs 1,386 crore for 60 per cent in the equity, Hero Group will pump in Rs 900 crore for the remaining 40 per cent.

The LCV truck plant is to come up on a 1,000 acre campus in Chennai, the new plant is being tipped as an integrated manufacturing facility. The plat would begin operations from 2010, with an initial production capacity of 70,000 trucks per year. Auto industry sources pointed out that the plant would be an expandable facility. This means that by year 2012, the plant would also be rolling out heavy commercial vehicles in the 49 tonne pay load capacity.

The new facility under the DHMC would provide direct employment to around 2,000 people. Playing its investor-friendliness card, the Tamil Nadu administration has come forward and said that the DHMC project could be set up under the Tamil Nadu ‘Ultra Mega Integrated Automobile Projects Policy’ which offers huge concessions to automobile projects involving an investment of not less than Rs 4,000 crore in a single location, said a report. Besides, the JV would also stand to gain more as it would be extended total refunds on VAT and CST, 100 per cent exemption from stamp duty, concessional land and concessional power supply, it added. Further, the entire ‘input tax’ will also be refundable.

However, for these sops to be availed of, the LCV truck JV will have to start production within seven years of signing the MoU with the government. It is expected that the plant will be kicked off with an R&D centre focusing on light and medium commercial vehicles being developed to suit Indian conditions.