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Home arrow Alliances and Joint Ventures arrow Ashok Leyland’s shareholders to participate in the Nissan Joint Venture
Ashok Leyland’s shareholders to participate in the Nissan Joint Venture Print E-mail
Written by Anand   
Thursday, 19 June 2008
Mumbai: Ashok Leyland, has plans to fund its joint venture projects with Japan’s Nissan Motor Company by selling shares to its existing shareholders.

Last month,  Ashok Leyland had formed three joint venture companies with Japanese auto giant,Nissan Motor Company,at an estimated investment of around Rs.2, 400 crore. Both Ashok Leyland and Nissan will be investing Rs. 600 crores each in the joint venture projects .

Mr K. Sridharan, Ashok Leyland's Chief Financial Officer, told newsmen at the Analysts meeting in Mumbai that the company plans to raise part of the equity investment by allowing its shareholders a certain percentage in the joint venture. He said that the shareholders could get the entitlement converted to equity after the venture gets listed.

The three JV companies set up by Ashok Leyland and Nissan are:  Ashok Leyland Nissan Vehicles (ALNVPL) to manufacture light commercial vehicles, Nissan Ashok Leyland Powertrain (NALPPL) to manufacture powertrains  and Nissan Ashok Leyland Technologies (NALTPL), a technology development company.
Talking about the company’s expansion plans, Mr R. Seshasayee,  Ashok Leyland’s Managing Director announced that the company has created a capital expenditure programme of Rs. 3,000 crore over the next three years  to ramp up its production capacity from 84,000 vehicles a year to 1,84,000 vehicles by 2009-10. The company’s upcoming facility at Uttarakhand will have the capacity to manufacture 50,000 vehicles by March 2010.

Currently, trucks, which are considered the company’s cyclic business, contribute 68% to the company’s revenue. Buses, engines, logistic vehicles for defence and genset applications, considered the company’s non-cyclic business, make up the remaining 32% of the revenue. Mr Seshasayee said that the company was now looking towards increasing the contribution of the non-cyclical business from 32% to 45% in the next two years.

Keeping this goal in mind, the company is setting up an engine manufacturing facility at its Ennore plant to make 50,000 engines a year. The plant also has the facility to manufacture 50,000 gear boxes a year.

 In addition to this, the company is in the process of setting up an integrated chassis and bus assembly plant in UAE. This plant which is expected to be commissioned by the end of the year has the capacity to manufacture 2,000 units a year.

 The company also has plans to double its exports in the next three years and will target new markets such as Indonesia, Syria, Vietnam, Thailand, Honduras, Venezuela and Russia.

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