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Ashok Leyland and Nissan Sign Agreement for LCV Partnership



31st October, 2007

Nissan Atlas F24

India's Hinduja Group flagship company, Ashok Leyland and Japan's Nissan Motor Co., Ltd., have this week signed a binding Master Co-Operation Agreement (MCA) for the formation of three joint venture companies supporting the Light Commercial Vehicle (LCV) business. The agreement was signed in Chennai by Mr. R. Seshasayee, Managing Director of Ashok Leyland and Mr. Carlos Ghosn, President and CEO of Nissan Motor Co., Ltd.

This agreement follows the signing of the Heads of Agreement (HoA) document in August and reflects progress achieved with the detailed project evaluation. It formalises the partnership between the companies, which will include the development and manufacture of LCV products under both the Ashok Leyland and Nissan brands as well as cooperation in sales.

The two companies anticipate an investment in the neighbourhood of US$500 million for the implementation of three joint venture companies that are to cover the following business areas:

  • Vehicle Manufacturing Company - a company with exclusive rights to manufacture LCV products in India for both the partners. Manufacturing facilities will be located in India and the company will be owned 51% by Ashok Leyland and 49% by Nissan. Production will start in 2010 and will include the new generation Nissan Atlas F24 light-duty truck, in addition to a range of products covering applications from 2.5 to 8 tonne gross vehicle weight (GVW). In the medium term, production volume, intended for both Indian and export markets, is expected to grow beyond 100,000 units annually.
  • Powertrain Manufacturing Company - responsible for the manufacture and assembly of engines and other drivetrain components to be fitted in LCV products and for export. Manufacturing will be located in India and the company will be owned 51% by Nissan and 49% by Ashok Leyland.
  • Technology Development Company - responsible for the development of LCV products and related powertrains, destined for the Indian and select global markets. This Joint Venture company will be owned 50:50 by the two partners and located in Chennai, India. The products developed will be sold under both the Ashok Leyland and Nissan brands.

In addition, the two partners also expect to cooperate to leverage each other's dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leyland's dealers in India and for Ashok Leyland, access to Nissan dealer networks in specific export markets.

The Joint Venture is also set to benefit from leveraging the sourcing strengths of both the partners.

Executive comments:

Mr. Gopichand P. Hinduja, President of the Hinduja Group of Companies:
"The Hinduja Group is firmly committed to the expansion of its automotive business globally. Nissan, under the leadership of Mr. Carlos Ghosn, has shown exemplary vision in using partnerships for growth. With this partnership I am confident that Ashok Leyland's growth plans in the LCV business will be realised."

Mr. Dheeraj G Hinduja, Co-Chairman, Ashok Leyland:
"We hope to leverage Ashok Leyland's marketing insight, product development capabilities and dealer network, together with the excellent engineering foundations inherent in Nissan's global products. The products will set new benchmarks in technology and customer value."

Mr. R Seshasayee, Managing Director, Ashok Leyland:
"An effective entry into the LCV segment has been on Ashok Leyland's radar for some time now. This partnership with Nissan will allow both companies to develop a range of cost-competitive and customer-oriented LCVs targeted not only to the Indian market but several select markets overseas. We are confident that the Joint Venture structures will facilitate both companies to achieve this objective with equitable contributions."

Mr. Carlos Ghosn, President and CEO, Nissan:
"The LCV business is one of Nissan's most important global growth engines. This agreement accelerates our LCV business in India and lays the foundation for further growth through exports. Ashok Leyland shares our vision of a successful win-win partnership, where both companies are focused on value generation for all stakeholders. We see India emerging as an important hub in Nissan's global LCV manufacturing footprint."

Mr. Andy Palmer, Corporate Vice President, Nissan:
"With the launch of our first product in 2010 we will be able to participate in the growth of the Indian LCV market with reliable and innovative vehicles that will match the expanding need for transportation of light cargo in small to medium distances. We are now focused on selecting the best production site to ensure the optimum mix of efficiency of operations, logistics and quality of the output."

About Hinduja Group

The Hinduja Group is a multi-billion dollar global investment and banking group with a diversified global portfolio of holdings across the manufacturing services and banking sectors. The Group, founded by Shri P.D. Hinduja in 1914, has activities across three core areas: Investment Banking, International Trading and Global Investments. As part of its Global investments, the Group owns businesses in Automotive, Information Technology, Media, Entertainment & Communications, Banking & Finance, Infrastructure Project Development, Chemicals & Agri business, Energy, Real Estate and Healthcare.

The Hinduja Group also supports charitable and philanthropic activities across the world through the Hinduja Foundation.

About Ashok Leyland

Ashok Leyland is the flagship of the Hinduja Group and a leading manufacturer of commercial vehicles in India with 06/07 sales turnover of more than US$2 billion. With six manufacturing locations at Chennai, Hosur (three plants), Alwar and Bhandara, the Company has an annual production capacity of 84,000 vehicles which is being enhanced to 100,000 in the current year. The Company has associate companies in the Czech Republic and the UAE and joint ventures in Sri Lanka and Bangladesh, and also exports to over 20 countries.

About Nissan

Nissan Motor Company generated global net revenues of 10.468 trillion yen in 2006. Nissan is present in all major global automotive markets selling a comprehensive range of cars, utility trucks, SUVs and light commercial vehicles under the Nissan and Infiniti brands. Nissan employs over 180,000 people worldwide.

Under the Nissan Value-Up business plan, the company continues to focus on long-term sustainable and profitable growth driven by three commitments:
- To maintain top level of operating profit margin among global car makers
- To achieve global sales of 4.2 million units in 2009
- 20% return on invested capital on average over the course of the plan

In 2007, Nissan will introduce 11 all-new products globally, with a further 33 to be introduced during the following three years.

Other Nissan content: here

Ashok Leyland content: here

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