Iveco, Leyland agree to extend co-operation

Iveco and the Hinduja group, the main shareholders of Ashok Leyland, have entered into an agreement to increase the co-operation between Leyland and Iveco in the areas of sourcing, entry into new markets and technology transfer.

The agreement has been triggered by the new opportunities in the global automotive market.

R Seshasayee, managing director of Ashok Leyland, described the agreement as one that re-emphasised the need and potential for the mutual benefit of Iveco and Leyland.

Iveco, an arm of the Fiat group, and Ashok Leyland are both engaged in the manufacture of commercial vehicles. Iveco and the Hinduja group jointly hold about 51 per cent of Leyland's equity.

Before the current development, Iveco and the Hinduja group had an agreement to ensure cooperation between Leyland and Iveco. Seshasayee said that the new agreement was triggered by new opportunities that have come about.

The old agreement was not comprehensive enough, he added.

The new agreement covers three areas: technology access, component sourcing and entry into new markets.

Seshasayee said that following the agreement Leyland would have access to Iveco's technology, including that is necessary to meet emission standards mandated by the Euro IV norms.

(Indian commercial vehicle manufacturers are required to move to the easier Euro III standards in select cities by next fiscal year.)

Leyland will have the first option to get Iveco's technology, but at the same time, is not bound to take it, said Seshasayee.

A task force, made up of Iveco and Leyland hands, would seek to study the components that Iveco could source out of India, including Ashok Leyland.

Seshasayee said that Iveco and Leyland would adopt a joint approach to enter new markets such as China and Iran. Leyland already has a presence in the Middle-East and North Africa.

Sehashayee said that the agreement did not, in any way, preclude Leyland from markets where Iveco is already present.

The EURO 9 billion Iveco has 49 plants and 15 research and development centres spread across 19 countries. Taking to account its joint ventures and investments, Iveco is present in over 100 countries, including China.

Iveco manufactures and markets over 140,000 commercial vehicles every year. In contrast, the Rs 3,394 crore Ashok Leyland sold 48,654 vehicles (including light commercial vehicles and buses) in 2003-04.