Mahindra plans CV unit in Pune

Mahindra and Mahindra (M&M) will set up a medium and heavy commercial vehicle plant in Maharashtra at a cost of Rs 2,500 crore. This will be the fourth automotive plant of M&M in the state.

The utility vehicles and tractor major signed a memorandum of understanding with the state government today for setting up the plant through a 51:49 joint venture with the US-based commercial vehicle maker, International Truck and Engine Corporation (ITEC).

The proposed plant in Pune, to be spread over 700 acres, will have the capacity to manufacture 250,000 vehicles annually, with an option of a capacity expansion. Production is slated to start in two years.

The JV will produce 70,000 units of medium and heavy commercial vehicles (MHCVs) per year, catering to both domestic and overseas markets. The localisation content of the vehicles will be 90 per cent from the begining.

The venture will leverage M&M's distribution network to rapidly launch a full range of M&HCV based, in part, on ITEC's existing product line and adapted for the Indian market.

"M&M is looking to export 20 per cent of its total produce which could be roughly at 40,000-50,000 vehicles per annum. The company is looking to become a major export player. The vehicles will be designed and developed with in-house capabilities. M&M already has a presence in the light commercial vehicle (LCV) segment," Pawan Goenka, President (Automotive Sector), M&M, said.

The plant will have the capacity to produce a wide range of commercial vehicles including cab assembly, vehicle assembly and a paint shop. M&M's future generation of vehicle, currently under development, will principally be used for commercial purposes including manufacturing of engines and transmission will form a part of this venture.

Anand Mahindra, Vice-Chairman and Managing Director, Mahindra and Mahindra, said, "The ITEC JV is a significant step in our evolution as an integrated player in the global automotive market. The truck business is very vital for the industry's growth as a whole. We are looking to establish ourselves as a major player in the heavy commercial vehicle market not just in India but also internationally".

John Lamoureux, Vice President, truck strategy and business operations, ITEC, said, "The new facility would be key to our global expansion that we wish to achieve by partnering with M&M. This greenfield facility which is coming after a gap of 15 years for ITEC will help leverage M&M's synergies with the state to realise the full potential of our strategy."

VK Jairath, Secretary (Industries), Government of Maharashtra, said, "The auto industry has seen Rs 10,000 crore of invesment in Maharashtra in the recent past with this being fifth venture of the Mahindra group overall."

ITEC is the market leader in CVs of 8 tonne GVW and above, with sales of approximately 100,000 vehicles per year. International is also a world-wide leader in diesel engines in the 160-325 bhp range, with production of over 400,00 engines per year.