M&M to transfer LCV business to JV for Rs 48 cr

Mahindra & Mahindra Ltd will transfer the company's light commercial vehicles (LCV) business to Mahindra International Pvt (MIPL) for Rs 48.4 crore.

The company took the decision following shareholders' approval through a postal ballot.The transfer to the joint venture is expected to enhance the value of the LCV business, sharing the technical expertise of the JV partner.

MIPL was set up as a joint venture between M&M and the US-based International Truck and Engine Corporation in June, 2005, to manufacture and market light, medium and heavy commercial vehicles for local and overseas markets. Mahindra owns 51 per cent stake in the JV, which was set up with an initial investment of Rs 400 crore.

The venture would produce commercial trucks and buses beginning 2007 at one of M&M's automotive plants. The factory will have a capacity to produce a wide range of commercial vehicles, and will include cab assembly, vehicle assembly and a paint shop.

The vehicles will be 90 per cent localised owing to availability of quality materials from Indian suppliers.

The new company will make vehicles in the 7-35 tonne range.

The JV will have a capacity to make 15-20,000 vehicles which will be immediately expanded to 50,000 vehicles. M&M will manufacture the vehicles, while the design and sourcing will be looked after by the JV.

The JV will enable International to use India as a significant supply base for sourcing components and materials, and to provide engineering services for the design and development of truck and bus products for International globally and the JV.