Mahindra, Renault plan greenfield plant

Mahindra and Mahindra has announced that the company would set up a greenfield facility in India with French car maker Renault with a production capacity slated to touch 5,00,000 units a year in five years. A memorandum of understanding (MoU) was signed in this regard today.

The alliance has narrowed down the location to two sites in two states from the earlier choice of five, which included states like Karnataka, Maharashtra, Uttaranchal and Tamil Nadu. It is believed that the location of the new site would have better terminal connectivity to ensure ease of shipments.

"The facility would not only be producing Renault's mid-sized car Logan but would also feature production of new products from Mahindra which would include utility vehicles (UVs) and sports utility vehicles(SUVs). There would also be enhancement in production of the existing range of Mahindra vehicles", Pawan Goenka, president (automotive sector) of Mahindra and Mahindra, said.

Renault would initially be importing 50% of the components for its vehicle and the balance of it would be sourced locally. However, the dependence on imports would decline in the future as the tie- up aims to rely on localising the components.

According to the MoU, which entitles Renault for commercialising the production of Logan in India, Mahindra will enjoy 50% of the ownership rights, and the rest would be shared between Renault and Nissan.

The production is expected to begin in 2009 with an initial installed capacity of 3,00,000 vehicles per year.

Commenting on the tie-up, Carlos Ghosn, President and CEO of Renault, said: "I am delighted to announce the deepening and enlarging of our partnership with Mahindra in what we see as a great oppurtunity for Renault's development in India. This gearing up of our presence in one of the fastest growing markets in the world is key to our commitment to international growth".

Anand Mahindra, vice chairman and managing director of Mahindra and Mahindra, said: "It is the chemistry that we discovered when the Mahindra-Renault joint venture was born. The partnership will go a long way in making India a global automotive market."

The product range would be marketed by Mahindra-Renault and will be sold through the former's outlets with the French car company contributing with its expertise in engineering, manufacturing and adaptation.