The 8-year-old partnership between Ashok Leyland and Nissan is heading for a break-up with the Japanese firm serving termination notice for one of the three joint ventures they have formed together in the latest flare-up between the partners.
The development comes after the Indian partner dragged Renault Nissan Automotive India Pvt Ltd (RNAIPL) to the court over alleged violations of contract agreement and flouting of Export Promotion Capital Goods (EPCG) scheme regulations.
In May 2008, Ashok Leyland and Nissan had formed three JVs -- Ashok Leyland Nissan Vehicles Ltd (ALNVL) for vehicles manufacturing; Nissan Ashok Leyland Power Train Ltd (NALPT) for making power trains; and Nissan Ashok Leyland Technologies Ltd (NALT), which is a technology joint venture.
The partners have invested about Rs 1,000 crore as equity between then.
"The future of the partnership looks bleak. Already Nissan has served a termination notice for the technology joint venture. There are lots of differences between the partners," a source said.
When contacted, spokespersons of both Ashok Leyland and Nissan India declined to comment on queries regarding the future of their partnership.
It is understood that the annual licensing fee to be paid to Nissan by the NALT for using Nissan technology is over Rs 20 crore and over Rs 2 crore is currently due.
Highlighting the implications of Nissan's termination notice for the technology JV, a source said: "Ashok Leyland won't be able to use Nissan technology in any of the JV products."
Another person in the know of development said such has been the breakdown in their relationship that Nissan nominee directors have not been coming to board meetings called by Ashok Leyland.
A source said while the Indian partner is peeved at Nissan for refusing to infuse capital, the Japanese partner has been asking for a sustainable business plan to be discussed at the Board level for all the three JVs as they have been making losses in the last five years.
Ashok Leyland is also not happy with Nissan's demand for more royalty by way of adopting cost plus structure for the successful light commercial vehicle, Dost, but the Japanese firm feels that it is only the Indian firm that is benefiting from the JV as Nissan's sole product Evalia from the JV hasn't worked, sources said.
Last year, Ashok Leyland had announced that it has made an impairment provision of Rs 214 crore out of total investment of Rs 509 crore in the three Nissan JV entities.
Allegations have also been made that the engine JV, NALPT, in which Nissan holds 51 per cent has held back supply of engines "citing trade dues".
"It is difficult when partners in a JV start acting in such a manner that they hurt the interest of the very company they are a part of it," a source said.
In the petition filed earlier this month in the district court of Kancheepuram, Ashok Leyland alleged RNAIPL of wrongfully using capital goods imported under EPCG scheme meant for vehicle manufacturing by ALNVL.
The vehicle JV had signed an agreement with RNAIPL to utilise the latter's facility at Oragadam to produce multi-purpose van Evalia (sold by Nissan) and Stile (by Ashok Leyland) using the imported capital goods. Due to poor market response production of these two vehicles have stopped.
Ashok Leyland claims that under a contract RNAIPL is not allowed to use its assets for manufacture of any other vehicle.
The spokesperson of Ashok Leyland confirmed filing a petition against RNAIPL but declined to share details.
A Nissan India spokesperson said: "We have received the notice from Ashok Leyland and we are contesting it. We are not in violation of any of the terms of our agreements with Ashok Leyland and dispute their claim."
The spokesperson further said: "Import duty on the machines is due because exports by the JV did not reach the expected level. We are cooperating with the authorities to resolve this matter.
