Ashok Leyland will buy partner Nissan’s stakes in Ashok Leyland Nissan Vehicles, Nissan Ashok Leyland Powertrain and Nissan Ashok Leyland Technologies.
The partners on Wednesday announced a restructuring agreement in which Nissan agreed to sell to Ashok Leyland all of its shares in the three joint ventures (JV) that were formed in 2008. The value of the transactions was not disclosed.
These companies will become wholly-owned Ashok Leyland subsidiaries. The process is expected to be concluded this year. Ashok Leyland will continue to manufacture under a licensing agreement the Dost and Partner light commercial vehicles that are based on Nissan’s design, engineering and technology. Servicing and spare parts will be ensured by a technical support arrangement. The firms will continue their arrangement to procure spare parts from India for Nissan.
“Under the licensing arrangement with Ashok Leyland, Indian commercial vehicle customers can continue to benefit from Nissan’s engineering with servicing and parts availability also ensured,” said Philippe Guérin-Boutaud, Nissan’s corporate vice-president in charge of the global light commercial vehicle business unit.
“We have decided to acquire Nissan’s stake in the three JV units. This will help us focus on our core business initiatives. We will continue our relationship with Nissan under the new arrangement,” said Vinod Dasari, managing director, Ashok Leyland.
Ashok Leyland had in 2014-15 made an impairment provision of Rs 214 crore on an investment of Rs 509 crore in the three joint ventures. It has made a series of allegations against Nissan and has moved court for legal remedy.
The loss of Ashok Leyland Nissan Vehicles has declined from Rs 791.16 crore in 2014-15 to Rs 61.87 crore in 2015-16. Nissan Ashok Leyland Powertrain made a profit of Rs 71.94 lakh in 2015-16 against a loss of Rs 3.08 crore in 2014-15. Nissan Ashok Leyland Technologies made a profit of Rs 5.05 crore in 2015-16 against a Rs 9.78 crore loss in 2014-15.
Ashok Leyland has a 51 per cent stake in Ashok Leyland Nissan Vehicles and Nissan Ashok Leyland Powertrain and a 50 per cent stake in Nissan Ashok Leyland Technologies.