Tuesday, January 16, 2007

Mahindra plans 2,500-cr heavy vehicle plant near Pune


MUMBAI: Mahindra & Mahindra has committed to an investment of Rs 2,500 crore near Pune to set up a greenfield facility. The new facility, M&M’s fourth in the state, will manufacture commercial trucks through its joint venture with US-based International Truck and Engine corp (ITEC).

The plant will manufacture 50,000 medium and heavy commercial vehicles for the Mahindra-International JV and the remaining capacity will be utilised to manufacture new generation of M&M vehicles, mainly those used for commercial purposes. Spread over 700 acres, the facility will begin production in two years and will have an initial capacity of 2,50,000 vehicles which can be increased in future.

The company refused to comment on what other M&M vehicles will be manufactured in the new facility but Anand Mahindra, vice-chairman and managing director of M&M said, “With the economy growing at 9% we have no worries about what to do with unutilised capacities.“

Pawan Goenka, president-automotive sector, M&M added, “Between this project and our new facility with Renault, we are making sure we have enough capacity for the next 10-15 years for all our future product lines.” M&M signed a 51: 49 joint venture agreement with ITEC in 2006 and has been scouting around for a suitable location for its facility.

The new plant will come under a new company in which M&M will hold a majority stake. Of the Rs 2,500 crore investment which will be made over the next 5-6 years, Mahindra-International will put in Rs 400 crore and the rest will be financed by M&M through internal accruals and debt.

The joint venture will produce medium and heavy commercial buses and trucks which will be designed and developed by the two companies based on ITEC’s existing product line. The vehicles will be distributed through M&M’s distribution network and will also be exported through its own as well as ITEC’s and M&M’s overseas networks.

While the JV also includes M&M’s existing range of light commercial vehicles, which are currently being manufactured in Zaheerabad and marketed under the Mahindra International brand name. As per the terms of their arrangement joint venture company will manufacture commercial vehicles with over 3.5 tonne capacity which leaves M&M free to manufacture smaller vehicles including those in the very lucrative 1-tonne segment.

With M&M’s latest investment announcements the Maharashtra state has crossed the Rs 10,000-crore mark in auto investments with companies like Tata Motors-Fiat, General Motors, Mico, Volkswagen and Daimler Chrysler choosing the state for future expansions.

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