The automakers have thus announced a restructuring agreement, under which, Ashok Leyland will buy the existing stakes of Nissan in three Joint Ventures (JVs), which were established in 2008.
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Under an agreement penned by the two companies on Wednesday, Nissan will sell its entire share in the three joint ventures to Ashok Leyland.
Under the agreement signed on September 7, 2016 by senior executives of Nissan and ALL, these joint ventures will become wholly-owned ALL subsidiaries, upon receipt of all necessary approvals from the regulatory authorities in India.
“Under the licensing arrangement with Ashok Leyland, the Indian commercial vehicle customers can continue to benefit from Nissan’s engineering, wherein servicing and parts availability will also be ensured”, he added. Moreover, service and spare parts availability to the customers will be taken care of by a technical support arrangement. In addition, the two companies have agreed to continue a deal that sends made-in-India parts to Nissan.
The two auto makers 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 in May.
Japanese auto major Nissan Motor Company has chose to end its over eight-year-old joint venture arrangement with the commercial vehicle maker Ashok Leyland.
Considering the significant uncertainty in the continuity of the joint venture operations and the accumulated losses of the entities, it had provided for the carrying value of the investment in the companies, aggregating ₹296 crore.
“We are pleased to be moving forward into a new phase of our business with Ashok Leyland”, said Philippe Guérin-Boutaud, Nissan corporate vice-president in-charge of the global light commercial vehicle business unit. Later, Ashok Leyland too sued Nissan, alleging a breach of the partnership agreement. Nissan had to discontinue the Evalia, and Ashok Leyland shelved the Stile after poor demand for the two products. This resulted in Ashok Leyland not only filing a lawsuit against Nissan India earlier this year. Only the Dost LCV sold by Ashok Leyland managed to do well in the market.
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“Stile and Evalia we had stopped manufacturing long back”, said Ashok Leyland’s Chief Financial Officer Gopal Mahadevan in a telephonic interview with BloombergQuint.
