Relationship between Ashok Leyland and its joint venture partner Nissan Motor Company has turned bitter as the business entities have been failing consistently in achieving the goals. The situation appears to have taken a turn for worse as the Indian automaker registered a case against Renault-Nissan Automotive India Pvt. Ltd. (RNAIPL) and Nissan Motor Company, accusing them of “criminal breach of turst” and “arm-twisting”.
The case has been registered at a district court in Kancheepuram, Tamil Nadu. Hinduja Group’s flagship company said that it’s Japanese partner has taken actions that violate the terms and conditions of the partnership in addition to illegally diverting and using plant machinery against the rules of Export Promotion Capital Goods (EPCG) scheme.
In 2008, Ashok Leyland and Nissan entered into three joint ventures and the legal dispute in question involves Ashok Leyland Nissan Vehicles (ALNVL) which was created to manufacture Ashok Leyland Stile and Nissan Evalia.Both Nissan Evalia and its badge engineered twin Ashok Leyland Stile failed to create an impact in the market.
The JV imported INR 334 cr worth machinery under EPCG scheme of which equipment worth INR 117 crore were installed at RNAIPL’s plant at Oragadam for manufacturing the MPV twins in question. However, production of both models had been called off due to poor demand in the market.
Ashok Leyland claims that, after the production came to a halt, Directorate General of Central Excise Intelligence (DGCEI) raised a due on the JV for payment of duties that were waived off as a part of the EPCG scheme. In its petition, the India CV major said that RNAIPL had been using JV’s machinery to produce Nissan vehicles without taking permission from the JV. The company also accuses its partner Nissan of not cooperating in regularizing the breach.
In response, Nissan told Times of India:
We are not in violation of any of the terms of our agreements with Ashok Leyland and dispute their claim. 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.