Ashok Leyland – Nissan sign restructuring agreement, embark new phase

Ashok Leyland and Nissan India formed a JV back in 2007. Under this JV, three companies were formed – Ashok Leyland Nissan Vehicles Pvt Ltd, Nissan Ashok Leyland Powertrain Pvt Ltd, and Ashok Leyland and Nissan Ashok Leyland Technologies Pvt Ltd.

In the first company under the JV, Ashok Leyland owned 51% stake while Nissan India owned 49% stake. In the second company, Nissan India owned 51% stake and Ashok Leyland owned 49% stake. In the third company, both Ashok Leyland and Nissan owned 50% stake each.

Ashok Leyland Dost 2016 Auto Expo

All three companies were formed with one aim, to reduce manufacturing cost of vehicles offered under the JV. A total of INR 509 crores was invested in the three companies. The breaking point came when the three companies reported losses to the tune of INR 791 crores in 2014-15. This resulted in Ashok Leyland not only filing a lawsuit against Nissan India earlier this year.

All that seems to be in the past now as the two companies announced a restructuring agreement today. As per the new agreement, Ashok Leyland will buy Nissan India’s entire stake in the JV. All three companies under the JV will become wholly owned subsidiaries of Ashok Leyland.

ashok leyland stile

The new phase of Ashok Leyland and Nissan India business relationship will commence immediately. As per this new agreement, “Ashok Leyland will continue to build, under a licensing agreement, the successful Dost and Partner light commercial vehicles, which are based on Nissan’s design, engineering and technology. Servicing and parts availability for customers will be ensured by a technical support arrangement. In addition, the two companies have agreed to continue a deal to procure made-in-India parts to Nissan.”

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