Ashok Leyland Nissan Vehicles JV in which Ashok Leyland has a 51% stake, has been bogged down by a host of difficulties besides mounting losses for year ended 2014-15. Losses after taxation escalated to INR 791 crores as against INR 175 crores in previous fiscal. As per latest reports, turnover also dipped significantly from INR 1,052 crores to INR 1,030 crores putting undue pressure on the JV.
In happier times. (L) Mr Carlos Ghosn, CEO, Renault Nissan Alliance shaking hands with Mr Dheeraj Hinduja at the unveiling of Stile MPV in 2013. Ashok Leyland Stile is based on Nissan Evalia.
In May, Ashok Leyland introduced the AL Nissan LCV JV with greater impetus on manufacture and sales of goods vehicles while it moved out of the LCV passenger segment. The production of Stile van, a 7 seater passenger vehicle was also brought to a close due to lower demand while the company saw sales of pick-up vehicle Dost of which sales were up 11% to 7,829 units. As on date, there are 1 lakh Dost vehicles on the road.
With doubtful prospects for the future where alliance of Ashok Leyland Nissan JV is concerned, next phase of investment have been deferred for indefinite periods of time.
Hinduja Group’s flagship company Ashok Leyland, the second largest commercial vehicle manufacturer in India had entered into an agreement with Nissan Motors of Japan in 2007-08 for production and sales of LCVs in the 2.5 to 7.5 tonne segment under both Ashok Leyland and Nissan brands.
Ashok Leyland even had their brand ambassador, MS Dhoni, Captain, Indian Cricket Team market the Stile; but sales never took off.
Nissan Forced Ashok Leyland to write-off?
As per the report by Economic Times, there is a possibility that Nissan forced Ashok Leyland for a write-off. As the JV was a subsidiary of Ashok Leyland, they needed Nissan to sign account books in order to finalize company accounts. Without this, Ashok Leyland would not have been able to consolidate their own accounts nor get their accounts finalized or audited. This put Ashok Leyland on a backfoot.
Ashok Leyland tried convincing their partner to not take such a step and defer the write-off plan by at least one year. This will give them decent time to explore new business opportunities. But, Nissan officials were against this idea. Ashok Leyland had no other option but to write-off, reveals the report.