Hinduja flagship firm Ashok Leyland “impaired” a total of Rs 558 crore in 2015-16 on its investment in partnerships, subsidiaries and associates, including three JVs with Nissan which it termed as having “significant uncertainty” in their continuity.
In May 2008, Ashok Leyland and Nissan had formed three JVs — Ashok Leyland Nissan Vehicles Ltd (ALNVL) for vehicle 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.
The partners have invested about Rs 1,000 crore as equity between them.
“The company and its joint venture (JV) partner (Nissan Motors Ltd) are in discussions to resolve the uncertainty with respect to the continuity of the joint venture operations represented by three companies,” Ashok Leyland said in its Annual Report for 2015-16.
It, however, said the financial statements of these companies have not been adopted by the board of directors of respective companies.
“Under the circumstances, considering the significant uncertainty in continuity of the joint venture operations and the accumulated losses of the joint venture entities, the company has provided for the carrying value of the investment in the said companies aggregating Rs 296 crore,” Ashok Leyland added.
As per the annual report, the provision for diminution in the value of investments in ALNVL is Rs 195.87 crore while that of NALPT is Rs 74.04 crore and Rs 26.05 crore for NALT.
Ashok Leyland said it has made an impairment provision of Rs 107 crore towards Albonair Germany, Rs 150 crore towards Optare Plc, UK, and Rs 5 crore towards Albonair India.
“Thus, in all, your company has impaired Rs 558 crore during the year,” Ashok Leyland said in the report addressed to its shareholders.
Earlier this year, the Japanese firm had served termination notice for the technology joint venture after the Indian partner dragged Renault Nissan Automotive India Pvt Ltd (RNAIPL) to the court over alleged violations of contract agreement and flouting of Export Promotion Capital Goods (EPCG) scheme regulations.
In 2014-15, Ashok Leyland had announced that it had made an impairment provision of Rs 214 crore out of total investment of Rs 509 crore in the three Nissan JV entities.