After a prolonged legal battle over issues relating to their LCV joint venture, Hinduja flagship commercial vehicle major Ashok Leyland (ALL) and Japan auto maker Nissan Motor Co have finally decided to part ways. The companies have chalked out a business restructuring agreement under which ALL would buy out the Nissan stake in all its three JVs.
For the time being, however, ALL will continue to build the JV companies’ LCVs Dost and Partner which are based on Nissan’s design, engineering and technology, under a licensing agreement. ALL and Nissan jointly on Wednesday announced the restructuring agreement that will enable both the companies to enter into a new phase in their business interaction.
Under the pact, Nissan has agreed to sell to ALL all of Nissan’s shares in three joint venture companies that were formed in 2008. These joint ventures were meant to focus on technology development, and manufacturing of power-trains and vehicles.
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. The process is expected to be concluded later this year.
Vinod Dasari,MD, ALL, said: “We have decided to acquire Nissan’s stake in the three joint venture companies, and this will help focus our efforts to concentrate on our core business initiatives and our customers. We will continue our relationship with Nissan under the new arrangement.”
The new phase of business interaction will begin immediately. ALL 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.