Caught in the global meltdown wave, which has taken its toll on the Indian commercial vehicles market over the last few months, truck major Ashok Leyland Ltd (ALL) and Japanese auto giant Nissan have to decided to rework their Rs 2,400-crore light commercial vehicle (LCV) project, being set up near Chennai. Both the companies are currently involved in talks on how to take the project ahead under current circumstances, said K Sridharan, chief financial officer, ALL.

?As part of our discussions, it has been understood that the project cannot be taken up as per the original JV agreement or as aggressive as we had proposed earlier,? he said. ?Given the current market situation, it is not advisable for us to go ahead with the original plans. We are rather looking at bringing down the project cost and capacity initially. We believe it is lot more sensible to take up the project in a phased manner,? he added.

?Both the partners are involved in detailed discussions on the time schedule, size, investments, procurement of machinery, suppliers/ vendors, etc. We will attain clarity on the JV in the next two to three months,? Sridharan maintained.

The company had earlier announced a six to eight month delay in the implementation of the project, which is now expected to be completed in the later part of the 2010-11 fiscal.

In response to a query, Nissan India spokesperson, via e-mail, said, ?The industrial project of the Nissan-Ashok Leyland alliance is not called into question. However, in today?s environment of financial and economic crisis, Nissan is studying the optimisation of its investments for its LCV business unit.?

The spokesperson further said, ?Studies are ongoing and at this stage, we have no comment to make on the timing or outcomes. Nissan is committed to ensuring the project?s development is managed in the optimum way for all parties involved.?

It may be recalled that on May 26, 2008, ALL had announced the legal formation of three JV companies with Nissan for LCV business in India, including manufacturing vehicles, powertrain and technology R&D. This legal formation followed the signing of master cooperation agreement (MCA) entered into between the two companies in October 2007.

As per the agreement, both the companies had finalised the shareholding structure of three different JVs. ALL was to hold 51% stake in Ashok Leyland Nissan Vehicles Private Ltd, 49% stake in Nissan Ashok Leyland Powertrain Private Ltd and 50% stake in Nissan Ashok Leyland Technologies Private Ltd. While Ashok Leyland Nissan Vehicles was to focus on manufacturing LCVs; Nissan Ashok Leyland Powertrain and Nissan Ashok Leyland Technologies was to focus on powertrain manufacturing and technology developmental activities, respectively, Ashok Leyland had said in a statement.

According to Sridharan, the company has also decided to bring down its original capital expenditure of Rs 3,200 crore over a period of three years into the northern region to Rs 2,000 crore now. The capacity of the Uttaranchal plant has been brought down to 50,000 units as against 70,000 units planned originally, he said. To a question, he said all the joint venture projects with the foreign partners are in track and are doing well.

Heavy pressure

•LCV project being set up near Chennai

• Project cannot be taken up as per the original JV agreement owing to current market situations

• Looking at bringing down project cost & capacity