Nissan issues termination notice for tech JV with Ashok Leyland

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Chennai | Updated: Feb 17, 2016 10:17 AM

Nissan Ashok Leyland Tech is one of the three JVs between the partners set up in May 2008.

nissan-Re-LThe latest development follows days after truck major Ashok Leyland issued a legal notice to Nissan, restraining the Japanese auto giant from using its equipment/tools installed at the latter’s plant at Oragadam near Chennai for making cars. (Reuters)

The joint venture (JV) between Hinduja flagship Ashok Leyland and Japanese auto giant Nissan Motor in the light commercial vehicle (LCV) segment is in for a major setback, with the latter issuing a termination notice on Nissan Ashok Leyland Technologies, a 50:50 technology/R&D venture. Nissan Ashok Leyland Tech is one of the three JVs between the partners set up in May 2008.

When contacted, Nissan India sources confirmed the development and said: “We are working with Ashok Leyland for a mutually agreeable solution. We have no further comments to offer on this subject.” Ashok Leyland officials were not available for comments.

The latest development follows days after truck major Ashok Leyland issued a legal notice to Nissan, restraining the Japanese auto giant from using its equipment/tools installed at the latter’s plant at Oragadam near Chennai for making cars. Ashok Leyland claimed those equipment/tools are belonged to the company and put up for making only LCVs, not cars. Nissan India, however, said that it will contest this legally.

According to industry sources, the sudden move by Nissan to issue a termination notice was due to Ashok Leyland’s failure to pay royalty to Nissan for using its technology in developing powertrain products and other allied products for some time now. The royalty to Nissan would be more than Rs 200 crore, the sources added.

Another major reason for Nissan to take such a decision has been that though this tech JV is for both the partners, Ashok Leyland is said to have benefited more with a sizeable number of products such as the Dost, Mitr, Partner and Stile, while Nissan came out with only the Evalia over the years.

This apart, late last year, Nissan Ashok Leyland Technologies (NALT) moved the the Bureau of Industrial and Financial Regulation (BIFR), claiming that its net worth completely eroded and ended with an accumulated loss of over R170 crore.

According to sources, Nissan is also believed to have informed the suppliers of Nissan Ashok Leyland Tech JV on the ongoing tussle between the partners and asked them not to supply parts till issue is resolved.

Both the companies had entered a three-way JV agreement back in May 2008 for vehicle manufacturing, powertrain manufacturing, and engineering design and development of products/parts for both the partners under Ashok Leyland Nissan Vehicles, Nissan Ashok Leyland Powertrain and Nissan Ashok Leyland Technologies, respectively.

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