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This is an archive article published on February 26, 2007

M&M, Nissan, Renault to set up Rs 4,000 cr plant in Chennai

Mahindra and Mahindra, French car giant Renault and Japan’s third largest automaker Nissan signed a deal today with the Tamil Nadu government for a Rs 4,000 crore car manufacturing facility at Oragadam near Chennai.

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Mahindra and Mahindra (M&M), French car giant Renault and Japan’s third largest automaker Nissan signed a deal today with the Tamil Nadu government for a Rs 4,000 crore car manufacturing facility at Oragadam near Chennai.

The new 1,100-acre plant will have an installed capacity to make 4 lakh vehicles a year. Production will start in the second half of 2009, with output to rival cars produced by market leader Maruti, Tata and Hyundai, the companies said in a joint statement.

Nissan’s executive vice-president, Carlos Tavares, said that Nissan had explored a number of options for its first Indian manufacturing base but the advantages of working with Renault and Mahindra were “compelling”.

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The Mahindra group and Renault already have a joint venture to manufacture Renault’s new no-frills car, Logan. But the “big leap” in the country’s automobile industry would be the new collaboration including Nissan.

While the Mahindras will have a 50 per cent stake in the project, Renault and Nissan will share the remaining equity at approximately half each.

Nissan will market its products independently, while Renault will depend on a joint venture with Mahindra to sell its models.

Nissan will focus on compact cars — the biggest market in India — where Maruti dominated with its Maruti-800 and Alto models.

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Renault officials said the French firm would initially stick to products under the Logan platform, but may expand that to include other models.

The new plant will also have a powertrain facility to supply the local market and may at some stage consider exports. Officials did not give details of the plant’s powertrain capacity.

The new project should provide a large sourcing operation for the Renault-Nissan alliance, while Mahindra will have access to its foreign partners’ wider distribution network.

Pawan Goenka, president of Mahindra’s automotive unit, told reporters the new venture may expand depending on market conditions in Asia’s fourth-biggest economy.

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The Oragadam plant will manufacture vehicles for each of the partners and president of M&M’s automotive sector. Pawan Goenka, will be the CEO of three-in-one venture. According to him, the facility, including an engine plant, a transmission plant, press shop, body shop, an assembly line and a paint shop, will be the biggest in the country rolling out passenger cars, SUVs and 50,000 tractors every year.

State Industries secretary, Sakthi Kanta Das, said 200 acres would set apart for the component manufacturers and ancillary units for the project. He added that while the project would provide direct employment to 5,000 persons initially, it has the potential to generate indirect employment to another 40,000.

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