M&M pulls out of joint venture with Renault, Nissan

Chennai: It is now official. Mahindra & Mahindra (M&M) will go its separate way and what was to be a three-way joint venture involving Renault and Nissan for car production on the outskirts of Chennai has become just a Franco-Japanese venture involving Renault and Nissan.

In a statement issued to the press in Mumbai today, M&M said that it is deferring its investment in the car plant, capable of producing up to 400,000 cars annually, that was to have come up in Oragadam, a village just off Chennai. The announcement thus effectively ends speculation, rife for some time now, that M&M is pulling out of the project.

According to the company, it will now focus on its existing plants. “The company will utilise capacity available at its new plant in Chakan and other existing plants to meet its medium-term requirements and hence shall not participate in the joint plant at Oragadam,” the release said. It also added that the company shall continue its Mahindra Research Valley (MRV) at Chengalpattu off Chennai and MRV test track and tractor plant plans in Oragadam.

Meanwhile, Renault and Nissan, in a statement issued along with M&M, said they ‘maintain their development plans for the creation of a new industrial plant in Chennai’. They also reiterated their long-term commitment to India with local development, including design, engineering, component outsourcing etc.

According to Tamil Nadu Government officials, the State had started handing over land for the project. It planned to acquire over 1,100 acres. But in the light of the latest development, the total area would come down, they said. With Mahindra & Mahindra exiting the project, it hopes to get land allocation separately for its project, and the State Government is examining its options, they said. Renault and Nissan by themselves are bringing in Rs 4,500 crore for the proposed plant project. Though Mahindra is deferring the investment in automobile plant, its other projects are in the pipeline, they said. Mahindra and Mahindra is investing over Rs 600 crore in the Mahindra Research Valley and test track and has plans to set up a tractor plant at Orgadam.

Mahindra, Renault and Nissan had announced in February last year of their intent to set up a joint manufacturing facility at Oragadam and signed an MOU with the Government of Tamil Nadu to that effect.

Mahindra and Renault will go on with their existing joint venture Mahindra Renault Pvt. Ltd. (MRPL) that has launched the Logan in India. ‘The new products that will be manufactured by Renault at its Chennai plant are planned to be marketed by MRPL under the Mahindra Renault brand’, the company said in a communication to the stock exchanges. And they will be sold through the company sales channel, it added.