Nissan sends JV termination notice to Ashok Leyland

Chennai, Feb 16 (IANS) Japanese automobile major Nissan Motor Company has sent a notice to Ashok Leyland Ltd terminating its technology development joint venture Nissan Ashok Leyland Technologies Pvt. Ltd over non-payment of royalty, said a source.

The joint venture company is owned in 50:50 by the two partners.

Curiously, the termination notice comes soon after Ashok Leyland Ltd sent a legal notice to Nissan for using the equipment owned by another joint venture company to roll-out cars instead of light commercial vehicles (LCV).

“It is true that we have issued a legal notice to Nissan. As the matter is sub-judice, I cannot comment further,” chief financial officer Gopal Mahadeven said here on February 12.

Indian commercial vehicle-maker Ashok Leyland and Nissan Motor Company had formed three joint ventures.

The first joint venture is to make LCV’s under the name Ashok Leyland Nissan Vehicles Pvt. Ltd. in which Ashok Leyland owns 51 percent while Nissan owns the rest.

The two warring partners have two more joint ventures — Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain manufacturing company owned 51 percent by Nissan and 49 percent by Ashok Leyland; and Nissan Ashok Leyland Technologies Pvt. Ltd., the technology development company owned 50:50 by the two partners.

Nissan has sent its termination notice for scrapping the joint venture Nissan Ashok Leyland Technologies Pvt. Ltd.

According to a top source, the Japanese group decided to exit the joint venture as Ashok Leyland has not paid royalty totalling over Rs.200 crore.

The Japanese company has decided to stop supply of parts and other aspects to the joint venture/Ashok Leyland.

Ashok Leyland had turned out four vehicle models from its partnership with Nissan — Dost, Mitr, Partner and Stile — while for Nissan it was only Evalia.

While Nissan put a halt to Evalia, Ashok Leyland stopped production of Stile later as the vehicle was not doing well in the market. However, Dost has been doing well for Ashok Leyland.

According to the source, Nissan wanted to be friendly and settle the issues amicably but was surprised at the legal notice from Ashok Leyland relating to another joint venture.

Last year, Nissan Ashok Leyland Technologies went to the Board for Industrial and Financial Reconstruction (BIFR).

The company’s net worth was eroded and the accumulated losses were around Rs.172.37 crore.

Senior Ashok Leyland officials were not available for comments.

“We are working with Ashok Leyland for a mutually agreeable solution. We have no further comments on the subject,” a Nissan spokesperson told IANS in an email.

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