Chennai: Ashok Leyland (ALL), the Hinduja Group flagship has entered
into a master co-operation contract with Japanese auto major Nissan for
construction and sale of light commercial vehicle (LCV) and powertrains
with the total investment of $500 million.

In conformance to the agreement, the companies would form three JVs
for constructing LCVs, powertrain making and technology growth.

Mr. Dheeraj G Hinduja, Ashok Leyland co-chairman said, “We hope to
leverage Ashok Leyland's marketing insight, product development
capabilities and dealer network, together with the excellent
engineering foundations inherent in Nissan's global products.”

Mr. R Seshasayee, MD of ALL and Carlos Ghosn, President, Nissan signed the deals in Chennai.

Mr. R Seshasayee said that Ashok Leyland would hold the major stake
of 51% in the LCV manufacturing venture, and the remaining 49% will be
owned by Nissan. The project is likely to start by 2010.

He also said that the factory location has not been decided yet but
the company is exploring different sites in Uttarkhand, Tamil Nadu and
Andhra Pradesh, and the final decision will be taken within some weeks.

Mr. Seshasayee said, “This partnership with Nissan will allow both
Companies to develop a range of cost-competitive and customer-oriented
LCVs targeted not only at the Indian market but, several select markets
overseas.”

In the second JV to make engines for the LCVs, Nissan will hold 51 percent stake and Ashok Leyland, the rest.

The two companies would hold equal stake in the third joint venture,
which will develop LCV products and related goods. It will be set up in
Chennai. The products built up by this venture will be marketed under
Ashok Leyland and Nissan trade names.

The light commercial vehicle (LCV) unit would make one lakhs units annually. It will start production by 2010.

Mr. Ghosn said that around 20% of the output will be exported to other countries.

He said that Nissan will also bring out 11 new products
internationally this year, and add up 33 new in the list by next three
years.