India's Hero abandons joint venture with Daimler
Stuttgart - Hero Group, the Indian industrial conglomerate controlled by the Munjal family, has abandoned a project to jointly assemble Mercedes-Benz trucks with Daimler of Germany in Chennai, Daimler said Wednesday.
Left with 100 per cent of the project, Daimler said it would press ahead anyway.
A joint announcement by Hero and Daimler blamed the end of the joint venture on "the economic situation and the continuing weakness in demand in India" and said Hero Group would return the 40-per-cent stake it had earlier acquired from Daimler Trucks.
The statement quoted Hero Corporate Service chairman Said Sunil Kant Munjal saying, "Hero Group has decided to ... continue to grow its core business and not to pursue the commercial-vehicles business at this time."
Sources at Daimler said the German company was likely to seek another Indian partner.
Daimler Trucks said it plans investment in India or more than 700 million euros (925 million dollars) over the next four years. Sources said Daimler had been counting on Hero to supply nearly 500 million euros of that sum, but Hero was apparently short of free cash.
After the acquisition of the Hero shares, the company, currently known as Daimler Hero Commercial Vehicles Ltd, will be renamed.
The new company will initially produce light, medium, and heavy- duty commercial vehicles for the Indian volume market.
The top trucks executive at Daimler, Andreas Renschler, said the setback "gives us more time" since the vehicles would not come to market in an economic downturn, but Daimler's intentions in India had not changed.
Production of trucks for export from India to other emerging regions would also be delayed. About 280 people have already been employed at the Chennai plant, which is projected to turn out up to 70,000 trucks yearly for India's roads.
Hero Group's most recent turnover was more than 4 billion dollars annually. A joint venture between Hero and Honda is believed to be the world's biggest manufacturer of motorcycles. (dpa)