Mahindra and Mahindra, which bought out its foreign partner Navistar's stake in the struggling commercial vehicle joint venture, said it will invest more in the venture which will eventually become a subsidiary. The proposed investment is for rolling out new variants of trucks, on exports and others. Besides, the company has stated that if it decides to expand the product portfolio further, then it may look at roping a new partner.
On Tuesday, the automajor M&M announced that it has acquired 49 per cent from its US joint venture partner Navistar for around Rs 175 crore. Thirty months since the first product was rolled out by the JV partners.
Speaking to Business Standard at the Mahindra Research Valley, the largest research centre in the automobile industry which houses around 2,500 people, at the Mahindra World City, on the outskirts of Chennai, Mahindra and Mahindra (M&M) president (automotive) Pawan Goenka said that Navistar’s stake in the JV which was valued at Rs 175 crore, which was less than the investment in the JV which was about Rs 510 crore.
“The JV was losing money and will continue to do so for sometime, and that’s why the valuation was lower,” he explained.
Asked when Mahindra Navistar will breakeven, he said it could happen when it touched sales volumes of 800-900 units a month compared to 200 units now.
He added that if the industry does well, then the breakeven could happen quickly. Unfortunately, the industry is in significant downturn with a 24 per cent contraction in the first eight months of the current fiscal and the remaining four months doesn’t look positive.
“We don’t see a turnaround happening in fiscal 2012 and 2013. It may happen in fiscal 2014. Once it happens, we expect an increase in our volumes,” said Goenka.
When asked if there is any problem in the portfolio, he said, “I don’t think so. What we are lacking is the market. Customers are not willing to experiment with the new brand, since they are struggling for their survival,” said Goenka. He noted that around 250,000 used trucks are not sold in the country.
No comments:
Post a Comment