Mahindra & Mahindra, Renault and Nissan to setup plant in Chennai

Mahindra & Mahindra Ltd has announced that following the signing of a memorandum of understanding (MoU) on February 26, 2007, Chennai, in the state of Tamil Nadu, has been announced as the location of what will potentially be one of the largest automotive production sites in India, with an installed capacity of 400,000 units per year, seven years after its initial production. Automakers the Company and Renault will now be joined in this project by Nissan.

Renault, Nissan and the Company are committed to investing a minimum of Rs 4,000 crore (Euro 686 million / $ 902 million) in the site during the next seven years, with an equity holding of 50% by the Company and 50% by Renault and Nissan. The project, a unique industrial complex, will provide vehicle production for each carmaker, plus a powertrain facility for Renault and Nissan. The MoU will facilitate the Company and its partners Renault and Nissan to manufacture passenger cars and SUVs in the 925 acre (approximately 400 ha.) facility.

A range of products suited to the requirements of Indian customers will be manufactured at the new production site. Production is expected to begin in the second half of 2009.

Chennai was chosen as the location for the new production site for reasons including its well developed automotive and components industry, high education levels in its workforce, and its overall infrastructure including its port facilities. The addition of this Greenfield project will help make Chennai a truly global player in the automotive business.

The partners will optimize production costs through economies of scale thanks to joint investment in plant and infrastructure, as well as purchasing synergies.

- Renault will contribute its expertise in engineering, manufacturing and adaptation to meet customer requirements.

- The Company will contribute its in-depth understanding of the Indian market and supplier base as well as manufacturing through years of market leadership.

- Nissan will contribute with worldwide export opportunities and manufacturing technologies.

Dr. Pawan Goenka, President, Automotive Sector - of the Company said, "This is M&M’s first major manufacturing facility in the state of Tamil Nadu and we appreciate the Tamil Nadu government's initiative in offering us a gateway to this state and providing the project with the necessary infrastructure to commence operations here. The advantages accrued to the customer by our synergies of cost, scale and engineering promise to set new benchmarks of quality and cost for the auto manufacturing in India. We are pleased to have Renault and Nissan as our partners on this mega project."

Source : Equity Bulls

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