M&M pulls out of investment in Chennai plant; Renault, Nissan to proceed with greenfield project

08 January 2008

Further to the reports of the Mahindras pulling out of the three-way joint venture with Renault and Nissan (See: Mahindra mulling exit from tripartite JV with Renault, Nissan: Reports), M&M today announced that it was "deferring" its investments in setting up a joint manufacturing facility at Oragadam, outside Chennai, for which it had signed a memorandum of understanding with the Tamil Nadu government.

In February 2007, the three companies had formalised a joint venture alliance, with M&M holding a 50-per cent stake in it, to set up a greenfield automobile plant in Chennai at a total cost of Rs4,000 crore.

The plant, with production planned for the second half of 2009, was to have built passenger cars for all three partners under their respective brands and also make transmission systems for Nissan and Renault. (See: Nissan-Renault-M&M to build Rs4,000 crore plant in Chennai)

In a regulatory filing with the exchanges, M&M said that while it had reviewed its plans, Renault and Nissan continue to be fully committed to their industria1 development plans.

The auto maker says that it would utilise the capacity available at the new plant in Chakan and other existing plants to meet its medium-term requirements.

It will continue its Mahindra Research Valley (MRV) at Chengelpet and MRV test track and tractor plant plans in Oragadam.

It will simultaneously evaluate a new automotive plant at Oragadam to further enhance its capacity. The Chakan plant owned by M&M will manufacture Mahindra vehicles and Mahindra international truck products