Mahindra & Mahindra Ltd will set up a Greenfield plant in Maharashtra to manufacture commercial trucks through its joint venture with US-based truck major International Truck and Engine Corp (ITEC). The JV will produce medium and heavy commercial vehicles, which would be designed and developed with in-house capabilities.

The new plant will also produce a new generation of M&M commercial vehicles and for manufacturing engines, transmission and other aggregates for the vehicles.

A memorandum of understanding to the effect was signed on January 16, 2007 by V K Jairath, secretary, industries, government of Maharashtra and Dr Pawan Goenka, president, automotive sector, M&M.

Production is expected to commence in two years, with an initial capacity of 250,000 vehicles per annum. The factory will have the capacity to produce a wide range of commercial vehicles and will include cab assembly, vehicle assembly; and a paint shop. The vehicles will have 90 per cent local content.

"The Mahindras have always partnered the state in its growth story," Keshub Mahindra, chairman, Mahindra Group, said in a statement. "Our plants have made their presence felt both in contributing to the economy of the regions they are in and in terms of creating jobs for locals. This latest project is in keeping with this tradition of mutual growth."

According to Lamoureux, "The new facility would be a key to our global expansion that we wish to achieve by partnering with Mahindra & Mahindra. I believe the new world class facility will help leverage Mahindra's synergies with the state to realise the full potential of our strategy."

M&M and ITEC had announced the joint venture in 2006. The JV will produce the new range of commercial trucks and buses. The venture will leverage M&M's extensive distribution network to launch a full range of medium and heavy commercial vehicles based, in part, on ITEC's existing product line, adapted for the Indian market. The venture is also expected to export vehicles through its own distribution channel, as well as ITEC and the M&M's overseas networks.

ITEC is the North American market leader in commercial vehicles in 8-tonne GVW and above, with sales of approximately 100,000 vehicles per year. It is also a world-wide leader in diesel engines in the 160-325 HP range, with production of over 400,000 engines per year.

For ITEC, which is also looking at competitive sourcing and engineering using a well developed and quality oriented supply base, entering the Indian market constitutes a major step in its global growth.