In a decision that reflects the recession in the car market, Ashok Leyland and Japan's Nissan Motor Co have said they are reworking their joint venture to produce light commercial vehicles.

Among the issues being reconsidered are levels of investment, types of products to be introduced and the location of the project, Ashok Leyland's chief financial officer K Sridharan said.

"Both partners are working in terms of the revised plan. Obviously it is too early for me to comment on what will be the outcome of that discussion, so we need to wait for that," he said. But he added that there was no question of pulling out of the venture.

Nissan had said last year the joint venture would delay production by about six months to September 2011, due to the depressed demand for trucks in India. Originally, production was scheduled for the business year starting April 2010, with 80 per cent of output slated for sale in India.

The plant was to be set up in Pillaipakkam, near Chennai, with an initial capacity of 100,000 units a year. However, the companies are now exploring the option of setting up the joint venture at the Nissan-Renault facility coming up at Oragadam.

Sridharan, while emphasising that there were no changes in the structure and legal framework of the Ashok Leyland-Nissan joint venture for light commercial vehicles, said the company was considering various options relating to the location of the project, the model of vehicles to be introduced and the size of investment.

The scale of operations was also under discussion. Earlier, the partners planned to invest a total of Rs2,400 crore, with equity shared equally, in three projects – for technology development, power train manufacture, and vehicle production.

Leyland to shed jobs: Ashok Leyland, the Hinduja group flagship company, also would undertake cost-cutting measures, including a 20 per cent reduction in wages.

Sridharan said margins are under pressure and may continue so till next month. The company has set a target of 10 per cent earnings before interest, taxes, depreciation and amortisation (EBITDA) margin for the next financial year.

To achieve this target, the company plans to cut down capital expenditure from around Rs1,000 crore to Rs800 crore, reduce salaries by around 20 per cent across the board compared to last year, and increase the revenue from non-cyclical business, Sridharan said.

The company, which was planning to invest around Rs3,200-3,300 crore during the next three years, has now decided to spend only Rs2,000 crore. Sridharan added that the company has to "knock out" around Rs700-800 crore, which will bring down the interest rate.

The company is also cutting down travelling and publicity expenses, by which it hopes to save around Rs40-50 crore. Sridharan noted that in the last quarter the company had saved around Rs20 crore by adopting these cost-cutting measures.

Sridharan said the company was planning to increase the non-cyclical revenue to 45-46 per cent for the overall business, compared to 38-39 per cent currently.

The number of working days has also come down to three in a week, which would help to bring down the inventory level, he said.

The commercial vehicle manufacturer has also revised its total capacity downwards to 150,000 units as compared to earlier 180,000.

However, the investment in research and development would continue, Sridharan said, adding that the company's average spend on R&D is around Rs110-120 crore.