Roadblock

New Delhi, March 8: Ashok Leyland and Nissan are exploring the possibility of reducing the capacity of their joint venture vehicle project as well as producing fewer models.

“We are reviewing business plans, not the joint venture. Both partners are going back to the drawing board on how to scale back initially envisaged capacity in view of the economic scenario,” said K. Sridharan, chief financial officer, Ashok Leyland.

Last year, the companies had announced the formation of three joint ventures — in vehicles and powertrains, and for technology development.

Ashok Leyland Nissan Vehicles Pvt Ltd — the firm meant to manufacture light commercial vehicles (LCVs) — had an initial target to produce one lakh units per annum. Leyland holds a 51 per cent stake in the firm.

Sridharan said the partners were in talks to decide the kind of products that would be introduced first. Investments, too, are likely to be scaled down. “What will be the scaled-down version will be known in the next few months,” he said.

“We are looking at the products to be introduced and those to be deferred in the first phase. So we are revisiting the business plans,” he said.

The joint venture had initially planned to manufacture LCVs in the 6-9 tonne category. Nissan had said that it expected exports to account for around 20 per cent of production.

Post-alliance, the two companies had signed a memorandum of understanding with the Tamil Nadu government to acquire 380 acres at Pillaipakkam, 40 kilometres from Chennai.

Earlier this month, Ashok Leyland managing director R. Seshasayee had told The Telegraph that land acquisition issues also needed to be sorted out.

It is learnt that Ashok Leyland may also consider the option of setting up the joint venture within the premises of the planned Nissan-Renault car factory at Oragadam.

Last year, Nissan had said the venture would delay production by about six months to September 2011 because of the depressed demand for trucks in India.

Last month, Leyland had bagged an order worth $43.5 million from the Angolan government for 1,000 buses. “These orders are definitive steps in our global plans for creating a significant presence in the second hemisphere markets and come close on the heels of the orders for defence vehicles from Honduras and Thailand,” Seshasayee had said.