Mumbai, May 5: Tata Motors has entered into a joint-venture agreement with Brazil-based Marcopolo to set up a company in India that will manufacture and assemble fully built buses and coaches.

The joint venture, in which Tata Motors and Marcopolo will hold 51 per cent and 49 per cent equity respectively, will set up a new manufacturing facility at an investment of Rs 150-200 crore.

The company is in the process of selecting a location for the facility and has not yet finalised any place, said a spokesperson.

The facility will have an initial production capacity of 7,000 vehicles per annum, which can be later increased in a modular fashion, he added.

The facility will go on stream in a year’s time and produce a variety of buses, including 16 to 54-seater standard buses, 18 and 45-seater luxury buses, luxury coaches, and low-floor city buses. The joint venture will also explore emerging opportunities in bus rapid transit system.

“The rapidly expanding road network and connecting cities as well as rural areas are expected to boost passenger transport. The joint venture with Marcopolo will enable us to successfully address the growing demand in India as well as relevant markets abroad,” said Ratan Tata, chairman, Tata Motors.

The buses will be marketed in India and overseas. Tata cars, buses and trucks are already marketed in several countries in Europe, Africa, West Asia, South Asia, Southeast Asia and Australia. However, there is enough growth potential in these markets and the company plans to leverage on the same, added the spokesperson.

“Marcopolo’s buses and coaches have a strong presence in Latin America and overseas markets. The joint venture with Tata Motors will help us extend our presence in the high-potential markets of India and other mutually agreed countries, which we can jointly develop,” said Paulo Bellini, chairman, Marcopolo.

Tata Motors had acquired a 21 per cent stake in Hispano Carrocera, the Spanish bus and coach manufacturer in 2005.

The projects are complimentary in nature and will enable the company to offer a complete product portfolio.

The Tata Motors-Marcopolo JV will take technology and expertise in chassis and aggregates from Tata Motors, and expertise and know-how in processes and systems for bodybuilding and bus-body design from Marcopolo. Both companies will actively participate in the management of the venture.

Tata Motors also acquired Daewoo Commercial Vehicles Co, Korea’s second largest truck maker, in 2004.