Mahindra and Mahindra (M&M) Limited, the country's leading utility vehicle maker, has revealed intentions to invest a whopping amount of Rs. 4,950 crore ($ 900 million) on building six new engines and three model platforms. As per a top company official, M&M has decided to collaborate with its South Korean subdivision SsangYong Motor Corp. for the project, which will be completed over a period of four years.
Pawan Goenka, President, Automotive Division, M&M, has affirmed that the company has plans of investing an additional sum of Rs. 5,000 crore, which will be solely dedicated for a new project. Accordingly, the company will develop products in a technical collaboration with SsangYong Motor Corp. in the country till the end of 2014. Expressing the company's future goals, Goenka quoted, “We have plans to bring in several new products to be developed jointly by both the companies and would meet this expenditure partly through fresh equity, internal accruals and external commercial borrowings.”
M&M has also set aside another sum of Rs. 200 to 250 crore to develop products for its Indian commercial vehicle subsidiaries over the next three years. Hence, Mahindra Navistar Engines Private Ltd. (MNEPL) and Mahindra Navistar Automotives Ltd. (MNAL) will benefit from their parent company's proposed investment. Interestingly, M&M has also decided to take complete control over MNEPL and MNAL by purchasing stake of Navistar Group in both the joint ventures.
Speaking his mind about the M&M – Navistar joint venture partnerships, Goenka said, “The joint venture has incurred significant losses, but we are committed to support operations. We will invest in new and upgrading the existing products. We are also looking at going beyond the current portfolio and revisiting two gaps in our product range, a decision on which will be taken over the next two to three months.”
Reportedly, Navistar is a US based automobile making group and has a 49 per cent stake in MNAL and MNEPL joint ventures with M&M. The Indian utility vehicle maker announced to buy Navistar's stake in the partnerships for an amount of Rs. 175 crore. Till date, M&M has invested more than Rs. 800 crore for developing new vehicles and engines in the Indian automotive sector, which underlines the importance of domestic commercial vehicle segment to the company. At present, both MNAL and MNEPL face some stiff competition from the well established commercial vehicle players like Tata Motors and Ashok Leyland in the country.
