Pawan Goenka affirms MNAL to be isolated from American owner's predicament

Tuesday 28 August 2012, 10:39 AM by

Mahindra Navistar Automotive Limited (MNAL), the Joint Venture (JV) between Indian partner Mahindra and Mahindra (M&M) and American Navistar International, has been pronounced safe and isolated from the turmoil experienced by its American owner.

The American truck major Navistar International is currently grappling with administrative and acquisitive provocations from its stake holders and the global auto conglomerates like Volkswagen and Fiat.

According to the Economic Times, Pawan Goenka, President, Automotive, M&M has revealed that MNAL operations are not much dependent on its part-American ownership and will not face the backlash of the threat looming over its American partner.

Clearing out the rumours, Goenka said, “As far as we know, no company is taking any strategic interest in Navistar right now. There are two investors who hold 14.9% in the company, and it had recently taken a Poison Pill. MNAL is self sufficient; it doesn't depend on Navistar, or for that matter, even on Mahindra for anything. It has its own products, own IPR, own sourcing base, own dealers, own design... so it doesn't depend on any of the two corporates”.

Goenka also emphasised on the fact that management duties are autonomously held by Mahindra Navistar, and only three or four positions are governed by Mahindra officials and one Navistar official. He further added, “The managing director and CFO are from M&M and the head of engineering is from Navistar; rest all are MNAL people and mostly Indians”.

MNAL sold 3,500 trucks in the last fiscal and is working towards achieving sales of 40,000-50,000 units over next three to four years. The company has planned 6-7 new trucks and already enjoys a whole gamut of trucks lined up against its arch market rivals like Tata Motors and Ashok Leyland. Reportedly, the alliance has not been very successful as the Indian truck market became impenetrable for the new entrant MNAL, when the entire scene is dominated by Indian heavyweights – Tata and Ashok Leyland. MNAL recorded a loss of Rs. 370 crore last fiscal against Rs. 240 crore in the same period in fiscal 2011.

The American partner Navistar, also recorded an unanticipated quarterly loss in June due to the warranty disbursement for engines made in 2010 and 2011. Navistar is further expecting before tax losses between $ 80 million to $ 115 million, without special items for the quarter (III) ended in July but is also hoping to hit profits in the fourth quarter.

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