Renault, Nissan, M&M plan Rs 4000 cr unit

Three world renowned auto majors - Renault of France, Nissan of Japan and Mahindra and Mahindra of India - on Monday formed a consortium to set up a Rs 4,000 crore (Rs 40 billion) automobile manufacturing facility at suburban Oragadam, near Chennai.

The first automobiles from the facility would roll out in the second half of 2009, Kashub Mahindra, chairman of the Mahindra group, said after signing a MoU with the Tamil Nadu government for the project.

Patrick Pelata, executive vice president, Renault, said it would be a launching pad for his company for its operations in the country, while Carlos Tavares of Nissan said his company would manufacture 'compact cars' from the facility.

Tamil Nadu government would provide land and incentives for the project, which would produce four lakh automobiles.

The common facility would be used by the three auto majors for production of their automobiles but Nissan would market its cars on its own dealership network.  Renault, which already had a tie-up with Mahindra, would be marketing its cars.

Mahindra would have an equity stake of 50 per cent and the rest would be shared by Renault and Nissan. Pelata said the quantum of equity to invested by his company and Nissan was yet to be decided.

Asked what would be the investment and debt for the new facility, Keshub Mahindra said the investment-debt ratio was yet to be worked out in consultation with the collaborators.

The new facility would provide direct employment to 5,000 people and indirect employment to many more, Pawan said adding all the three companies would use the products of the local component manufacturing vendors initially.

If the companies wanted to use the components of the foreign manufacturers, they would be invited to set up their units at a later stage, he said.

Sakthikanta Das, Industries Secretary, Tamil Nadu government, said the government had land and would acquire more to meet the needs of the facility, which would come up on a 925-acre-plot of land.

In an obvious reference to the protests against allocation of land for Tata Motors in Singur in West Bengal, Keshub Mahindra said his company's new facility would see to it that those displaced due to acquisition of land for the project would be relocated at a place convenient to them. 

The new company would also start vocational schools in the area to train students and absorb them in the facility.

Asked whether there would be competition in selling products, produced in the same campus, Keshub Mahindra said it had become a global practice now.