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Ashok Leyland drags JV partner Nissan to court

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Ashok Leyland drags JV partner Nissan to court.

Chennai | by Dharani Thangavelu, Livemint | Feb 13, 2016 02:42 AM IST.

Nissan has been asked to suspend using Ashok Leyland’s equipment installed at the company’s factory in Orgadam, near Chennai, according to reports.

Hinduja group’s flagship company Ashok Leyland Ltd has moved a district court near Chennai over a legal dispute with its joint venture partner Nissan.

Times of India on Thursday reported that Nissan has been asked to suspend using Ashok Leyland’s equipment installed at the company’s factory in Orgadam, near Chennai.

While a top executive at Ashok Leyland declined to comment regarding anything on the joint venture, the car maker Nissan said the company received the notice on Wednesday.

“We have received the notice from Ashok Leyland and we are contesting it,” a spokesperson at Nissan told Mintthrough an email.

Mint had reported in November that Nissan Ashok Leyland Technologies Ltd (NALT), an equal joint venture between Nissan Motor Co. of Japan and Ashok Leyland, has moved the Board for Industrial and Financial Reconstruction (BIFR) due to financial constraints.

Ashok Leyland’s partnerships with Nissan for light commercial vehicles and with the US-based John Deere for earth-moving equipment have been facing issues over the past one year.

“Like any joint venture, we have issues with our joint venture partners. Sometimes good and bad,” said Vinod Dasari, managing director, Ashok Leyland, to Mint, last week at the Delhi Auto Expo, when asked about the joint venture between Nissan and Ashok Leyland.

“The Stile and Evalia platform was a mistake,” said Dasari. Ashok Leyland Stile and Nissan Evalia were the two products that came out of the joint venture.

In 2008, Nissan Motor and Ashok Leyland signed three joint ventures for light commercial vehicles business, power train manufacturing and technology development. While Ashok Leyland has 51% and Nissan has 49% in both the vehicle manufacturing companies and the power train company, they are 50:50 partners in the technology development company.

Ashok Leyland had earlier said it wrote off Rs.214 crore from the joint venture which reported a loss of Rs.791 crore in the last fiscal.

According to a document filed with BIFR in November, the joint venture’s entire net worth has been fully eroded due to accumulated losses, which stood at Rs.172.37 crore. The investment in the factory in Kanchipuram district, near Chennai, was Rs.9.29 crore, the BIFR document said.

On the John Deere production, Dasari said, “John Deere production has been shut down because the construction equipment market is down. So we are working with our partner to see how we can find a win-win situation even at this closure.” The bus and truck manufacturer wrote off Rs.157 crore to cut back the value of its investment in that business.

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