Business Line reported that Mahindra and Mahindra Ltd is buying out Navistar Group's stake in two of its subsidiary JV companies for approximately INR 175 crore.
Following the buyout,Chakan based Mahindra Navistar Automotives Ltd and Mahindra Navistar Engines Pvt Ltd will be fully owned by M&M.
The company said that the purchase of Navistar's stake in the two subsidiaries requires regulatory approval in India.It is subject to conclusion of agreements and is expected to be completed in early 2013.
Mr Pawan Goenka President of M&M said that"Since it was established in 2005,Mahindra Navistar Automotives has created a niche for itself in the Indian commercial vehicle industry."
Navistar and Mahindra entered into the MNAL JV in late 2005 to manufacture trucks and buses in India,source components and provide engineering services for the design and development of Navistar vehicle products.Mahindra Navistar Engines JV was formed in 2007 and began producing engines in 2010.
Mr Goenka said that"MNAL has set up a world class dealer and service network for trucks,which coupled with synergies with Mahindra's dealer network,gives us a significant opportunity to grow our presence in the truck market.In addition,the product has been well accepted as is evident from our high ranking in the TNS customer satisfaction survey.M&M is committed to the success of the truck business.We acknowledge the contribution made by Navistar to this venture thus far and appreciate their support for business continuity after they exit the business."
M&M would take complete ownership of operations and continue to sell MNEPL and MNAL products.Navistar would continue to source components from India while Mahindra would continue to provide engineering services to Navistar.
It said that Navistar Group would continue to support M&M through a license agreement and extend necessary support to MNAL and MNEPL for the purposes of business continuity.
Mr Troy Clarke president and COO of Navistar said that"While the Indian market has not expanded as we had originally expected and industry challenges there continue in the near term,we still see promise in India going forward.But given Navistar's 2013 priorities,our capital and focus needs to be allocated to other business opportunities in the near term."
Source-Business Line
