Mahindra, International Ink Truck Alliance

Posted on November 22, 2005

’s Mahindra & Mahindra, and International Truck & Engine Corp. have announced a joint venture, Mahindra International, to manufacture trucks and buses in India. Mahindra & Mahindra will hold a 51% share in the venture, with International having a 49% stake.

Investment in Mahindra International is $80 million. As part of the alliance, Mahindra & Mahindra has transferred its light commercial vehicle business to Mahindra International under a contract manufacturing arrangement with at its Zaheerabad plant.. This, the companies said, will enable the joint venture to start production from its inception pending the launch of the new range of medium and heavy commercial vehicles in 2007.

The joint venture company aims to be in every segment of the commercial vehicle market, the announcement said, from 6 ton GVW to 35 ton GVW with variants of passenger transport, cargo and specialized load applications.

The announcement said the medium and heavy vehicle product range will be engineered to meet Indian requirements. The joint venture's product range and technology will also be focused on serving various export markets in Asia, Middle East, Africa, Russia and Central Europe as well as providing International with appropriate low-cost products and aggregate technologies for the Americas. Both International's Truck Development & Technology Center, in the U.S. and Mahindra & Mahindra’s Automotive Product Development group have been working on a product development program for the past several months.

The joint venture will use Mahindra & Mahindra distribution network in India and has appointed 140 dealers for that purpose. Mahindra International will likely build medium and heavy trucks for Mahindra & Mahindra on a contract basis, at a location expected to be announced in the near future.

The joint venture company will also provide sourcing services and engineering services to International Truck & Engine's North American operations. International said it intends to leverage India's competitive automotive parts supply base using Mahindra & Mahindra’s Strategic Sourcing Business Unit and the joint venture company's sourcing team. Buying volumes of International are targeted to cross $100 million annually by 2007.

Mahindra & Mahindra Ltd. and International will each have five directors on the bard of Mahindra International. Anand Mahindra will be chairman of the board, while the company's management team will be led by Arun Pande, managing director, Mahindra International.