Volvo plans joint venture with Eicher Motors of India
Wednesday, 12 December 2007, 18:13 IST
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Stockholm: Swedish heavy-vehicle maker Volvo Monday announced plans for a joint venture with Eicher Motors of India. The joint venture will include Eicher Motors' truck and bus operations and the Volvo Group's Indian truck sales operations, a statement from Volvo said. Volvo chief executive Leif Johansson called the deal important because "the Indian market for heavy trucks is the fourth largest in the world". Eicher Motors is India's third largest truck maker and has 27 percent share in the light truck market. According to the letter of intent, Eicher Motors is to transfer its entire truck and bus operations as well as the component business and engineering services to the new joint venture company. Motorcycle production would not be included. Production would be centred at Eicher Motors' plant in Pithampur in Madhya Pradesh. The joint venture will have an enterprise value of $506 million, Eicher Motors announced in New Delhi. Volvo will invest a total of $350 million in the new company by transferring its Indian truck dealer and service network, valued at $75 million, and contributing $275 million in cash. Eicher Motors will hold 54.4 percent while Volvo will hold the rest of the shares in the company that will have 2,300 employees. Eicher Motors chief executive Siddhartha Lal said the group hoped to benefit from Volvo's brand and "support in products, technology and financial strength". The deal is slated to be concluded by mid-2008, but hinges on approval from competition authorities and Eicher Motors shareholders.
Source: IANS
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