Mahindra & Renault sign a memorandum of understanding to establish a greenfield plant

Mahindra & Mahindra Ltd has announced that the Company & Renault have signed a memorandum of understanding to establish a long-term strategic partnership in India. Under the agreement, Renault and the Company would create a greenfield site with capacity of 500,000 units per year within 5 years, offering innovative products to their customers in India.

Capitalizing on the existing joint venture with the Company to commercialize Logan in India from first half of 2007, this strategic partnership would present a win-win situation for both Companies and of course for Indian customers. This agreement is based on a 50/50 principle: 50% for Mahindra group and 50% for the Alliance.

Mr. Anand Mahindra, Vice-Chairman & Managing Director, of the Company said, "The success of this partnership is scripted within the India growth story and Mahindra & Renault's shared vision for its customers. It is a chemistry that we discovered when the Mahindra-Renault joint venture was born. Besides, the strengths of Mahindra and Renault will go a long way in making India a key global automotive market."

A range of the Company as well as Mahindra-Renault products suited to the requirements of Indian customers will be manufactured at the new ‘greenfield’ production site under the direction of Renault and the Company. The production site will include a vehicle assembly plant, shared between the two partners. Renault also plans a powertrain factory. Production is expected to begin mid-2009, with an initial installed production capacity of 300,000 vehicles per year. The manufacturing site will be announced shortly.

The product range will be marketed by Mahindra-Renault and sold through the extensive and well-established Company's channel network throughout India.

Partners will optimize production costs through economies of scale thanks to joint investment n plant and infrastructure, as well as purchasing synergies.

- Renault will contribute its expertise in engineering, manufacturing and adaptation to meet customer requirements, and

- The Company will contribute its in-depth understanding of the Indian market and supplier base through years of market leadership.

Both Companies have the same focus on product innovation and strategy; both strive for customer service excellence and global competitiveness.

"Mahindra & Renault's joint vision is defined, however, by more than just these factors. It is centered on our common wish for growth that will only come with making products to suit the customer's needs around the world," added Mr. Mahindra.

Source : Equity Bulls

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