WSJMahindra to Invest in Military Vehicle Plant
By NITIN LUTHRA
PRITHLA, India -- Mahindra & Mahindra Ltd. Tuesday said its investment in a new defense-vehicle manufacturing plant in Haryana state could eventually total 400 million rupees ($7.8 million).
"We have already invested 250 million rupees in the first phase and will invest another 150 million rupees for the second phase of expansion," Anand Mahindra, the Mumbai-based company's vice chairman and managing director, said.
He addressed a news conference to mark the opening of the new factory, at Prithla in northern India. Mahindra & Mahindra is India's biggest sport-utility vehicle maker by sales.
The factory will initially be used to build armored versions of Mahindra's Scorpio and Bolero SUVs, as well the Indian government's Rakshak vehicle, Mr. Mahindra said.
Later, the plant will produce the Axe military vehicle, as well as a mine-shielded vehicle, as part of a Mahindra-BAE Systems PLC joint venture. The JV, which the Indian partner controls, is scheduled to begin production by June.
"We have a simple strategy of focusing on land and naval systems only," Mr. Mahindra said.
Khutub Hai, chief executive of Mahindra's defense unit, said the new factory will build about 200 vehicles this year, 350 next year, and has the capacity to produce 750 annually.
Mahindra is no longer discussing a possible joint venture with a unit of Italy's Finmeccanica SpA to produce naval equipment in India, Mr. Hai said.
Mahindra planned to own 74% stake of the JV to build underwater weapon systems such as torpedoes for the Indian armed forces. The remaining stake was to be held by Whitehead Alenia Systemi Subacquei, the Finmeccanica unit.
A new overseas partner will be chosen by the end of the year, Mr. Hai said. He declined to say why talks with the Finmeccanica unit ended.
Mahindra plans to tie up with African governments, including South Africa, to build factories to make defense equipment, Mr. Hai said. Plans to export vehicles from Prithla to BAE's global operations are in the works, he added.
Write to Nitin Luthra at firstname.lastname@example.org