STRATEGIC MANAGEMENT - II

A PROJECT REPORT ON

JOINT VENTURES

Submitted to: Submitted by:

Prof. Supriti Mishra Amal Jain (007)

Aswini Kumar Dhir (014)
Ayush Mishra (015)
Diksha Lath (023)
Gourav Kant Choudhary (026)
Meghana Verma (036)
Mihir Ranjan Swain (037)
Nadeem Akhtar (040)
Satyajit Mohanty (058)
Sudhanshu Ranjan Chandra (073)
Swagat Surya Prakash (077)
 CONTENTS

S.No. Contents Page No.

1. Introduction to Joint Venture 3

2. Vistara 4-5

3. Gati-KWE 6-7

4. PNB Metlife India 8-9

5. Tata Starbucks Pvt. Ltd. 10-12

6. Volvo-Eicher Commercial Vehicles (VECV) 13-15

7. Mahindra Renault Ltd. 16-17

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 JOINT VENTURE
A joint venture (JV) is a business arrangement in which two or more parties agree to
pool their resources for the purpose of accomplishing a specific task. This task can be a
new project or any other business activity.

In a joint venture (JV), each of the participants is responsible for profits, losses,
and costs associated with it. However, the venture is its own entity, separate from
the participants' other business interests.

Companies typically pursue joint ventures for one of four reasons: to access a new
market, particularly emerging markets; to gain scale efficiencies by combining assets
and operations; to share risk for major investments or projects; or to access skills and
capabilities.

Features of Joint Venture

• Agreement: Two or more firms come to an agreement, to undertake a business, for
a definite purpose and are bound by it.
• Joint Control: There exist a joint control of the co-venturers over business
assets, operations, administration and even the venture.
• Pooling of resources and expertise: Firms pool their resources like capital, manpower,
technical know-how, and expertise, which helps in large-scale production.
• Sharing of profit and loss: The co-venturers agree to share the profits and losses of the
business in an agreed ratio. The computation of the profit and loss is usually done at the
end of the venture, however, when it continues for the long duration, the profit and loss is
calculated annually.
• Access to advanced technology: By entering into joint venture firms get access to
various techniques of production, marketing and doing business, which decreases the
overall cost and also improves quality.
• Dissolution: Once the term or purpose of the joint venture is complete, the
agreement comes to an end, and the accounts of the coventurers, are settled, as
and when it is dissolved.

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 VISTARA

About the Joint Venture

Tata SIA Airlines Limited, operating as Vistara, is an Indian full-service airline, based in
Gurgaon, with its hub at Indira Gandhi International Airport. The carrier, a joint venture
between Tata Sons and Singapore Airlines, commenced operations on 9 January 2015
with its inaugural flight between Delhi and Mumbai. In Vistara, Tata Sons holds 51% stake
and Singapore Airlines hold 49% stake. The airline, offers a three seat configuration —
economy, premium economy, and business class The airline had carried more than two
million passengers and as of May 2019, has a 4.7% share [3] of the domestic carrier
market, making it the 6th largest domestic airline.[4] The airline serves twenty-four[5]
destinations with a fleet of Airbus A320 and Boeing 737-800NG[6] aircraft. The common
goal of the joint venture is to redefine air travel in India to provide Indian travellers a
seamless and personalized flying experience that blends Tata’s and SIA’s service
excellence and legendary hospitality.
Vistara, which started operations in 2015, is 51% owned by Tata Sons and 49% owned
by Singapore Airlines.

➢ Benefits of Vistara:
• No cheap fares, no discounts
Vistara is not offering steep discounts, unlike its rivals. As a world-class full-service
carrier, Vistara promises a seamless experience and service excellence on-board and
on-ground
• Loyalty by money, not miles
The first airline in India to offer a value-based frequent flyer programme called Club
Vistara, where loyalty points are accrued based on actual spending on fares rather than
miles travelled. The airline has done away with the physical loyalty card. It interline
arrangement and loyalty program agreement with Singapore Airlines will allow
passengers to experience a seamless travel experience to destinations together covered
by the Singapore Airlines and growing Vistara network.

• Low-cost thinking, full-service offering

Vistara is maintaining a lean structure of operations while offering a full-service product.
They are starting afresh without any legacy cost. They are keeping a low-cost mentality
in every single contract they are signing barring in-flight facilities, aircraft and dining. As
it is maintaining a low-cost structure, economy class passengers can expect a more
robust offering than a standard no-frill airline
• No advertisement splash, no fanfare
the airline is not spending much on advertisements or expensive launch parties. Vistara
is launching quietly as if it wants to stay under the radar.

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 • Three-class configuration
Vistara is the first full-service carrier in India to introduce a so-called premium economy
class. It has Economy, Premium Economy, and Business, in a 96-36-16 seat split.
Vistara has come in to cater primarily to the business and corporate traveller, and leisure
travellers who are willing to pay for a certain degree of minimum services and treatment. The
airline’s true competitors are Jet and Air India but considering the Singapore-airlines level of
service that Vistara ensures, the airline stands one cut above the rest.

With the airline’s focus on the soft product rather than the hard, a threat it may face is
from its competitors – both low cost and full service, who may ramp up their levels of
service to match Vistara’s, at perhaps a more attractive price. The advantage Vistara has
is the clean image it comes with, and no baggage of the past. Vistara’s network focus
seems to be on mature markets, the markets in which most of its target traveller base is
found.

➢ Financials
The airline, which started operations in 2015, have always reported loss since its
inception however it improved its performance on several parameters in the 2018 financial
year. While its departures increased to 32,823 from 23,983, Vistara managed to reduce
its costs and revenue margins. Its revenue per available seat kilometer, or RASK,
improved from Rs 3.36 to Rs 3.64. At the same time, its cost per available seat kilometer,
or CASK, reduced to Rs 4.38 from Rs 4.71. Vistara, has narrowed its losses to Rs 431
crore in FY18, from Rs 518 crore a year earlier, however it nearly doubled to Rs 831 crore
in FY19 in a tough operating environment, and also due to an increase in crude oil prices
and a weak rupee.

➢ Future growth plans

Vistara expects to end 2019 with 41 aircraft, up from 30 at present, as it pursues an
international expansion plan. Air Vistara’s long-term growth strategies will not be swayed
by short-term developments. Tatas did not participate in the recent expression of interest
invited for Jet Airways by its lenders, which intrigued industry watchers because the group
was expected to bid given that Vistara needs to expand its network and get more landing
slots to have a national reach and be viable.
Recently, Tata Sons and Singapore Airlines Ltd infused a combined Rs 900 crore in their
joint venture Tata SIA to improve the airline’s financial health and take delivery of new
planes from Airbus SE and Boeing Co.
Vistara recently received about 10 flight slots from the congested airport of Mumbai that
have been left by Jet which has had to ground almost all of its planes.

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 GATI-KWE

➢ GATI-Kintetsu Express Private Limited (GATI-KWE)

GATI-Kintetsu Express Private Limited (GATI-KWE) is a joint venture company between
GATI– India’s leading logistics, distribution and supply chain provider and Japan’s
Kintetsu World Express which was formed on February 13, 2012.

➢ About GATI LIMITED

GATI LIMITED (www.gati.com) is pioneer and leader in Express Distribution and Supply
Chain Solutions in India. Having started as a cargo management company in 1989, Gati
has grown into an organization with more than 3500 employees and an annual turnover
of Rs 12094 million (249 million USD) covering 622 out of total 626 districts in India. Gati
has over 4500 vehicles on the road excluding their fleet of refrigerated vehicles, container
shipping vessels and world class warehousing facilities across India. Furthermore, Gati
has a strong market presence in the Asia Pacific region and SAARC countries. Gati has
offices in Singapore, Beijing, Shanghai, Qingdao, Hong Kong, Bangkok, Kuala Lumpur
and Dubai and the SAARC countries.

➢ About KWE INCORPORATION

The Tokyo Stock Exchange listed KWE Inc (www.kwe.com) is a Global provider of logistic
services and solutions to its world-wide clients. Established in the year 1970, KWE today
has a total of 333 offices in 203 cities in 31 countries overseas.
KWE provides comprehensive one-stop services & solutions that incorporate airfreight
forwarding, Ocean freight forwarding and a full-range of logistics services to provide
"Optimum Distribution Solutions" to its clients on a global scale. KWE has 57 affiliated
companies with a total of 333 offices spread in 203 cities and 31 countries. The
consolidated revenue for the last financial year stood at USD 3505.6 Mn and the
consolidated net income was at 103.20 Mn USD. The total asset was at USD 1575.17
Mn.

➢ GATI – KW JOINT VENTURE

GATI-KWE is a 3500 people strong company with an intrinsic network that spans the
length and breadth of India – GATI-KWE has a reach of 99.3 percent covering 667
districts out of 671 districts in India with a fleet size of more than 4,000 vehicles,” states
the company website. The JV allows GATI-KWE to offer customers in India, a high-quality
logistics service using various modes of transportation across different terrain.

Under the JV agreement, Gati will hold 70 per cent stake and 30 per cent will be held by
Kintetsu World Express (KWE) in Gati-Kintetsu Express Pvt Ltd (GATI-KWE). GATI-KWE
is a subsidiary of GATI LIMITED. Japan's KWE has invested Rs 267.7 cr in Gati-Kintetsu
Express.

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➢ Summary of the Joint Venture

Name Gati- Kintetsu Express Private Ltd.

Address
President
Description of Business
Capital Stock
Capital Payment Date
Fiscal year Ends
Investment Ratio
1-7-273, M.G.Road, Secunderabad AP 500 003 India
Ms.Chitra Shinde
Domestic Freightage Operations / Logistics Operations
(business succession from Gati Ltd.)
5 Million INR
June 15, 2012
June
Gati Ltd. : 70% KWE Group : 30%

➢ Benefits of the Venture

• GATI-KWE brings together the strengths of Gati’s local expertise in Express
Distribution and KWE’s global experience in 3PL warehousing, supply chain and
freight forwarding capabilities creating an unmatched offering and superior value to
customers.
• This fund infusion makes GATI’s Balance sheet much stronger through a significant
deleveraging of the debt and reduction in the interest costs upto 50 percent, which in
turn will help in re-investment in the growth of the organization and will reflect a healthy
bottom line.
• Gati-KWE offers services that are customized to the requirements, be it a Premium
service – for time critical shipments or an Express Service for cost effective and direct
express route connectivity.
• A large fleet of more than 5000 vehicles and an assured space across 32 airline
sectors ensures that your shipments are delivered in the right time at the right place.
• The JV also benefits from India- Japan Comprehensive Economic Partnership
Agreement (CEPA) signed in 2011 and the two countries target USD 25 billion worth
of bilateral trade by 2014 from the present USD 10.3 billion.

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 PNB METLIFE INDIA

➢ About Joint Venture

PNB MetLife India Insurance Company Limited (PNB MetLife) is one of the leading life
insurance companies in India. PNB MetLife is a joint venture between Punjab National
Bank (PNB), which holds 30 per cent stake, MetLife (26 per cent), Elpro International (21
per cent), M Pallonji & Company (18 per cent), and Jammu & Kashmir Bank (5 per cent).
The company has share capital of Rs 2,120 crore. MIHL and PNB being the majority
shareholders. PNB MetLife has been present in India since 2001. PNB MetLife is present
in 107 locations across the country with access to over 100 million customers in more
than 11,000 locations through its strong bank partnerships with PNB, JKB, KBL and other
bank partners.
PNB MetLife partners with the customers for their entire ‘Circle of Life’ covering their 4
different stages of life – Child Education, Family Protection, Long Term Savings and
Retirement. Their comprehensive product portfolio comprises of 16 Savings Products, 13
Protection Products, 5 pension products, and 8 optional riders. PNB MetLife wide range
of protection and retirement products through its Agency sales of over 7,338 financial
advisors and multiple bank partners and provides access to Employee Benefit plans for
over 659 corporate clients in India. The company continues to be consistently profitable
and has declared profits for last five Financial Years.

➢ Fast Facts
MD & CEO: Ashish Kumar Srivastava
Established in India: 2001
Regional Headquarters: Hong Kong
Employees: 10,444*
Offices: 107 locations
Products: Life Insurance, Retirement Solutions and Employee Benefit Programs

➢ Milestones
• In 2001, MetLife India starts operations in India. Established Bancassurance
partnerships with two private regional banks – the Jammu & Kashmir Bank Ltd. (JKB)
and Karnataka Bank Ltd. (KBL).
• In 2008, MetLife India achieved a milestone premium of USD 200 million.
• In 2009, MetLife India launched Met Monthly Income Plan, pioneering the niche
“monthly income” market in India.
• In 2011, MetLife India breaks even per statutory and GAAP financials in the year;
among the few life insurance companies operating in India to turn profitable. MetLife
India launches Bancassurance partnership with Punjab National Bank (PNB), one of
the leading nationalised banks in India with around 6,000 domestic outlets across the
country and a customer base of over 78 million. (as on FY2011). In 2013, Punjab
National Bank (PNB) acquired 30% stake in MetLife India Insurance Co Ltd.
• In 2014, PNB MetLife launched its CSR initiative in partnership with its bank
partners, JKB and KBL.
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• In 2019, PNB MetLife tied up with Esaf Small Finance Bank & on-boards PV Sindhu
at its Brand ambassador. The Economic Times lists PNB MetLife among ‘Top 10
trusted Life Insurers of India’ and recognizes among the Best Brands of 2019.

➢ Industrial Changes
The insurance industry is going through a phase of consolidation after legislation enabled
foreign insurers to raise stake to 49 per cent. Post change in law, three life insurance
companies — ICICI Prudential Life, SBI Life and HDFC Life have listed their shares on
stock exchanges. PNB Metlife has also informed employees about the plan to defer the
IPO. PNB MetLife had in August last year filed the draft red herring prospectus with the
capital market regulator Securities and Exchange Board of India (SEBI) to sell 24.64% of
the post offer paid-up equity share capital of the company.

➢ Benefits
PNB MetLife brings together the financial strength of a leading global life insurance
provider, MetLife, Inc. and the credibility and reliability of PNB, one of India's oldest and
leading nationalised banks. The vast distribution reach of PNB together with the global
insurance expertise and product range of MetLife makes PNB MetLife a strong and
trusted insurance provider. PNB MetLife has offered customers access to global
expertise, financial reliability, and a wide range of innovative products and services.

➢ Financials
• In 2011, MetLife India break-even per statutory and GAAP financials in the year;
among the few life insurance companies operating in India to turn profitable. Now it
has profits of about Rs. 266.7 crore.
• The company has share capital of Rs. 2,013 crore.
• 17.86% growth in New Business Premium to Rs. 1,682 crore.

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 TATA STARBUCKS PVT. LTD.

➢ About Joint Venture

TATA Starbucks Private Limited, formerly known as Tata Starbucks Limited, is a 50:50 joint
venture company, owned by Tata Global Beverages and Starbucks Corporation that owns
and operates Starbucks outlets in India. The outlets are branded Starbucks "A Tata Alliance".
In January 2011, Starbucks Corporation and Tata Coffee announced plans to begin opening
Starbucks locations in India. Despite a false start in 2007, in January 2012 Starbucks finally
announced a 50:50 joint venture with Tata Global Beverages, called Tata Starbucks Ltd.,
which would own and operate outlets branded "Starbucks, A Tata Alliance". Starbucks had
previously attempted to enter the Indian market in 2007.
On 19 October 2012, Starbucks opened its first store in India, measuring 4,500 sq ft in
Elphinstone Building, Horniman Circle, and Mumbai. Starbucks opened its first roasting
and packaging plant to supply its Indian outlets in Coorg, Karnataka in 2013. Starbucks
expanded its presence to Delhi on 24 January 2013 by opening 2 outlets at Terminal III
of the Indira Gandhi International Airport, and later one in Connaught Place. Tata Global
Beverages announced in 2013 that they would have 50 locations by the end of the year,
with an investment of ₹4 billion (US$58 million). Starbucks announced its entry into the
Gujarat market on 7 August 2019. The company simultaneously opened five stores in
Surat and Ahmedabad the next day. Starbucks' flagship store in the state is located at
Prahlad Nagar, Ahmedabad and offers more vegetarian options than other Indian outlets.
CEO Navin Gurnaney stated that the company would more than 30 stores in the 2019-20
fiscal year, of which 11 had already opened.

➢ Fast Facts
Trade name - Starbucks "A TATA alliance"
Formerly - Tata Starbucks limited
Type - Joint Venture
Industry - Coffee shop
Founded - Mumbai, Maharashtra, India (19 October 2012) Headquarters -
Tower 2, Indiabulls Finance Center, Mumbai, Maharashtra, India. Number of
locations - 157 stores (August 2019)
Area served - India
Key people - Navin Gurnaney (CEO) Products - Coffee, Tea,
Pastries, Frappuccino beverages, Smoothies Number of employees
- 1200+ (May 2016)

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➢ Products and Services Offered
Apart from the usual products offered internationally, Starbucks in India has some Indian-
style product offerings such as Tandoori Paneer Roll, Chocolate Rossomalai Mousse,
Malai Chom Chom Tiramisu, Elaichi Mewa Croissant, Chicken Kathi Roll and Murg Tikka
Panini to suit Indian customers. All espressos sold in Indian outlets are made from Indian
roasted coffees supplied by Tata Coffee. Starbucks also sells Himalayan bottled mineral
water. Free Wi-Fi is available at all Starbucks stores. In January 2017, Tata Starbucks
introduced Starbucks' tea brand Teavana offering 18 different varieties of tea across its
outlets in India. One of the varieties, called the India Spice Majesty Blend, was specifically
developed for the Indian market and is only available in India. India Spice Majesty Blend
is a blend of full leaf Assam black tea infused with whole cinnamon, cardamom, cloves,
pepper, star anise and ginger.
On 15 June 2015, Tata Starbucks announced that it was suspending the use of ingredients
that had not been approved by the Food Safety and Standards Authority of India (FSSAI).
The company did not specify what the ingredients were or which products they were used.
The company also stated that it was in the process of applying for FSSAI approval for these
ingredients. According to the Latte Index, a ranking of the cost of a tall hot latte at Starbucks
in 44 countries, India was the fifth most expensive country to purchase the beverage based
on January 2016 prices. The index published by US-based consumer research firm
ValuePenguin found that a tall hot latte cost US$7.99 in India, far higher than the $2.75 it
costs in the cheapest country, the United States, but much lower than the $12.32 in the most
expensive country, Russia. The Tata Group and Starbucks Corporation also collaborate on
some ventures outside India. Starbucks Reserve Tata Nullore Estates, the first-ever
Starbucks Reserve coffee sourced exclusively from India, became the first Indian coffee to
be roasted and sold at Starbucks home city of Seattle in 2016. The coffee was later rolled out
across Starbucks outlets in the United States. In the same year, Starbucks began selling
Himalayan bottled mineral water at its outlets in Singapore and also began retailing its
products on board all flights of Vistara, a joint venture between the Tata Group and Singapore
Airlines.

➢ Benefits of Joint Venture

The partnership aimed to take advantage of the various businesses running under the Tata
group. The group’s business spans across hotels, retail chain, steel, chemical, tea, software
and automobiles among others. This partnership provide Starbucks instant access to Tata’s
vast presence throughout India. Starbucks’ competitors in the broader market for specialty
coffee include McDonald’s, Caribou Coffee and Pet’s Coffee .Over the past several years,
Indians and especially the younger generation, have developed a liking for coffee every now
and then. The overall domestic consumption of coffee rose to approximately 108,000 metric
tons in 2010, witnessing an enormous growth of 80% in the past decade, according to
government figures. Tata is a trust worthy brand name, and someone who can handle the
appetite of Starbucks. Tata Global beverages is like the coca cola of tea so basically if
Starbucks had gone with someone else they would have ended like barista or CCD.
Starbucks gas partnered with Tata Global beverages whose brands serve close 500000 cups
of tea and coffee each day. They own brands like Tetley,

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Tata tea and almost most of the leading tea makers in countries like USA UK and
Australia.

➢ Current Position of the Venture

Starbucks is on track to make India among its top five markets globally, according to
Navin Gurnaney, CEO, Tata Starbucks. Starbucks operates in India has 138 stores,
mostly in metro cities along with a couple in tier-2 cities. Speaking about the growth driver,
the acceptance of the Indian consumer and constant innovation are the main drivers. Two
years ago, they had 250,000 members who had subscribed to the loyalty programme and
now we have 540,000. So we’ve doubled in the last two years. Starbucks has a mixed
base of customers of which millennials constitute a large segment. Consumer interest in
coffee continues to grow year after year and people are getting more discerning about
good quality coffee and that’s what attracts them to Starbucks. People are getting more
knowledgeable.

➢ Financials and Future of the Joint Venture

Tata Starbucks, joint venture has reported a 30 per cent top-line growth in fiscal 2018-19,
driven by new stores openings and improved performance. Tata Starbucks, which is
expecting to break-even in the current fiscal, has opened 146 stores till date. Tata
Starbucks reported "double digit top-line growth -- 30 per cent for the full year, driven by
new stores and improved store performance", Tata Global Beverages Ltd (TGBL) said in
an investors' presentation. Tata Starbucks revenue for the 2018-19, is expected to be
around ₹450 crore. Tata Starbucks opened 30 outlets in the previous fiscal, out of which,
15 new stores were opened during the last quarter of the financial year. The company
said, it has reported profits at store level and all cities were also profitable and it has also
witnessed rise in food share in overall sales.
Revenue - ₹3.45 billion (US$50 million) (FY18)
Operating income - ₹12.6 million (US$180,000) (FY18)
Net income - ₹-305 million (US$−4.4 million)

Tata Starbucks Pvt. Ltd is looking at smaller Indian cities with population of less than 5
million to open outlets next fiscal year, chief executive officer Sumitro Ghosh said. This
comes as part of the Starbuck’s long-term goal of making India among its top five markets,
in terms of number of stores. In India, Starbucks has 120 stores which is fewer than most
of the 27 countries where it operates. India’s largest coffee chain Coffee Day Enterprises
Ltd, which operates Café Coffee Day (CCD) outlets, has more than 1,550 stores across
the country. At present, Starbucks has a maximum number of outlets in the US, its home
country, followed by China, Canada, Japan and the UK. India, where it opened the first
store in October 2012, has a long way to go to be among the top five markets for
Starbucks considering the fact that the company operates more than 900 outlets in the
UK, its fifth largest market in terms of number of stores. India’s coffee retail chain market,
which was estimated at $107 million in 2015, is projected to touch $855 million by 2025,
according to a report by San Francisco-headquartered consulting firm Grand Research
Inc.

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 VOLVO-EICHER COMMERCIAL VEHICLES LTD.

➢ About the company: VECV Ltd.

VE Commercial Vehicles Limited is a joint venture between the Volvo Group (Volvo) and
Eicher Motors Limited (EML), headquartered at New Delhi. In 2008, Eicher Motors tied
up with Swedish truck maker Volvo, in its bid to become a larger player and build a global
presence in the commercial vehicle business. Volvo, on the other hand, wanted to crack
the small and medium-truck segment in India. It is a partnership that brings together global
leadership in technology, quality, safety, along with the deep knowledge and
understanding of the Indian Commercial Vehicle (CV) market.

Eicher moved its truck and bus business to a new company, the joint venture VECV, into
which Volvo pumped about Rs 1,082 crore and added its heavy trucks distribution
business to buy a 50 per cent stake. The top management of Eicher wanted to boost its
commercial vehicles business in India and also build an overseas presence. Volvo
brought advanced manufacturing technology and set up new processes to improve
Eicher's after-sales service. The partners set up a component distribution center, which
ties into the after-sales service, to monitor inventory at retail outlets and Eicher's
warehouses.

Through this Joint Venture, the two companies leveraged their respective strengths to
achieve their disparate goals. It is a partnership that brings together global leadership in
technology, quality, safety, and environmental care, and aims at driving modernization in
the commercial transportation, both in India as well as other developing markets.

➢ Facts about the two companies

• In VECV joint venture, both the companies had a 1:1 stake i.e. equal stake.
• Eicher entered the commercial vehicle business in 1986 when it began selling a six-
ton fully imported truck from Japanese auto maker Mitsubishi. The partnership ended
in 1993.
• The first Eicher truck was rolled out from its manufacturing plant at Pithampur, Madhya
Pradesh in 1986, and after completing 31 years of operations in June 2017, the products
have got endorsement from happy customers of over 6,14,000 vehicles.
• Eicher’s 12 to 69-seater buses have a growing presence in the LMD school bus, staff
and route-permit segments. ETB has also made strong inroads into heavy-duty trucks
segment of 16T-49T with their "VE" series of Fuel-Efficient heavy-duty trucks, and the
next generation Eicher Pro Series of heavy-duty trucks.
• Volvo was the world's second-largest truck maker after Daimler AG of Germany. The
joint venture could have been a good idea as Volvo had funds, systems and
technology.

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➢ Business Areas of Volvo Eicher Motors Limited
Eicher Motors Ltd. comprises of the automotive businesses of the Eicher Group. The
business activities of the company are carried out by its constituent Business Units, each
covering a product category as described below:

VECV manufactures a range of commercial vehicles with GVW of 5 to 11 tons. It has

been outperforming the industry for the past six years. The sales growth in its LCV
segment has been higher than that of the industry. With technical and financial
collaboration with Mitsubishi Motors Corporation of Japan, EML started manufacturing
the CANTER range of vehicles in 1986 at its plant at Pithampur in Madhya Pradesh with
an integrated capacity of around 20000 vehicles per annum.

➢ Summary of Volvo-Eicher Joint Venture

Operational since July 2008, VE Commercial Vehicles Ltd. (VECV) comprises of five
business verticals – Eicher Trucks and Buses, Volvo Trucks India, Eicher Engineering
Components and VE Powertrain. VECV includes the complete range of Eicher's
commercial vehicles, components and engineering design businesses as well as the
sales and distribution of Volvo trucks.

VECV aims to emerge as an Industry leader in driving modernization in commercial

vehicle transportation in India and the developing world by bringing about improvement
in transport efficiencies. In the near course, VECV will strengthen each of its product
brands as leaders in their respective segments through innovative products and
expansion of its existing network spanning the geographical expanse of the country.

VECV’s portfolio of commercial vehicles includes two product brands with absolutely different
market positions yet complementing segmenting synergies. Eicher Trucks & Buses have a
wide offering in the mass market, 5T40T range while Volvo Trucks command a strong
presence in the premium, high-performance, heavy duty segments from 25T49T. With a
formidable presence in the existing light and medium duty segments,
VECV’s main focus is on increasing the penetration and market share of its heavy-duty
products. Thus, its investments in design, development, manufacturing, systems,
distribution and services are largely oriented towards creating a stronger position in the
heavy-duty market.

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VE Commercial Vehicles has over 4000 employees with a sales and support network but
spreads across more than 300 points across the country. VECV is jointly managed by
both the companies with shared management and equal representation rights on the
Board of Directors.

➢ Benefits from the Joint Venture

• The 2 main goals of Volvo were fulfilled through this joint venture, which were: to get
a significant market share in India, and to make India a base for exports to other
emerging markets. For doing this, it had to selectively inject technology to make the
products better. Eicher's low-cost manufacturing base offered Volvo that opportunity.
• A global truck maker would have had to spend three to four times the amount Eicher did
in developing a new truck or setting up a new factory. With this joint venture, VECV has
invested Rs 1,300 crore to expand manufacturing and distribution capacity, improve
processes and set up an engine factory at Pithampur in Madhya Pradesh.
• The joint venture also improved processes. The factory could make 100,000 engines a
year. The plan was that VECV will export 30 per cent engines annually to Europe. These
engines will conform to Euro-VI emission standards - to be implemented in Europe from
January 2014. In the next two years (from 2012), VECV planned to invest Rs 1,200 crore
to develop products, set up a bus body plant and expand capacity.
• Eicher's revenue from the trucks and bus business has more than doubled since
forming the joint venture to Rs 5,443 crore in 2012. VECV had a cash surplus of Rs
700 crore and posted a net profit of Rs 336.66 crore in FY2012.

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 Mahindra Renault Ltd.

➢ Mahindra & Mahindra

Mahindra & Mahindra Limited is an Indian multinational automobile manufacturing
corporation headquartered in Mumbai, Maharashtra, India. It is one of the largest vehicle
manufacturers by production in the Republic of India. M & M was founded in 1945 by
Mahindra brother’s i.e. KC Mahindra and JC Mahindra and Mohd. Ghulam as a steel
trading company, we entered automotive manufacturing in 1947 to bring the iconic Willy’s
Jeep onto Indian roads. It US $16.2 billion multinational group with more than 240000
employees in over 100 countries.

➢ Renault S.A
Groupe Renault (legally Renault S.A.) is a French multinational automobile
manufacturer established in 1899. The company produces a range of cars and vans, and
in the past has manufactured trucks, tractors, tanks, buses/coaches, aircraft engines, and
auto rail vehicle. In 2016 Renault was the ninth biggest automaker in the world by
production volume. It is working with an employee’s strength of 181,344.

➢ How the JV was Formed

• Renault designers planned and visualized a robust, low-cost car, under €5000, which
became a big hit in Europe. Which was also picturized as middle-class car for Indian
market customers.

• M&M initiated to carry forward that opportunity in India. Both companies were well known
for their USP’s. Renault is well known for its important expertise about design,
engineering & construction, innovative and safe vehicles worldwide. M&M - wide cost-
effective supplier base, brand name, experience.

• Thus M&M entered into a JV with Renault in 2005 to take advantage of each other’s
strengths and capture the Indian market. The JV, 51% owned by Mahindra & Mahindra
and 49% by Renault, then set up a state-of-the-art manufacturing plant in Nashik in
Maharashtra, India to roll out their Logan in 2007.

➢ About Joint Venture

Mahindra & Mahindra is an automobile industry in India. In 2005 Mahindra & Mahindra had
a joint venture agreement with Renault which is a French car manufacturing company

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 to produce and commercialize Logan. The joint venture is a 51:49 partnership between
Mahindra & Mahindra and Renault. The Logan plant at Nasik has a capacity to produce
50,000 units per year (Mahindra, 2010). The main focus of this joint venture between these
two companies was to produce no-frills Logan car with class-defying features at an
aggressive price & launch them exclusively for Indian market with the advantage of using
dealers of Mahindra in order to reduce the time required to increase the market shares
(Economic Times, 2007). This suggests that there was a technology requirement in Indian
automobile market which demanded no-frills spacious cars with middle class customers
as their target. The Renault chief execute Carlos Ghosn wanted to increase the global car
sales by 800,000 by year 2009 & he believed that this figure could be achieved by investing
in Indian market as he spotted significant opportunities to gain massive profit in Indian
market. The biggest challenge for this joint venture was to design a car model that suits
Indian driving conditions which includes contemporary styling and design. Logan is
supposed to be the unique product in its segment with above features along with the room
for the middle passenger in the rear seat (Mahindra Logan, 2010).

➢ Reasons for Failure

• The economic situation – Logan was launched in 2007, just before the crisis of 2008.
Like everywhere, India was also affected. that is why the Indian market never placed
its important in the French car. Already it had affected the Indian car market demand.
• Not enough Market Research - Aesthetic mismatch with Indians who have been
pampered by Hyundai for quite some time now. Logan failed to account for modernity
and luxury (something which was expected due to its French connection). Indians
didn’t like the design of the Logan. They felt it looked old-fashioned. (originally
designed for Eastern European markets).
• Marketing Failure - M&M’s image: tough, reliable, rugged and economical vehicles, but
the company’s products are not perceived as modern or technologically advanced. Logan
had great power, performance and space, but failed to communicate the message.
• Higher price – Localization content (the percentage of parts sourced locally) of the
car, which is at 50 per cent, was much lower than competition and thereby has pushed
up the final cost of the car (high import costs of engine and gearbox).
• Rated poorly in most dimensions. What is even more surprising is that even though
Mahindra Logan highlights price and mileage, it has been rated poorly in these aspects
too. This is clearly due to its ambiguous positioning. The only point where Logan is
perceived favorably i.e. spaciousness has a limited appeal to customers after some level.
Ironically, the company has emphasized on spaciousness as one of the main factors.
• Culture Difference: About declining sales, because of renault mindset that they are
Third World, and they have got utmost expertise to produce the best cars in the world.
They placed the Logan badly in Indian market with relatively dull powertrains and
expected that Indians will lap up the Logan in that format. However, it went wrong
somewhere. Concluded the attitude they carry around is responsible for low sales.

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