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Joint venture - Case study


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Defines joint venture and makes you understand better by the case study.

Published in: Business, Economy & Finance

Joint venture - Case study

  1. 1. Joint Venture Mahindra & Renault Dept. of IE&M
  2. 2. JOINT VENTURE • Two or more firms combine equity to form a new third entity • The level of equity can vary from very small amounts to large multi-million dollar investments • The amount contributed by each party will not necessarily be equal • Very detailed agreements covering what each party is to provide, what each can expect, and how each is to operate in the joint venture
  3. 3. Joint Venture of Mahindra & Renault MAHINDRA • Set up as a steel trading company in 1945 • In 1947, introduced the utility vehicle • Key operation on 18 industries RENAULT • French car making company • Known for its Engine manufacturing and Design
  4. 4. Why - JV For Mahindra • Mahindra & Mahindra, the fourth largest Indian vehicle maker wanted to extend its range to passenger and family cars • To increase their Engine efficiency • Renault follows a strategy of profitable growth (high quality, innovative range of vehicles and services) For Renault • Entering the Indian market • To establish international market
  5. 5. LOGAN • Mahindra & Mahindra and Renault have decided to join forces to produce and commercialize LOGAN, developed by Renault • The two groups concluded a framework agreement for setting up a joint venture in India with Mahindra retaining a 51 per cent share and Renault 49 per cent • The JV will be called Mahindra Renault Ltd • The estimated project amount will be 125 million euros • The capacity of the factory for Logan will be 50,000 cars per year
  6. 6. Plus points - LOGAN • • • • Higher Spacious vehicle High efficiency Diesel engine 44000 Satisfied customer Exported to SA, Srilanka etc
  7. 7. Renault exits from Logan JV • • • • • • Cost Not so good looks Excise duty (4.2 mts) Poor marketing promotions Manufacturing environment The two partners have had serious differences over the future of the venture, especially as the only model from the company • The Logan has seen its sales go down by over 60 per cent in 2009-10, selling only 5,332 units
  8. 8. M&M gets license • Mahindra & Mahindra renamed the 'Logan' sedan as ‘Verito’ • Renault agreed to continue to support M&M and Logan through a license agreement and supply key components, including the engine and transmission • M&M could use the Logan brand for 18 months after which it was to drop the Renault badge from the product as well as dealerships
  9. 9. Current Situation • Mahindra • Renault
  10. 10. Conclusion • • • • Lack of Transparency Responsibility (51:49) Each had their own goal Leadership qualities
  11. 11. THANK YOU Kiran Hanjar 1MS12MIA03 I sem MSRIT