"Apart from a fusion of the respective strengths of both partners, the JV reflects the expansion of Ashok Leyland group's presence in auto components sector to take advantage of rapidly growing opportunities both in India and abroad," Ashok Leyland managing director R Seshasayee said.
The 50:50 joint venture would manufacture High Pressure Die Casting (HPDC) aluminium products, Ashok Leyland said in a communique to Bombay Stock Exchange.
The JV would start operations this year and the first phase will be completed by 2008 at an investment of over Rs 175 (Rs 1.75 billion) crore.
With the completion of second phase, the JV would achieve a turnover of Rs 650 crore (Rs 6.50 billion) and generate jobs for over 1,000 people, Ashok Leyland added.
The manufacturing unit in Tamil Nadu will also be used to partly meet Ashok Leyland's captive requirements for components for engines and gearboxes.
The JV would synergize Ashok Leyland's expertise in automotive sector with Alteams' know-how of HPDC and their insights into telecom sector, it said.
"We are already present in the foundry business through Ennore Foundries. This JV broadens our portfolio to meet the demand of castings from the automotive and telecom sectors," Seshasayee added.
