Mahindra & Mahindra will set up a three-way joint venture in Russia for assembling and marketing its sports utility vehicle Scorpio.
Its partners for the JV will be Russian automobile company GAZ and the Khemka family-promoted SUN group, which has operations in both India and Russia. The assembly unit will be set up alongside GAZ's present manufacturing base in Russia.
"The Russian operations are expected to begin by early 2007. We are targeting a market share of 6 per cent in the first couple of years of operation. Once that is achieved, we might even look at manufacturing Scorpio in Russia," said Pawan Goenka, president (automotive), M&M.
However, he refused to divulge details regarding the company's investment in the proposed venture.
Sources close to the company said "the three players are likely to have an equal stake in the joint venture company which will invest nearly Rs 300 crore (Rs 3 billion) in setting up the plant."
M&M would provide the design and technology for Scorpio, while GAZ would market the vehicle, they said. There is a market of one lakh SUV units a year in Russia and this is growing at a rate of 10 per cent annually. The market is valued at Rs 8,000 crore (Rs 80 billion).
"M&M has already sent a batch of 100 units of Scorpio to Russia. The vehicle is designed to suit the Russian climatic and environmental conditions," said Goenka.
Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
