Ashok Leyland - Nissan Motor tie-up

Ashok Leyland Ltd has informed that the Company has signed on October 29, 2007 a Master Cooperation Agreement with Nissan Motor Co. Ltd, Japan for manufacture and sale of Light Commercial Vehicles and Powertrains.

In this regard the Company has issued the following Press Release:

Ashok Leyland Ltd and Nissan Motor Co., Ltd., on October 29, 2007 signed a binding Master Co-Operation Agreement (MCA) for the formation of three joint venture Companies supporting the Light Commercial vehicle (LCV) business. The agreement was signed in Chennai on October 29, 2007 by Mr. R Seshasayee, Managing Director of Ashok Leyland and Mr. Carlos Ghosn, President and CEO of Nissan Motor Co., Ltd.

This agreement follows the signing of the Heads of Agreement (HoA) document in August and reflects progress achieved with the detailed project evaluation. It formalizes the partnership between the Companies, which will include the development and manufacture of LCV products under both the Ashok Leyland and Nissan brands as well as cooperation in sales.

The two Companies anticipate an investment in the neighborhood of US$ 500 million for the creation of three joint venture Companies that are to cover the following business areas:

Vehicle Manufacturing Company - a Company with exclusive rights to manufacture LCV products in India for both the partners. Manufacturing facilities will be located in India and the Company will be owned 51% by Ashok Leyland and 49% by Nissan. Production will start in 2010 and will include the new generation Nissan Atlas F24 light-duty truck, in addition to a range of products covering application from 2.5 to 8 ton gross vehicle weights (GVW). In the medium term, production volume, intended for both Indian and export markets, is expected to grow beyond 100,000 units annually.

Powertrain Manufacturing Company — responsible for the manufacture and assembly of engines and other drivetrain components to be fitted in LCV products and for export. Manufacturing will be located in India and the Company will be owned 51% by Nissan and 49% by Ashok Leyland.

Technology Development Company — responsible for the development of LCV products and related powertrains, destined for the Indian and select global markets. This JV Company will be owned 50:50 by the two partners and located in Chennai. The products developed will be sold under both the Ashok Leyland and Nissan brands.

In addition, the two partners also expect to cooperate to leverage each other's dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leyland's dealers in India and for Ashok Leyland, access to Nissan dealer networks in specific export markets.

The JV is also set to benefit from leveraging the sourcing strengths of both the partners.

Executive Comments :

Mr. Dheeraj G Hinduja, Co-Chairman, Ashok Leyland:

"We hope to leverage Ashok Leyland's marketing insight, product development capabilities and dealer network, together with the excellent engineering foundations inherent in Nissan's global products. The products will set new benchmarks in technology and customer value."

Mr. R Seshasayee, Managing Director, Ashok Leyland:

"An effective entry into the LCV segment has been on Ashok Leyland's radar for some time now. This partnership with Nissan will allow both Companies to develop a range of
cost-competitive and customer-oriented LCVs targeted not only to the Indian market but several select markets overseas. We are confident that the JV structures will facilitate both Companies to achieve this objective with equitable contributions."