Mahindra and Mahindra with Ideal Motors, its partner in Sri Lanka for Mahindra Group of vehicles will invest around Rs. 2.5 to 3 billion in a state-of-the-art automo facility in Sri Lanka.
The joint venture between two leading players in the automotive industry, globally and locally, will tap the peripheral segment of the automotive market which according to both players has immense scope for market expansion within a short span of time.
Brimming with confidence, Ideal Group Chairman Nalin Welgama said the joint venture between the two companies is a landmark venture that will transform the automotive industry in Sri Lanka.
“We will be targeting around 100 units a month and then expand, keeping pace with demand,” Welgama said.
Mahindra and Mahindra, a part of the US$ 19 billion Mahindra Group represented in over 120 countries across the globe, sees the vast potential of the Sri Lankan market for a thriving automotive segment of the diverse portfolio of business across the globe.
Mahindra will hold a 35 percent stake, while the rest will be held by Ideal Motors in the joint venture. The Ideal Motors and Mahindra Group partnership spanning nine years has paid dividends to both companies according to officials of both companies who spoke at a media briefing last week on the launch of the joint venture.
“We have expanded our customer base to over 65,000 during our partnership. The landmark agreement to day makes my one dream come to reality that is to assemble a vehicle in Sri Lanka and then venture into the electric car segment,” Welgama said.
The joint venture will also comprise a vendor park to be set up in Kalutara enabling high-end vehicle manufacturers in India to come in, to assemble components for the global market.
“We want to start small as it is also the wish of Mahindra Group with components and then go big once confidence has been built,” Welgama said. The value addition component by Ideal Motors will be around 35 percent. “No automotive company could have 100 percent value addition by itself,” he said.
The first vehicle to be assembled in the 1960s in Sri Lanka was by the legendary entrepreneur Upali Wijewardene who ventured into the industry during the closed economy era which closed doors for importation of goods to the country. An amateur racing enthusiast, Wijewardene raced his mother’s Opel Kapitan at the Katukurunda Races in the early 1960s and in the following decade he set up Upali Motor Company which under licence, assembled UMC Mazda and Upali Fiat at the Upali industrial complex in Homagama.
“Today, Ideal Motors is proud to be a pioneer in setting up the first automotive assembly in partnership with the automotive giant Mahindra. The joint venture will lead to new horizons,” Welgama said.
Mahindra and Mahindra which has vehicles ranging from two to 40 seaters, considers Sri Lanka as one of the top three export markets.
“We have a strong vision for Sri Lanka and the joint venture is an integral part of the plan,” Vice President, Head of International Operations, AFS (South Asia), Sanjay Jadhav said.
Ideal Group Deputy Chairman Aravinda de Silva said the joint venture is a major milestone in the automotive industry in Sri Lanka which is much more important than petty political gains made by politicians.
“The strategic partnership represents a quantum leap for both companies at it will enable us to deliver products at affordable prices,” he said.
The Mahindra Group has a presence in aerospace, agribusiness, aftermarket, automotive, components, construction equipment, finance and insurance, defence, energy, industrial and farm equipment and is considered to be one of the most reputable industrial houses in India with a market leadership in utility vehicles and tractors in India.