KamAZ will leave for India

The Russian concern and the Indian Vectra Group are creating a joint venture to produce trucks

With falling demand and general instability, KamAZ is trying to find new markets for its products. Yesterday the company announced that it had signed an agreement with India's Vectra Group to create a joint venture to produce trucks for the Indian market. The plant, designed to produce 5 thousand trucks per year, will begin operations at the end of 2009 and will be located in the city of Hosur, 80 km from Bangalore.

KamAZ owns 51% of the shares of the joint venture, Vectra Group - 49%. “Vectra Group is a partner who knows the specifics of the local market well. We plan to develop a long-term strategic partnership with him in India,” said KamAZ CEO Sergei Kogogin. The remaining parameters of the agreement, including the amount of investment, are unknown. It was impossible to contact a KamAZ representative yesterday. According to experts, the Russian side is unlikely to spend much money; most likely, its contribution will not be financial, but mainly in the form of intellectual and technical resources.

Last year, KamAZ was already negotiating the purchase of an Indian truck production plant owned by Tatra Vectra Motors, but the deal never took place. It is quite possible that this asset will now be involved in the new joint venture. But for now, its prospects are vague. “Neither the details of the agreement nor information about what kind of enterprise it will be is known,” says Natalya Sorokina from Uralsib. “Obviously, for now it is assumed that there will be some kind of industrial site where KamAZ vehicles, and maybe those from local manufacturers, will be assembled.” According to the analyst, for KamAZ such an agreement is an attempt to expand its sales area, despite the crisis.

However, it is too early to say whether Russian-made trucks will find demand in such an exotic market. Firstly, the situation in the industry is critical, and KamAZ even reduced its sales plan for this year from 43 thousand to 28 thousand vehicles, and secondly, Indian consumers are demanding of prices. Although Ms. Sorokina believes that in terms of price criteria, Russian cars will be quite competitive. “There are chances, but it will be possible to talk about the benefits of the joint venture after the general economic situation has been restored,” the expert noted.

As Nail Nagumanov, head of KamAZ's public relations department, told Interfax, today the plant intends to stop the main conveyor approximately until May 12. Some other KamAZ production facilities may begin work as early as May 4, Mr. Nagumanov noted. This year, KamAZ suspended work until January 19 after the New Year holidays, from January 29 to February 12 and from March 6 to 16.

KamAZ is one of the largest automobile plants in the Russian Federation, engaged in the production and sale of trucks (more than 30 models, over 400 configurations), spare parts, as well as trailers, buses, tractors, engines, power units and various tools. The company is a founder (participant) of 103 organizations of the KamAZ group, including assembly plants in Vietnam, Iran, Kazakhstan, Pakistan and the DPRK. The company occupies 30% of the Russian heavy truck market. In 2008, it sold 47.5 thousand cars. Revenue for 2009 is planned at 100 billion rubles. Major shareholders: state corporation Russian Technologies - 37.8% of shares, Daimler concern - 10% of shares, investment company Troika Dialog - 44.4% of shares.

Vectra Group unites 18 companies that are engaged in various types of business in the Indian market, in Eastern Europe, and other countries of the world. Main areas of business: aviation, in particular the sale of helicopters; truck production; real estate; information Technology; security systems; oil industry.

Irina TSYRULEVA