India's Mahindra may freeze Renault JV - paper

MUMBAI, March 27 (Reuters) - Mahindra & Mahindra, India's largest utility vehicles and tractor maker, is likely to freeze investments in its joint venture with French carmaker Renault, the Economic Times reported on Saturday.

Such a move would see the company cede its majority stake and management control in the venture to its French partner.

The newspaper, citing a number of unidentified people close to the development, said future investments would be by Renault, resulting in a fall in Mahindra's 51 percent stake over a period of time.

Mahindra's joint venture with Renault in India makes the no-frills Logan sedan, sales of which have been falling since 2008 after a good start.

Pricing has been a major issue because the car, at more than 4 metres long, incurs a factory gate duty of 20 percent, making it expensive for its target segment.

'While there are many possibilities for the Logan, nothing has been finalised as yet,' Mahindra president and automotive head, Pawan Goenka, told the paper.

In February, Renault India officials said the joint venture was being restructured and a decision would be made in 30-45 days.

The Economic Times said a capping of investment by Mahindra was being discussed and an equity restructuring was also on the table, citing an unidentified official close to the development.

The two companies were expected to make an announcement in the first week of April, it said.

They were also discussing the possibility of letting Renault use part of the 50,000-unit Logan facility in Nashik in western India to make other vehicles, it said.

'We are in the final stages of the discussions and will be in a position to make a joint statement very soon. Hence we would not like to comment on any rumours and speculations,' a Renault India spokesman told the newspaper.

(Writing by Janaki Krishnan; Editing by Paul Tait)

(([e-mail], [phone]; Reuters Messaging: [e-mail])) Keywords: MAHINDRA/RENAULT (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.