Chennai, July 3 (Agencies): Ashok Leyland and Finland’s Alteams Group formed a 50:50 joint venture today that will invest over Rs 500 crore to set up a unit for manufacturing aluminium products.

Alteams has units in Finland, Sweden, Russia, Estonia and China. On its Web site, the company says it is already the world’s leading supplier of cast light metal components to the telecom industry.

The factory, to be set up near Chennai, will be commissioned by December 2008. Ashok Leyland managing director R. Seshasayee and Alteams CEO Panu Routila said the partners would invest Rs 175 crore in the first phase and Rs 335 crore in the second. This will be done in five to six years.

The new unit will make aluminium products, particularly for automotive and telecom industries. Its turnover in the first year of operations is expected to be around Rs 280 crore. After the second phase is completed, the JV should achieve a turnover of Rs 650 crore and generate 1,000 jobs.

Routila said the venture would start functioning immediately. It will distribute Alteams’s products — imported from the company’s unit in China — to Ashok Leyland and Nokia.

The factory will be set up near Chennai, so that it can be close to Ashok Leyland and Nokia factories.

Ashok Leyland informed stock exchanges that the joint venture would manufacture high-pressure die casting aluminium products, particularly for auto and telecom sectors.

The venture will partly meet Ashok Leyland’s requirements for components for engines and gearboxes. The portfolio will extend to parts for passenger cars and other non-automotive applications.

Ashok Leyland subsidiary Ennore Foundries Ltd. makes castings, and the new venture will help Leyland corner a larger share of the market for niche parts, analysts said.

“The JV reflects the expansion of Ashok Leyland’s presence into the auto components sector to take advantage of the rapidly growing opportunities both in India and abroad,” Seshasayee said.