Zhengzhou Nissan to get 1.04 bln capital injection

Zhengzhou Nissan Automobile Co Ltd will received 1.04 bln yuan ($152 million) worth of capital from its three shareholders, raising registered capital to 1.29 bln yuan from the current 250 mln, shareholder Dongfeng Automobile Co Ltd said.

Dongfeng Auto holds a 51 pct stake in Zhengzhou Nissan Auto. Dongfeng Auto's parent Dongfeng Motor Co Ltd, a 50-50 joint venture between state-owned Dongfeng Motor Corp and Nissan Motor Co, holds 28.65 pct.

Nissan (China) Investment Co Ltd holds a 20.35 pct stake.

In a statement filed with the Shanghai Stock Exchange, the company said all the three shareholders will retain their shareholding levels after the capital injection.

Zhengzhou Nissan must meet a deficit in auto production capacity in 2009 amid strong demand market and intense competition. The venture needs to build a new plant to increase capacity and make products tailored for the local market, it said.

In 2007, the venture sold 40,038 vehicles and booked a profit of 219 mln yuan.

The new auto plant is expected to have annual capacity of 200,000 passenger vehicles in 2015.

Investment in the plant is expected to reach 3.076 bln yuan. The first phase, involving investment of 985 mln yuan, is due to be completed next year, the company said.

In a separate statement, Dongfeng Auto said that its board has approved the establishment of an engine joint venture with Dongfeng Motor.

The engine venture will have registered capital of 720 mln yuan, with Dongfeng Auto holding a 51 pct stake. Total investment in the project will be 1.524 bln yuan.

The engine venture will mainly produce light engines which can meet Euro III and Euro IV emission standards. It is due to start operations in March 2009.