December 7, 2007 -- Indian conglomerate Mahindra and Mahindra (BSE:500520) is understood to have emerged as a preferred partner of international defence equipments major BAE Systems for a manufacturing joint venture in India.

The UK-based BAE Systems has zeroed in on M&M and is believed to have signed a Memorandum of Understanding (MoU) after holding talks with at least two other leading corporates -- Tatas and Larsen and Toubro (L&T)(BSE:500510) for its Indian Land Systems project, sources close to the development said.

The MoU would prove to be a big morale booster for Mahindras which is competing with Tata Motors (BSE:500570) for the acquisition of auto giant Ford's global luxury brands Jaguar and Land Rover, revised bids for which were submitted on Wednesday last.

The proposed JV will manufacture combat vehicles and other land-based defence equipments. Sources said that the project would cater to the Indian Army whilst also looking for exports from Indian soil.

When contacted, BAE Systems' Media Relations Director John Neilson said from London, " BAE Systems has made no secret of ambitions to develop its partnership with India and continues to have discussions with potential industrial partners in the country."

Until such time as these discussions are completed, it would be premature to predict their outcome, he said when asked about the signing of MoU with M&M earlier this week.

Officials of the Indian company could not be contacted for comments.

Next step after the MoU would be the creation of a joint venture, for which the two sides would soon approach the authorities for the necessary regulatory approvals. A government nod is mandatory in India for defence production.

Source: Asia Pulse