Mumbai: The board of Eicher Motors has approved the draft agreement to form a joint venture with Swedish truck major AB Volvo.

“The board of directors has approved the draft of definitive agreement with AB Volvo to carry on commercial vehicles business through EML’s step down subsidiary Eicher Motors India Ltd,” Eicher Motors (EML) said in a filing to the Bombay Stock Exchange.

Earlier, the company had announced that the combined entity would have an equity value of $768 million and the joint venture is expected to start operations by July 2008. The Indian partner will hold a 54.4% stake in the joint venture.

Further, the board has authorised Siddharta Lal, EML Managing Director, for execution of the aforesaid agreement.

The JV would focus mainly on distribution of commercial vehicles in India and overseas markets, where the partners have interest like research and development and manufacturing.

Besides, the partners are also mulling to get into the financial services business through the joint venture. Shares of Eicher Motors were trading at Rs327 at the BSE, up 2.11% from the previous close.