INDIA BUSINESS WORLD - March 16th - March 29th - 2008
ASHOK LEYLAND TO INVEST RS 6,000 CR IN COMMERCIAL VEHICLE BUSINESS EXPANSION
The Hinduja Group-promoted Ashok Leyland is ramping up investments in its commercial vehicle (CV) business by investing close to Rs 6,000 crore in the next few years. The move is part of the group's strategy to strengthen the commercial vehicle business.
Hinduja Group co-chairman GP Hinduja said: "The total investments will include the Rs 2,000-crore investment in the Nissan-Ashok Leyland JV. It will help enhance our capacities and strengthen our position in the commercial vehicle segment, including medium and heavy vehicles."
Late last year, Ashok Leyland and Nissan Motor signed a binding co-operation agreement to enter into the light commercial vehicle segment in India, with an investment of Rs 2,000 crore. The partnership, which will begin production in 2010, will manufacture the new-generation Nissan Atlas F24 light-duty truck and a range of products covering applications from 2.5-8 tonne gross vehicle weights. Initially the products will be produced for the local markets though the focus will be on the export markets too.
The growth rate of CVs, especially heavy trucks, have been sluggish for the past couple of years. Transport operators have postponed purchases in the wake of high interest rates in a market where over 90% of the trucks are purchased through borrowings.
Ashok Leyland plans to increase capacity in a phased manner from 83,000 vehicles in 2006-07 to one lakh units, primarily medium and heavy commercial vehicles. The Chennai-based truck major, which currently has six manufacturing units, one at Chennai, three plants at Hosur, Alwar and Bhandara, is also looking for new locations in Uttaranchal for setting up additional manufacturing capacities. The volumes in the Ashok Leyland-Nissan JV will go up in a phased manner to a lakh units annually, sources said. For Apr 2007-Feb 2008, medium and heavy commercial vehicle sales fell by 4% while light commercial vehicles grew by 13%, as per the sales numbers released by the Society of Indian Automobile Manufacturers. This is the first decline in six years, after recording consistent growth rates of 10-12%.
Analysts indicate that this decline is cyclical in nature and sales of CVs will start looking up in the next couple of month. "We are enhancing capacity in segments which promise higher growth rates. The company has associate companies in the Czech Republic and the UAE and joint ventures in Sri Lanka and Bangladesh, and exports to over 20 countries world-wide.
|
