Ashok Leyland Revives Investment Plans (08-Mar-2010)
During the melt down, Ashok Leyland, the truck manufacturer, after delaying its investment plans earlier due to the global meltdown, is now geared it self and has revived its investment plans with a new strategy.
According to Ashok Leyland Managing Director R Seshasayee, the company had slashed its investment due to the market conditions.
He also added that as the market has come back, the company is now activating the investment again. So the company will make Rs 3,000 crore of investment in the next three years for various activities, he said.
As the economy is gathering momentum, the company has lined up investment plans over the next few years.
The company as part of its new gameplan plans Rs 3,000 crore of investment over the next three years, which would be mostly utilised on new product developments as well as churning out new line of trucks and buses.
Moreover, it will also expand its dealership network into underpenetrated northern as well as eastern market and inject more funds into JVs with Nissan on LCVs and John Deere on construction equipment.
The company is doing this inorder to boosts its market share of 30 per cent, which has declined to 22 per cent.
In order to expand in the norther region, the commencement of Pantnagar plant will play a big role.
With input cost surging drastically, the commencement of the plant in Pantnagar offers the much-needed cushion to Ashok Leyland on the margins front.
The company on every truck will save Rs 30,000-Rs 50,000.
He said that the investments would include the company''s share in the light commercial vehicles (LCV) JV with Nissan along with the construction equipment business (JV with John Deere) and overseas operations (bus facility at Ras-Al-Khaimah).
Following the global economic downturn that hit the auto sector badly, Ashok Leyland had slashed on the capex that was announced last year from Rs 3,200 crore to Rs 2,000 crore, for the three consecutive years.
Seshasayee said that the company will start commercial operations at its Pantnagar facility from today, which will have the production capacity of 75,000 units at full utilisation.
Moreover, he added that the company''s centre of gravity will change to North (India) from South after the facility is opened today.
He further said that the company will further consolidate its base in North India when the company will transform Alwar bus body making unit into an integrated bus manufacturing plant in the next 3-4 years.
At the initial stage, the company will roll out its latest U-Truck, and produce various medium and heavy duty vehicles in the later stages from the 190-acre Pantnagar facility, said Seshasayee.
Moreover he added that the company has to make an investment of Rs 1,500 crore in setting up this facility, out of which Rs 1,200 crore has already been put in while the rest in the next few months.
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