AMW sales may hit Rs 500 cr in FY08

Asia MotorWorks is likely to end 2007-08 (April-March) with sales of over Rs 500 crore, said Managing Director and Chief Executive Officer Anirudh Bhuwalka.

"By the end of the year, we would have sold 4,500-6,000 units overall," Bhuwalka said on the sidelines of the launch of the company's new 49-tn truck.

The commercial vehicle maker, which has sold 3,000 vehicles so far until November, sees sales surging to 10,000 units by the end of 2008-09. Bhuwalka sees strong growth in the Indian economy, freight-generating sectors, increasing road networks, and importance of surface transport driving future demand for trucks.

"The growth in the commercial vehicles segment has been 26 per cent over the past four years with the heavy commercial vehicles market growing nearly 90 per cent," he said.

He sees cost economy from heavier trucks shifting demand to the high-tonnage segment.

The company has priced its second offering in the 49-tn segment, heaviest in commercial vehicles, at Rs 27 lakh.

Tata Motors' 49-tn tractor and 49-tn tractor-trailer cost Rs 33 lakh and Rs 21.5 lakh, respectively, while the new Ashok Leyland 49-tn truck costs around Rs 19 lakh.

Asia MotorWorks, which currently has eight models in the Indian market, is eyeing a 90 per cent share in the commercial vehicle segment by March against 70 per cent now.

The company was the first to launch the 49-tn truck in India, two and a half years ago.With today's launch, Asia MotorWorks has five 25-tn truck models, one 40-tn model, and two 49-tn models.

Of the company's revenues, 50 per cent comes from the sale of 25-tn trucks, 25 per cent from 40-tn, and the rest from 49-tn trucks. Localisation content for Asia MotorWorks vehicles is around 15 per cent, which mostly comprises gearboxes.

"Next year, we plan to localise content to around 90 per cent, which is one of the important things for us to break even soon," Bhuwalka said.

He added the company would look at expanding only when it starts producing 1,000 units a month up from 500 units now.

The company eventually plans to get into light commercial vehicles, buses, as well as exports, Bhuwalka said.

"We are still putting together a strategy for that."

The company has invested Rs 500 crore in its current facility at Bhuj in Gujarat where it also houses a component manufacturing unit.

At present, the company makes and exports 2.5 mln wheel rims for cars.

"An additional production of 15 mln units will be commissioned in 8-10 months," said R C Mangal, senior vice-president, marketing.

Bhuwalka sees the wheel rim business generating 20 per cent of the company's revenues in 2008-09.