To invest Rs 2,000 crore over two years.
Commercial vehicle major Ashok Leyland is planning to invest around Rs 2,000 crore over the next two years, both at its existing plants and in joint ventures. The company has got shareholder appro-val today to raise Rs 700 crore debt. Besides, the company also said it is planning to start manufacturing trucks from its plant in United Arab Emirates to cater to African markets.
Speaking at the company’s annual general meeting in Chennai, R Seshasayee, managing director, Ashok Leyland, said that in 2009-10 company’s capital expendi-ture was Rs 810 crore and Rs 142 crore was invested in joint ventures.
“Over the next two years we will invest Rs 1,200 crore for modernising the company’s plants and creating additional infrastructure. He added, another Rs 800 crore will be invested in the joint ventures.”
R J Shahaney, chairman, Ashok Leyland, said the joint venture, with Nissan Motor Company, that will make Ashok Leyland a full range player, is on course. The first products of the joint venture is expected to roll out by mid-2011 from the existing Hosur plant and the company will then compete in one of the most robust segments in the commercial vehicle industry.
He added, the company is also in the process of acquiring land for setting up greenfield facility for the project.
The company’s joint venture with John Deere, for construction equipment business, is on schedule. Pilot production at the Gummidipoondi, near Chennai, will start towards end of the year and the first product — the backhoe leader — will hit the Indian market by early 2011, he added.
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The integrated facility at Ras Al Khaimah, UAE, has already started producing buses, with an annual capacity of 2,000 buses, will feed GCC countries and the African markets, said Shahaney.
Meanwhile, the company has got shareholder approval, at the company’s AGM, to raise around Rs 700 crore by way of non-convertible deb-entures (NCDs), term loans and other modes.
The company has a proposal to borrow money in Rupees or in foreign currency, through fresh NCDs and or term loans / facilities from banks, financial institutions, mutual funds as lenders/ trustees others upto an amount not exceeding Rs 700 crore.
The above NCDs, term loans/facilities to be contracted in 2010-11 and external commercial borrowings to the extent of $295 million already borrowed, are to be secured by mortgage of the immovable, movable properties of the company, according to the announcement.
In 2009-10, the company had disposed off investments in long-term bonds and raised Rs 112 crore besides availing term loans of Rs 500 crore. The total long-term borrowings of the company in the form of external commercial borrowings, debentures and term loans, outstanding at the end of the year, aggregated to Rs 2,204 crore, according to company’s annual report.
The report added, the company has incurred Rs 684 crore towards capital expenditure, mainly in the new plant at Uttarakhand for setting up integrated manufactu-ring facilities and for developing new aggregates and driver cab. The company also incurred capital expenditure towards enhancing stamping facility at Hosur and for implementing a new ERP system. The rest of the capital expenditure was towards capacity optimisation programmes in existing plants.