Ashok Leyland to focus on efficient investments

Ashok Leyland has identified higher efficiency in investment and operations, and development of new products as priorities in the current financial year.

Company's managing director R Seshasayee today told shareholders at the annual general meeting that capital expenditure during the year would be Rs 250 crore. The money would go towards increasing the vehicle making capacity to 77,000 units a year (it was 50,000 units a year in March 2004), and development of new products.

Seshasayee stressed on capacity expansion through the least cost route in a year where the company has indicated that there could be a slowdown in the growth rate of the commercial vehicle industry. The domestic commercial vehicle industry has grown in the last four years, with the last fiscal seeing a 22 per cent increase to 3.18 lakh units.

Another area that came in for repeated mention at the AGM by the company's representatives was new product development.

"Technology is the key to a company's success in the medium and long-term," said Seshasayee. Last fiscal, Leyland spent Rs 92.37 crore on research and development (1.9 per cent of total turnover).

A design office located near Chennai, where initially 400 engineers will work is to be commissioned by January 2006. The strength of the team is to go up to 800 engineers in a couple of years.

Among the products that have been developed by the company are the common rail version of 'H' series engine and Newgen 4026 J tractor. Leyland has also got access to the technology of the European vehicle maker Iveco, one of the company's promoters.

To sell 3% of IndusInd equity

Ashok Leyland is to sell 3 per cent of IndusInd Bank's equity held by it in the next three months. This has come in the wake of the Reserve Bank of India's guidelines that govern the maximum equity that can be held in private sector banks.

Leyland found itself in possession of 15 per cent of IndusInd's equity after its erstwhile subsidiary, Ashok Leyland Finance, was merged with the bank.

Leyland sold 3 per cent of IndusInd's equity last fiscal, and with another 3 per cent due to be sold, its stake in the bank will come below 10 per cent.