Leyland heads for Dubai, lines up Rs 550 cr plan

8th AUTO EXPO 2006

Flagship company of the Hindujas, Ashok Leyland, today said that it would invest Rs 550 crore in the next two years on capacity expansion for all its commercial vehicles.

This will include setting up of a unit in Dubai to build bodies of buses, a bus manufacturing factory in North India and a unit to manufacture gears for export.

"The plan is to take our capacity to 100,000 units from the current 77,000 units per annum. Plans are under way for setting up a manufacturing unit in Dubai while the process for identification of a location in North India is also on," Ashok Leyland Managing Director R Seshasayee said at the Auto Expo here.

Seshasayee said the expansion would be funded mainly through internal accruals but care would be taken to ensure that the company's debt-equity ratio was not disturbed. "No additional equity will be brought into the balance sheet," he said.

He said the company was entering new areas to grow beyond its core business of commercial vehicles. This includes vehicular design under the banner of Ashley Design and Engineering Services (ADES) and building as well as sourcing components.

Seshasayee said the company's auto component group, which facilitates sourcing from India, had commenced trading and was targeting a business volume of $100 million in three years.

He said the Dubai facility would have a capacity of 2,000 buses including chassis assembly and body building.

"The location has not been finalised but we will be in business there within six months," he said, adding that the Dubai facility will take care of exports to the Middle-east and the African markets..

On the company's plans to set up a facility in North India, he said, "The facility will have a capacity of 600 buses We will shortly identify the location."

The Rs 550 crore investment is part of the Rs 1,000 crore expansion the company had started two years ago. While the first step saw capacity expansion from 50,000 units to 77,000 units, the next phase would see the company cross the one lakh mark.

On import of components from China, Seshasayee said at no point would it become a significant part of the company's purchases. "The company will not encourage any Chinese firm to dump components in India" he said.