Scania to go it alone as L&T backs out

Tie-up was to market Swedish firm's tipper range.

Swedish truck and bus maker Scania has firmed up plans to manufacture trucks in India. This follows the decision of the company's current distribution partner, Larsen and Toubro (L&T), of not venturing into auto manufacturing.

In 2006, the two companies had entered into an agreement to market Scania's tipper range, which was followed by a delayed launch of the vehicle last November, more than 14 months after the distribution agreement was signed.

"We will not get into automotive manufacturing. The distribution agreement with Scania was signed for mining trucks and not for highway trucks," said J P Nayak, wholetime director and president, machinery and industrial products, L&T.

The L&T move comes at a time when Scania is trying to have a manufacturing presence in the country to cut costs, according to market sources.

A manufacturing presence in India will enable Scania to market its products at competitive rates on a par with its fellow European competitor, MAN, which has already established a joint manufacturing facility with Firodia's Force Motors. At present, the company imports its trucks into India from Sweden as fully-built units attracting huge import duties.

Scania's multi-axle tipper range, used in the construction and mining sectors, is priced around Rs 58-65 lakh compared with Rs 20 lakh for the MAN range. MAN claims that their Indian price is even cheaper than its European range.

The company will execute its first order of 100 tippers, which are priced higher than Daimler Benz Actros, next month, carrying a price tag of Rs 55 lakh. The tipper range of Scania was intended to complement L&T's excavator range used for mining and construction.

According to auto analysts, the multi-axle tipper segment in India is growing at a fast clip, considering the gamut of activities taking place in the infrastructure segment.

According to Indian Earthmoving and Construction Industry Association (IECIAL), which represents the construction equipment industry, a staggering investment of $320 billion is expected in the infrastructure sector in the next five years.

During the past couple of years, the country has seen a number of global commercial vehicle (CV) giants making a beeline to establish presence here to tap domestic as well as export markets.

Daimler, the world's largest commercial vehicle player, recently forged an agreement to make its range of CVs here. Volvo too signed a manufacturing agreement with Eicher and utility vehicle major Mahindra & Mahindra (M&M) signed an agreement with International Truck and Engine Corporation (ITEC) of the US.

The L&T stock closed 1.72 per cent higher at Rs 3,493.05 on BSE today compared with its previous close of Rs 3,434.