Volvo Eicher Commercial Vehicles (VECV) has firmed up a two-year plan to invest Rs 1,000 crore to set up an engine-manufacturing facility and expand the capacity of commercial vehicle production.
While Rs 550 crore has been earmarked to enhance capacity for rolling out commercial vehicles, the remaining money would be invested to operationalise the proposed engine-manufacturing unit. Once the expansion programme is complete by the end of next year, the company would be able to scale up its average monthly production volumes by over 35 per cent — to 5,500 units from the current 4,000.
VVEC chief executive officer Vinod Aggarwal said the company has already started investing in the expansion programme. “Out of Rs 1,000 crore, we have already invested about Rs 200 crore at our existing facility in Pithampur in Madhya Pradesh,” he informed. “The engine plant will come up at the same site. We plan to commission it mid-2013.”
The new engine unit would initially have a capacity to produce 50,000 engines by 2013. It would be ramped up to roll out 100,000 units by 2015, Aggarwal said. As for the base engines, which will be compliant with the Euro VI emission norms, the plan is to export these to Europe for final assembly. Volvo would then introduce them worldwide in its medium-duty trucks. These engines are also being adapted for Euro III and Euro IV norms for use in Eicher’s next-generation medium- and heavy-duty trucks.
The company, a 50:50 joint-venture between Sweden’s Volvo Group and Eicher Motors, will further scale up its presence in overseas markets. “We currently export mainly to Sri Lanka, Nepal and Bangladesh,” Aggarwal noted. “The potential to up exports is very high. South African, West Asian markets are expected to show good growth in the coming years.”
Currently, exports constitute 7-8 per cent of VECV’s overall sales. This is expected to double over the next five years. As the country’s fourth-largest commercial vehicle manufacturer, it sold 25,804 units in the domestic market between April and October this year.
The company’s sales increased by 27 per cent during the period. The commercial vehicle industry, in the meantime, grew by around 18 per cent -- to 433,701 units. In a bid to beef up sales, the company is now looking at increased focus in the segments of heavy commercial vehicles and city buses.