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Medium and heavy commercial vehicle maker Ashok Leyland today said uncertain global market conditions has forced it to 'optimise' existing infrastructure besides ceasing production in one of its plants abroad.
"At this point of time, we have expanded capacity in the last few years substantially. But (M&HCV) market dropped by 25% last year and 14% in the first quarter (of this financial year). I think we need to just optimise what we have. Capex and investments are delayed for the moment", Ashok Leyland Chairman, Dheeraj G Hinduja told reporters here.
"I think in the next few months and few quarters, till market revives, we need to be as lean as possible.Fortunately, most of the critical investments have already been done. Whether with Nissan JV, John Deere,with Albanair, in the last four years most of the investments have already been done."
On production at its Prague plant,he said European Union, like India,is now fairly depressed in the commercial vehicle (segment). It did not make economic sense to continue in that environment as total production there was just 1,000 vehicles.
"At this point of time, we are closing down production and optimising.We are trying to focus what are the right prospects for the company. We are ceasing production there.The advantage of having Prague unit is that you have complete access to European markets."
On the recently launched "Stile", the second product under the Joint Venture with Nissan Motor Company, Ashok Leyland Non-Executive Vice-Chairman Dr V Sumantran said "Stile was launched after getting feedback from customers.
"For instance, the Stile that we see (today) has bucket seats, people were asking for sliding window, we have it. But the European origin of Evalia did not have it, Stile has it."
He clarified that Stile would not compete with Evalia as both products would target different consumers. "I do not see us and Nissan competing for the same customer.We will go for more commercial oriented customer, it could be hotels, or airport shuttles, BPO vans. We will target a slightly different customer base than Evalia", he said.
On investments made between the JVs, he said as far as the Nissan JV was concerned, they would commit a cumulative Rs 2,500 crore over a period for full spectrum of products. "I would say right now 50-60% is done. But we will progressively make a more of it."We launched DOST, we launched Stile and we are almost finished with Partner", he said.
On plans for a greenfield facility under the JV, he said, "I think we will consume a quantum of investments (for that)".
On strengthening its presence in the bus segment,Sumantran said the global strategy is still on and he thought more of it would be seen in the next 12-18 months.The first product would be Janbus, to be launched in India based on the JNNURM scheme.
"Janbus to me is a best example in what you want in a city bus. We have created Janbus to be the world's first one step flat floor 650mm hight. Janbus is a full size bus. We will launch based on JNNURM", he said.
