Leyland lines up Rs 5250 cr expansion

Hinduja Group flagship Ashok Leyland has lined up investment worth Rs 5,250 crore to enhance its production capacity by 1,40,000 units over a period of next four to five years.

While maintaining its leadership position in the heavy commercial vehicle segment, the company is scouting for a second location to have the 1 lakh production capacity in the near future with an investment of Rs 4,000 crore and has already selected Uttaranchal to set up a capacity of 40,000 units, where it will invest Rs 1,250 crore.

R Seshasayee, managing director, Ashok Leyland, said, "We are yet to zero in on the location of the second unit, which could be in north or central India and will have the initial capacity of 60,000 units scale-able up to 100,000 units in three years period. We are planning a host of new vehicles across all segments, including few launches, which will be produced from these twin-facilities."

The company is also scouting for two location to diversify its bus body fabrication facility to north India, besides the existing two facilities at Trichi and Madurai, which serves the southern region. These facilities will be expanded with equal participation by its Spanish joint venture bus maker, Irizar.

"There is tremendous growth potential in the bus segment. Uttaranchal could be one of the location and we are yet to decide the second one. We will be giving fully built utility and luxury buses. The investment part is yet to be worked out," said Seshasayee.

The company is eyeing the huge growth in the light commercial vehicle segment in the domestic market and planning to go in for a joint venture to produce a sub one-ton Tata Motor Ace like light commercial vehicle.

Watching the global moves of its arch-rival Tata Motor, it is planning to enter the South East Asia, South Africa, Middle East and China.

"The assembly unit in South Africa will have our entire range and will sell about a 1,000 vehicles in the first year from the new facility. It will mainly target South and Central African countries. Some components for the facility will be sourced from Avia (Czechoslovakian subsidiary of Ashok Leyland) and some parts from the Indian unit. We would then be designing appropriate products for the South African market," added Seshasayee

Besides this, Ashok Leyland has already announced a bus assembly unit in Ras-al-Khaimah in United Arab Emirates that will be functional by early next year with initially sales of 1,000 units in the West Asia and North African markets. Beside the acquisition of Avia, the company is exploring acquisition opportunities in the LCV segment and talks are on with potential targets in central Europe markets.