Leyland weighs setting up plant overseas

Ashok Leyland, one of the leading commercial vehicle manufacturers in the country, is looking at setting up a manufacturing facility in the export market. The options being considered are China, Thailand and the Gulf.

J N Amrolia, executive director, said a joint venture in these markets could also be explored. A feasibility report is being prepared by the company and a decision will be taken over 3-4 months. Amrolia was in the city to attend an Indian Society for Training and Development convention.

Amrolia said, depending on the potential of the markets, the company will decide on the number of manufacturing units to be set up. He also said it was likely that the facilities will be assembling units.

Starting with the first unit at Ennore, Ashok Leyland has six manufacturing plants"" the mother unit at Ennore near Chennai, two plants at Hosur (Hosur I and Hosur II), assembly plants at Alwar, Bhandara and castings plant at Hyderabad. The total covered space at these six plants exceed well over 450,000 square metre and employ close to 12,000.

Amrolia said the facilities made sense in the wake of free trade agreements (FTAs). India had embarked on an aggressive strategy of preferential liberalisation with its Asian neighbours.

Agreements had been signed for the creation of free trade zones (FTZs) within South Asia and with members of Associations of South East Asian Nations. FTZs eliminate tariffs against members but retain them on non-members.

On the export front, he said, Ashok Leyland is executing its Iraq order, which entails shipping 3,400 trucks.

Though the order was given nine months back, the company could not implement it owing to the uncertainty in Iraq. Amrolia said the order will be executed in tranches.

Meanwhile, the company will go ahead with the proposal to raise long-term funds of $100 million in the international market, which will enable it to quickly enhance production capacities in line with demand growth.