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Ashok Leyland to invest Rs 4,150 cr in TN

The company plans to lauch two more products by the end of this year

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Hinduja's flagship company is planning to invest about Rs 4,150 crore in Tamil Nadu. The proposed investment include a Light Commercial Vehicle (LCV) project in association with its Japanese partner, Nissan.

The company said it would launch two more products by end of this year.

Vinod Dasari, managing director, Ashok Leyland, said the proposed investments included setting up a greenfield facility to manufacture LCV, in collaboration with Nissan. The facility will be set up at Pillaipakkam by Ashok Leyland-Motor Company.

Last year, Ashok Leyland-Nissan launched their first product Dost, which came from Ashok Leyland. According to Dasari, the company sold 7,760 units of the vehicle and has managed to grab 17% market share in the LCV market now. The JV partners, in which Ashok Leyland holds 51%, are planning to launch two more products.

The company will also invest in Hosur, Ennore (where Ashok Leyland got its facilities), and later at Velli Vaayalsavadi and Orgadam. This includes expanding the capacity for M&HCV.

The MoU for the proposed investment was signed by R Seshasayee, executive vice-chairman, Ashok Leyland with the Tamil Nadu government on Monday at Chennai.

Meanwhile, the company has said that it would bring Avia's cab to India by the fourth quarter of 2012-13, which will replace Comet Cab.

The commercial vehicle major also said it would launch two more products, including Jan Bus, a front-engine low floor bus, in the second half of the year, and Five Axle Rigid Truck by end of the first half of the year.

It is also planning to launch Neptune Engines in the next 3-4 months.

Dasari said the company's overall sales volume rose to 101,990 vehicles in 2011-12 from 94,106, an increase of around 8.37%.

Company's performance in 2011-12, according to Dasari, is sluggish due to poor demand in the Southern market, which is the key market for the company, coupled with high interest rates and depreciation charges due to capital expenditure. Also, the company's investment in overseas arms has resulted in a fall in its net profit by around 10% to Rs 565 crore.

According to RBI's data, Ashok Leyland has invested around $17 million (around Rs 90 crore) in its foreign subsidiaries Avia, Optare and AL Bonair, of which $10 million as equity in Avia.

Equity infusion in Avia comes at a time when the Czech Republic subsidiary has joined hands with entrepreneurs to launch its models in the UK market and is planning to set up an assembling facility.

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