The company has already secured an order for about 240 city buses from the Karnataka government, of which 40 have been delivered. On Thursday, it delivered 20 buses to the Andhra Pradesh State Road Transport Corporation.

"We have delivered the first batch of 9400 series buses to APSRTC as it is our key customer," said VBIPL managing director Akash Passey. The corporation spent Rs 70 lakh for each bus and with this, the state-run transport company has over 110 Volvo buses in its fleet.

The company has an order book of 310 buses to be delivered this year and most of them are from public transport companies. It expects the turnover to touch Rs 300 crore by this December.

Karnataka and Andhra Pradesh apart, Volvo is looking to tap emerging markets in Chennai, Pune, Mumbai and others cities, he said, adding Volvo had about 150 clients including private fleet owners.

APSRTC vice-chairman and managing director V Dinesh Reddy said the corporation was testing a lone AC bus on the city routes, and if the project takes off, the corporation might place more orders. Besides, Volvo is looking forward to the proposed Bus Rapid Transit System in Vijayawada, Visakhapatnam and Hyderabad.

With the occupancy rate in the luxury buses about 90 per cent, APSRTC hopes to recover a majority of the investment in two years.

Meanwhile, Volvo would increase its production capacity at the Bangalore plant from 450 buses a year to 1,000 by 2010. It is also looking to tap the coach segment in the tourism sector, Passey said. The company has invested about Rs 80 crore in the plant.