Ashok Leyland lines up Rs 2,000 cr capex for BS-VI migration, new LCV unit

The company is planning funds infusion for BS-VI and new projects related to light commercial vehicles, among others

Commercial vehicles (CV) major Ashok Leyland has lined up a capital expenditure (capex) of Rs 2,000 crore for FY20 and FY21. 

Among the fresh investments it is planning are funds infusion for BS-VI and new projects related to light commercial vehicles (LCVs), among others. The company has predicted that the industry would grow by around 10-12 per cent.

Ashok Leyland Chairman Dheeraj Hinduja said despite a litany of challenges in 2018-19, the company managed to increase its market share and reported a growth. 

He is optimistic about 2019-20, mainly on the backdrop of BS-VI switchover as well as a push for both infrastructure growth and capital investments since a stable government is set to form at the Centre. “I am optimistic that the CV industry will grow 10-12 per cent this financial year and Ashok Leyland will outphase the industry growth,” he said.

Speaking about company’s proposed capex and investment plans, Gopal Mahadevan, chief financial officer (CFO), Ashok Leyland, said investments will be set aside for creating a new LCV platform Phoenix and modular platform for BS-VI, among others.

The new project will help it address the gap in the LCV portfolio. 

Currently, the company’s LCV Dost caters to the needs of the 2.5-3 tonne segment while Phoenix will help address the requirements of the 5-7.5 tonne segment.

“LCV is an important business for us, both in domestic and exports segments. In the export market, an LCV is a good product to build the brand. So, in many of the new markets, the company will foray into the LCV segment while expanding its medium and heavy commercial vehicle (M&HCV) products,” Mahadevan added.

He said during the fourth quarter, the company’s profit dropped 10 per cent to Rs 665 crore from Rs 741 crore due to discount, challenge in realisations and high steel prices, among others. 

No talks with Tesla

Ashok Leyland Chairman Dheeraj Hindjua on Friday denied reports that company was talking with Elon Musk's Tesla for electric cars in India. “We are not in talks currently with them (Tesla). We are not working with any passenger car manufacturer and we don't want to be present there. We are talking with a lot of people for electric vehicle technology and components,” said Hinduja.  The company, however, said it was open to talks with partners for battery and motoring technologies.