Ashok Leyland scouts for acquisitions in Latin America

As part of expanding its global footprint, Ashok Leyland, a Hinduja Group company, has said it was scouting for acquisition opportunities, mainly in the bus segment, in Latin America, North Africa and parts of Southeast Asia.

Dheeraj G Hinduja, 39, who took over as the new chairman of Ashok Leyland last week, said “the company should be among the global top 10 in commercial vehicles and top five in buses, within a time span of five years”.

A third-generation member of the Hinduja family, he said he would not participate in day-to-day activities. His focus would be on a strategy for the company, merger and acquisitions, and creating a talent pool and leadership skill.

Currently, the company is in the global 16th position in CVs and number six in the bus segment. In terms of volumes, it will be 150,000 units of CVs and 40,000 buses, within five years. “We are always open for new acquisitions, which would give access to technology, new markets and customers,” he said.

“We have a strong hold in Saarc countries and West Asia and now we want to focus on North Africa, South East Asia and Latin America,” said Hinduja.

Managing Director R Seshasayee added the company would also look at opportunities, mainly in the bus segment, engineering and design, and foundries. “We will also look at the possibilities of brownfield expansion (of existing units),” he said.

In July, Leyland entered into an agreement with UK-based bus manufacturer Optare to acquire 26 per cent stake, for $7.5 million (Rs 33 crore). The company has said this acquisition will give access to technology, including a modern range of mid-size and full-size city buses which can appeal to both domestic and global markets.

Seshasayee added, “Indian bus manufacturers can go global and got a good chance. While international players are entering into India, we are going to compete them in the global market. Our major advantage is a low cost base. While manufacturing capabilities can come from us, technology has to come from a partner.”

The two main drivers for potential acquisitions would be technology (design and engineering) and customers, he said.

Dheeraj Hinduja said the company's joint venture with John Deere for construction equipment would go on stream in the next few months.

Also, “our JV with Nissan for making LCVs (light commercial vehicles) is key, since it will allow the company to offer a full range of products.” Earlier, the company said the partners would launch the products in May 2011. Initially, the products will be rolled out from Leyland’s Hosur facilit,y with an initial capacity of 55,000 vehicles, going up to 80,000 later. The JV is also in the process of setting a new facility near Chennai. Seshaayee did not commit to any schedule for the project.