Ashok Leyland to invest Rs 3k cr in various projects

Hinduja Group company Ashok Leyland today said it will invest Rs 3,000 crore in the next three years on various projects, including its light commercial vehicle joint venture (JV) with Japanese auto maker Nissan.

"We had cut back our investment due to the market conditions. Now, we are activating the investment again as the market has come back. We will invest Rs 3,000 crore in the next three years for various activities," Ashok Leyland Managing Director R Seshasayee told reporters, a day before inaugurating the company's Pantnagar integrated trucks unit.

He said the investments would include the company's share in the light commercial vehicles (LCV) JV with Nissan, the construction equipment business (JV with John Deere) and overseas operations (bus facility at Ras-Al-Khaimah).

After the economic slowdown hit the auto market, Ashok Leyland had cut back on the capex announced last year to Rs 2,000 crore from Rs 3,200 crore, for three consecutive years.

Seshasayee said the company will start commercial operations at its Pantnagar facility from tomorrow and it will have the capacity to produce 75,000 units at full utilisation.

He added, "The centre of gravity for the company will change from South to North (India) after we open the facility tomorrow. We will further consolidate our North India base when we will transform Alwar bus body making unit into an integrated bus manufacturing plant in the next 3-4 years."

Seshasayee said the 190-acre Pantnagar facility will initially roll out its latest U-Truck, and produce various medium and heavy duty vehicles in the later stages. "We have planned to invest Rs 1,500 crore in setting up this facility, of which Rs 1,200 crore has already been put in. The rest will happen in the next few months," he said.

Further, he added that because of the tax benefit the company is getting from the Uttrakhand government, its products will be cheaper by Rs 30,000-50,000.

Talking about its vendor base at Pantnagar, Seshasayee said, "Many of the suppliers have also set up their plants here. Nearly 50 per cent of the component requirement will be produced locally."

When asked about the company's sales performance, he said, it is expecting to close the current fiscal with 15 per cent growth. In 2008-09, it had sold 56,000 vehicles.

"We will watch out the credit situation and if no further tightening happens, we should witness 15 per cent growth in 2010-11."

On Nissan's reported discussions with the company for producing a $4,500-5,000 small car, he declined to comment.