Volvo buys partner's stake in Indian JV

Swedish bus maker Volvo Bus Corporation today said it had bought out its joint venture (JV) partner Azad Group’s stake in Volvo Buses India Pvt Ltd (VBIPL) for an undisclosed sum. With this, VBIPL has become a wholly-owned subsidiary of Volvo Bus Corporation.

VBIPL was formed in January 2008 as a 70:30 JV between Volvo Bus Corporation and Azad Group, with its headquarters in Bangalore. The company had invested Rs 100 crore to start operations with a 1,000 buses per annum capacity plant at Hoskote near Bangalore.

“Volvo Buses is witnessing increased demand from both private and institutional customers and this strategic move will provide Volvo Buses greater flexibility to expand and put in place ambitious growth plans in the coming years,” Akash Passey, managing director, VBIPL, said.

He said Volvo would invest Rs 100 crore to increase the manufacturing capacity of its Bangalore plant to 5,000 buses per annum in the next five years. VBIPL would also introduce one to two new products every year, he said.

To cater to the growing demand and plans, Volvo Buses will augment its factory and establishment, with new facilities for refurbishment operations, customer experience lounge, integral production principles and a competence development centre. As a result of expansion, the company would also increase its headcount by 30 per cent at its plant, he said. The Bangalore plant employs 1,000 people.

Volvo is working on introducing a CNG (compressed natural gas) bus in India. “Our CNG buses are undergoing field trials in Delhi. We expect the trials to complete in about six months and get an order from the Delhi Transport Corporation in 2011,” Passey told Business Standard.

He said the company was also working on introducing alternative-fuel buses, like hybrid and methane, for the Indian market. The company also bagged a 100 multi-axle buses order from Hubli-based transport company VRL Logistics Ltd.

Rune Lundberg, senior vice-president, Volvo Bus Corporation, and chairman of the board of VBIPL, said, “The Asian dream of Volvo is coming together and we are witnessing excellent demand from markets like India. India has emerged as the home market for Volvo in Asia. We will invest further on research in India and develop new products for the Indian and export markets.”

He said, “We want to shape the future of bus industry in India, as India can take a lead. India will be the hub for exports to Saarc (South Asian Association For Regional Cooperation) countries and South Africa.”

According to Passey, the company, which commenced exports from India this year, expects to export about 15-20 units in 2010 and about 30 per cent of the total capacity in 2011. The first consignment would be exported to South Africa in December, he said.

In 2010, the company is likely to achieve 15 per cent growth in sales over 2009. In 2009, the company sold 535 buses in India. Currently, the company has orders for six months.