Ashok Leyland gains on tax benefit hopes

Shares in Ashok Leyland gain 2.8 percent a day after the company said it would spend Rs 4,000 crore over the next three years to increase capacity in Tamil Nadu as the auto maker would benefit from tax incentives, according to a conference call with analysts.

Half of the investment would be geared to increase capacity in medium and heavy commercial vehicles, with the other half geared to increase production of light commercial vehicles as part of its joint venture with Nissan Motor Co , analyst said.

Analysts say the investment is positive for the truck and bus maker because Tamil Nadu offers waiving value added taxes for a 14-year period, after which the company would have to pay back the total amount waived without paying any interest.