The Hindu Business Line : Bajaj unveils investment plan

In the first phase, it is proposed to expand motorcycle capacity to 3.6 million per annum by 2007. Products for roll-out include a `light cargo four-wheeler.'

Mumbai , March 10

Bajaj Auto Ltd (BAL) will spend Rs 1,500 crore over the next three years for a range of projects, including enhancement of manufacturing capacity from the current 3.5 million vehicles per annum to 5.1 million.

Financing would be from the company's own funds. Products for roll-out include a `light cargo four-wheeler.'In a statement following its board meeting on Friday, BAL said, "considering the robust domestic demand for Bajaj vehicles and plans for a major foray in markets outside India, the board has approved plans to build capacity of two and three-four wheelers to 5.1 million vehicles per annum by 2009 (two-wheelers - 4.6 million and three-four wheelers - 0.5 million). "In the first phase, it is proposed to expand motorcycle capacity to 3.6 million per annum by 2007."

When contacted, Mr Sanjiv Bajaj, Executive Director, said of BAL's overseas expansion plans that the company already had good market share in its traditional export markets such as Sri Lanka and Columbia. New markets include South-East Asia, Nigeria and Iran. By May, investment figures for the company's proposed facility in Indonesia would be ready. The foray is planned in partnership with a local player, BAL likely holding majority.

"Our intent is to first settle down in Indonesia and then begin selling to the large South-East Asian market," he said. BAL has ongoing exports to Nigeria, where it has also set up an assembly line. The Nigerian operations, as well as formal tapping of the Iranian market (expected to commence shortly), would gain momentum in the months ahead. "These are all very large markets," Mr Bajaj said.

The projects approved include additional capacity at BAL's existing plants in Akurdi and Chakan, a greenfield plant with capacity for one million motorcycles per annum at Pantnagar, Uttaranchal (commissioning in 2007) and another greenfield plant at Chakan to manufacture a new range of three-four wheelers (operations start by 2008).

The Pantnagar facility would be BAL's first plant outside Maharashtra. While tax breaks make investment destinations such as Uttaranchal hard to ignore, Mr Bajaj said a North Indian plant also made sense because 40 per cent of BAL's domestic sales comes from the northern and eastern regions. Further, with motorcycle manufacturers largely present in that belt, a manufacturing perch in their proximity has advantages in component supply.

Besides capacity expansion, the approved investment would also go towards R&D, new model developments, pro-biking showrooms (company's high-end retail initiative) across the country and an all new `learning centre' at Akurdi, the statement said.

Bulk of project investment would go for greenfield facilities and three-four wheelers, Mr Bajaj said. He maintained that the company's interest in four-wheelers was confined to the light cargo segment.

More Stories on : Two/Three Wheelers | New Projects | Outlook | Bajaj Auto Ltd

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