The Hindu Business Line : Ashok Leyland to break ground for Uttaranchal, UAE units in Jan

Home drive
To invest over Rs 1,000 crore in an integrated plant with an initial capacity of 25,000 vehicles
About 200 acres of land identified at Pant Nagar in Uttaranchal
To invest about Rs 22.5 crore in the UAE initially for a capacity to assemble about 1,000 buses

Chennai , Dec. 23

Ashok Leyland will break ground for its Uttaranchal plant in January, with production scheduled to begin in 2009-10.

The company will invest over Rs 1,000 crore in an integrated plant with an initial capacity of 25,000 vehicles. The unit will have chassis, cab facilities, an engine plant and probably a transmission plant, according to Mr R. Seshasayee, Managing Director, Ashok Leyland.

The company has identified about 200 acres of land at Pant Nagar in Uttaranchal and plans to increase capacity to 50,000 vehicles ultimately.

Mr Seshasayee told Business Line that the company did not require to raise fresh funds for the project. "We are very low geared and we are cash surplus," he said. Ashok Leyland would go in for some debt as and when required.

He said the excise duty exemption and income-tax exemption and concession were a compelling reason for the company to invest in Uttaranchal. "My competition is there and I can't afford not to be there," he said. (The Centre has announced excise duty exemption and income-tax exemption and concession for five to 10 years for the hill States to attract investments.)

bus assembly plant

Mr Seshasayee said Ashok Leyland would also break ground for a bus assembly plant in Ras al Khaimah in the UAE in mid-January. It signed all the agreements last week and would invest about $5 million (Rs 22.5 crore) initially for a capacity to assemble about 1,000 buses. The plant would be upgraded to assemble buses and trucks and would start operations in a year.

He said that Ashok Leyland sells more than 1,200 buses in the UAE and putting up a plant there would bring the company closer to the customer. This plant would also help the company tap the North African market and to some extent the East European market.

Ashok Leyland was in the process of building up the Avia plant, in Prague, the Czech Republic. It was setting up dealerships and establishing the supply chain.

The company announced in July that it signed a framework agreement to acquire the truck business unit of Avia, which had a 20,000 vehicles capacity. Avia would manufacture trucks of 6 tonnes, 7.5 tonnes and 9 tonnes gross vehicle weight.

Mr Seshasayee said Avia was a strong brand and it would help Ashok Leyland get a feel of what it was to fight in the European market.

The product line would get integrated over a period of time.

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