The Hindu Business Line : Ashok Leyland, Siemens VDO setting up joint venture

New venture: Mr R. Seshasayee (left), Managing Director, Ashok Leyland, and Mr Christoph Maximilian Eisenhardt, CEO, Global Commercial Vehicles Business, Siemens VDO, Germany, at a press conference in Chennai on Monday.

Our Bureau

Chennai, July 16

Ashok Leyland and Siemens VDO Automotive AG of Germany today signed an agreement to set up an equal joint venture.

Announcing this at a press conference here today, Ashok Leyland’s Managing Director, Mr R Seshasayee, said that the joint venture would be a “design, development and marketing company”. It will design and develop a range of electronic components and software for vehicles. Manufacturing will be outsourced, although where possible Siemens VDO in India will be engaged in the production.

Mr Seshasayee observed that there is a huge market waiting to be tapped, a market where demand is driven by the scope to improve vehicle efficiency by the use of electronics and by regulatory requirements such as for emission control.

He said the partners expected the joint venture to achieve a turnover of € 100 million (Rs 550 crore) in the fifth year of operations. “Infotronics content is expected to grow significantly in India following the introduction of BS III compliant vehicles with electronically controlled fuel injection,” Mr Seshasayee said.

Ashok Leyland sees three areas of marketing — Civilian applications, defence applications and production for the Siemens group worldwide.

Mr Christoph Eisenhardt, CEO, Global Commercial Vehicles Business, Siemens VDO, Germany, said at the press conference that the joint venture would enable his company expand presence in India.

Ashok Leyland’s vision

The joint venture with Siemens is the second that Ashok Leyland announced in two weeks. The first was with a Finnish company called Alteams, for production of high pressure die-cast aluminium components. Mr Seshasayee says that more such joint ventures are possible.

So what is Ashok Leyland’s game plan?

Answering this question, Mr Seshasayee said that while commercial vehicles would continue to be Ashok Leyland’s core business, the company was looking for “adjacencies”. Auto components are one such adjacency, under which area Ashok Leyland’s activities would fall in three categories.

The first is castings, where the group company Ennore Foundries has expertise. Hence the joint venture with Alteams. The second is hi-tech products, emerging as auto components only now, which is where the joint venture with Siemens fits in. The third is trading in auto components — buying locally and exporting.

Another ‘adjacency’ is vehicle testing, for which space Ashok Leyland acquired the US-based Defiance.

Mr Seshasayee ruled out the company getting into passenger cars (“too capital intensive”), but said it continued to be interested in LCVs.