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Our Bureau

Chennai, July 19 Ashok Leyland, which acquired the Czech company Avia in 2006 and the Detroit-based Defiance Testing and Engineering Services Inc. in 2007, is scouting for more acquisitions.

The company’s annual report for 2007-08 said that Ashok Leyland “aspires to widen its footprint in the global commercial vehicle industry through organic and inorganic growth.Ashok Leyland is “examining opportunities towards this end”, it said.

The annual report speaks of the company’s ‘Future Vehicle Development Programme’.

Officials of the company have told Business Line that the initiative is to develop vehicles under the “modular concept”. Simply put, Ashok Leyland will develop the aggregates (such as engines and transmission) in such a manner as would enable a customer to choose any combination of them. In effect, the customer decides what kind of vehicle the company should make for him.

Alongside this, Ashok Leyland is also developing a “new engine platform”. Sources said that a few engines would be developed in collaboration with Avia. These would be both four- and six-cylinder engines, Euro V compliant, and with power over 260 HP.

Sources said that it would take the company a year to come out with these engines. To produce them, some modifications would have to be made at the company’s engine plants, but they would not call for major investments.

The annual report also speaks of the company’s efforts to raise revenues from non-cyclical businesses. In 2007-08, “the share of non-cyclical revenues (covering revenues from buses, chassis for buses, non-auto engines, sales to Defence, exports and spare parts) improved to 33 per cent of total sales from 24 per cent in the year before.”

A “new line of revenue stream” was ‘Leypower Gensets’ — oil-fired power generators made with engines imported from China and sold under ‘Leypower’ brand.

Sales of (all kinds of) engines grew to Rs 192 crore in 2007-08, 60 per cent more than Rs 121 crore in the previous year. Though this is small compared with the Rs 6,818 crore that Ashok Leyland earned from vehicle sales, it is seen as a high growth area.

More Stories on : Mergers & Acquisitions | HCV/LCV/Tractors

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