Our Bureau

Chennai, Nov. 24

ASHOK Leyland Ltd has informed dealers of a 2.5 per cent hike in prices of its vehicles. Mr K. Sridharan, Executive Director-Finance, cited higher input cost as the reason for the price hike.

In an informal chat with journalists on the sidelines of a conference organised here by the Confederation of Indian Industry, Mr Sridharan said that the company's foray into LCV/sub-1-tonne segment would necessarily be through acquisitions.

He said that the price hike, which officially took effect from November 21, would have a positive bearing on the company's turnover and profits for the current year.

The current year promises to be good for the company, for several reasons. First, there has been a spurt in purchase of buses by various State transport undertakings. Ashok Leyland expects STU sales of 6,000-7,000 vehicles, or about 1,000-2,000 vehicles more than last year.

Second, the Defence establishment will buy around 900 vehicles more this year. These are special application vehicles, such as fire fighters, and are "very high value" products. This is in addition to the 5,000-odd vehicles that Ashok Leyland sells to Defence every year, in the form of kits.

Third, Ashok Leyland's exports are growing. Mr Sridharan said that the company expected to get an order from ZF of Germany, its technology supplier for gearboxes.

Answering a question, Mr Sridharan said that Ashok Leyland was talking to "a few companies" (including one in China) for a possible acquisition. He said the company believed that the only way forward in the small commercial vehicles segment was to take over a company with a depreciated plant and an existing product and customer base. He did not want to give a timeframe for the acquisition.

Mr Sridharan said he was convinced that the commercial vehicles industry was in for good times, although there has been a dip in the demand for medium duty vehicles. There is no dearth of goods, freight rates are picking up and the roads are getting better, he noted.

(This article was published in the Business Line print edition dated November 25, 2005)
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