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Commercial vehicles (CVs) major Ashok Leyland, which is keen to boost its presence in the African market, will establish its first assembly plant in that continent in Kenya.
“We have incorporated the company in Kenya. We are trying to get a local partner or we may do it ourselves. We are in the final stages of identifying the location and the plant is expected to be up and running in eight-nine months,” CFO Gopal Mahadevan told BusinessLine .
Kenya, seen as one of the key growth markets for CVs, has a current market size of about 4,000 units a year, with a potential to double in the next few years.
Ashok Leyland is expected to make an initial investment of $4-5 million in the Kenyan assembly unit and ramp up the investment to $10 million subsequently. The factory will assemble both buses and trucks for the local market.
Mahadevan said the African markets are at present being addressed mostly by Chinese players. The Hinduja flagship ha strong potential to establish its presence with its new range of cost-competitive trucks and buses, he observed, adding: “Kenya is a very strategic market for us and also more appropriate centre geographically.”
Bangladesh unitAshok Leyland is also set to establish an assembly unit in Bangladesh for trucks through a strategic partner in three-four months. Bangladesh has been one of its key export markets.
Meanwhile, the company is confident of achieving double-digit growth this fiscal in the domestic market, aided by improvements in the roads and mining sectors, among others.
Mahadevan also indicated the company is moving out of non-core businesses to focus on the key segments of trucks and non-trucks. It had disposed of its shares in Ashok Leyland John Deere at a loss of ₹233 crore in 2015-16.
After evaluating the potential of some of its adjacency ventures, it has made an impairment provision of ₹107 crore towards Albonair Germany, ₹150 crore towards Optare Plc, UK and ₹5 crore towards Albonair India.
Mahadevan further said the company is carrying out an operational efficiency drive covering functions such as HR, finance, procurement and quality.
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