Ashok Leyland Plans Expansion

Hinduja Group’s flagship company, Ashok Leyland announced that it will Ashok Leylandinvest Rs 3000 crore on setting up a new plant in Uttarakhand and expand capacity at its subsisting facility at Ennore, Tamil Nadu.

The company also said that a part of the its proposed investment will also move on its engine development program. It is setting up six cylinder and four cylinder engines, complying with the Euro IV norms in collaboration with Austrian firm AVL.

On the sidelines of the CFO Asia Summit, K Sridharan, Ashok Leyland Chief Financial Officer, said, “The company will be investing additional Rs 3,000 crore on the new vehicle plant which is coming up in Uttarakhand capable of rolling out 50,000 vehicles, besides expanding the plant at Ennore and engine development.”

Mr. Sridharan also said that Rs 1,000-1,500 crore will be funded through internal accruals, whereas around Rs 800 crore would be raised in the form of debt, possibly from overseas market.

He also said that the company had raised $200 million via external commercial borrowings, out of which, $20 million have already been spent.

The company said that its new facility at Uttarakhand will have an annual capacity of 50,000 vehicles, and it expects to roll out the first vehicle from the Uttarakhand plant by April 2009.

The company is also developing two projects out of the country including one bus body building facility in Ras al Khaimah (the UAE) and another in Dubai for special purpose vehicles (SPVs).

The Ras al Khaimah project, likely to be commissioned by October 2008, will have an annual capacity of 2,000 vehicles.

Depending upon the success of the UAE project, Ashok Leyland will set up assembly units, primarily for buses, in Egypt, Bangladesh and South Africa. The first one is expected to come up in South Africa, Sridharan added.

“On similar lines with Ras Al Khaimah (RAK), we will set up assembly units, primarily for buses in Egypt, Bangladesh and South Africa, depending upon the success of RAK. The first one is expected to be in South Africa,” Mr. Sridharan added.

The shares of the company, on Wednesday, gained 2.8% to end at Rs 41.15 on the Bombay Stock Exchange (BSE).