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Anil Sasi

The new manufacturing plant to come up by 2008

Tokyo , June 15

Commercial vehicles manufacturer Ashok Leyland is in talks with a global player for a tie-up to set up a light commercial vehicle (LCV) manufacturing plant in India. "We are in talks with a leading player for LCVs. This could be an equity partnership through a joint venture or just a technical tie-up," the Ashok Leyland Managing Director, Mr R. Seshasayee, said.

Ashok Leyland, in which the Hindujas and Fiat together hold 51 per cent stake, already has a tie-up with Italian company Iveco (the commercial vehicles entity of Fiat) for the manufacture of heavy vehicle chassis. In fact, there has been considerable speculation in the market that an international player may pick up all or part of the stake currently held by Fiat in the company.

Vehicle Production

The LCV tie-up would be for Ashok Leyland's sixth plant in India. Mr Seshasayee said that by the time the new plant comes up in 2008, the combined production at the existing five plants would cross the 100,000 units capacity. An announcement on the new facility is expected in August. The tie-up with the new player is expected to help Ashok Leyland develop new LCV vehicles with contemporary and advanced technologies. According to industry sources, Ashok Leyland is looking to roll out LCVs in the 2.5 tonne to four tonne segment.

In addition, the company is likely to take up a resolution shortly to raise $150 million equity. Mr Seshasayee did not disclose details of the plan to enhance the paid up capital base, which would help the company leverage equity to raise more debt and finance expansion.

The funds would be utilised to finance the company's plan to raise capacity from 77,000 vehicles to one-lakh vehicles and other design engineering projects.

More Stories on : HCV/LCV/Tractors | Alliances & Joint Ventures

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