The Hindu Business Line : Ashok Leyland to supply 875 buses to DTC

Alwar (Rajasthan), Oct. 1 Ashok Leyland said that it would complete the supply of 875 Ultra Low Entry (ULE) buses to the Delhi Transport Corporation (DTC) from its new bus body facility at Alwar in Rajasthan by February 2010.

According to Ashok Leyland, the 35-seater ULE buses have an extremely low floor height of 390 mm, besides air suspension, wide doors and windows for passenger comfort. The 250 hp automatic buses are also fitted with a speed limiting system and electronic doors, it said.

According to Mr Rajeev Saharia, Executive Director (Marketing), the Alwar facility will supply the first 50 buses to the DTC this month. “We have already given both the A/C and non-A/C prototypes to the DTC,” he said.

Explaining the delay in delivery he said, “There were a lot of changes in specifications that had to be made after the order was placed, both from the DTC’s side and ours.”

Mr Saharia also said that the Rs 1,190-crore deal between the two parties includes a contract for the maintenance of the buses for 12 years.

On the order for 4,800 buses under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) contract, Mr Saharia said that around 350 buses have been delivered to the various States. Ashok Leyland, along with Tata Motors, had got a lion’s share out of the approximately 11,000 bus contract under the JNNURM.

“This is the first time we are supplying full body buses, along with the chassis. The complete delivery of 4,800 buses will be completed within the current fiscal,” he said. He added that the Alwar facility can currently produce 200 units a month, which is being ramped up to 300 units.

The buses, according to Mr Saharia, are priced around Rs 55-70 lakh, depending on the individual specifications.

Mr Saharia said the company is looking to hike prices from April once the new emission regulations come into force. From April, 11 Indian cities are to move to Bharat Stage (BS) IV norms from BS III, while the rest of the country will switch over to BS III norms, up from BS II.

Rising costs

“Costs will have to be passed on to the consumer. It will vary according to the model, but we are looking to increase prices on all models,” he said. He added that the rise will primarily be because of the higher development costs of more efficient diesel engines.

Company officials added that Ashok Leyland is making a loss of around Rs 4 lakh a bus it manufactures under the DTC and JNNURM orders, primarily because of rising input costs, like steel, and tight specifications of orders. Moreover, the testing cost for each bus is high, at around Rs 2 lakh, they added.

Speaking on the rising input costs, Mr Saharia said, “We are committed to a price in the DTC and JNNURM contracts and so will have to absorb any rise in input costs.”

On sales targets, Mr Saharia said that the company expects a growth in sales by around 5 per cent for the fiscal. “With a good performance in the first half, we are improving on our targets. Our production during the first half stood at 80,000 units. This should go up to 1.10 lakh units in the next half with a growing demand of tractors and multi-axle trucks. The demand for tippers is also growing with the boom in the construction sector,” he said.

Company officials said the company had exported around 9,000 units out of the total production of 53,000 units last year, which was lower than normal because of the global slowdown and subsequent fall in demand.

According to Mr Saharia, the company plans to continue on its product development and investments as it emerges out of tough times. The new plant in Uttarakhand, with a capacity of 50,000 units, would be inaugurated in a few months, he said.

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