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Ashok Leyland cabin project at Hosur

M. Ramesh

CHENNAI, July 7

ASHOK Leyland has undertaken a Rs 140-crore project for putting up facilities at its Hosur plant for making cabins for the company's commercial vehicles.

The project is expected to be completed by December.

Till now, Ashok Leyland has been having the metal sheets pressed for making cabins at a company called Musco at Thane. The company belongs to the Mahindra group.

However, Ashok Leyland expects the Government to make manufacturer-built cabins mandatory, as part of the safety norms. The project is being put up in order to be able to meet the safety requirements.

Senior officials of the company told Business Line that a ``family of presses,'' consisting of some 15 presses of various capacities, would come up at Hosur-II, some of them imported. Some presses have already arrived.

``This is one of the biggest investments in Tamil Nadu in the recent times,'' Mr T. Ananthanarayanan, Director (Finance), Ashok Leyland, told Business Line on Saturday.

Asked about the funding of the project, Mr Ananthanarayanan said that the company had not taken any separate loans for project. Internal accruals and the company's annual borrowing programme would cover the funding needs of this project also, he said.

This year, Ashok Leyland will borrow Rs 200 crore from the market -- of which Rs 50 crore has already been done. Sources pointed out that the company's borrowing has been declining every year, in a bid to keep a check on the interest costs.

Last year, Ashok Leyland borrowed Rs 285 crore by issue of debentures and Rs 65 crore from ICICI. In its forthcoming annual general meeting, to be held on July 24, the company will place a resolution before the shareholders seeking to mortgage some immov able and movable properties against the loans obtained last year.

In its annual report released on Saturday, Ashok Leyland speaks of the ongoing negotiations with the labour of Hosur-II and Ennore plants and the need for ``indexing manpower costs to value addition and competitiveness of the company's products.''

The report says that the company is fully prepared to achieve conformity to Bharat-II norms, which it expects to come into force in the near future.

On the outlook for the current year, the annual report says that in today's economic scenario, commercial industry's growth ``will be largely influenced by replacement demand with augmentation of fleet capacity deferred for a later period.''

In a recent chat with Business Line, the Ashok Leyland Executive Director (Marketing), Mr Amol Sandil, named three factors which affected sales last year, that are there now. First, sales in the initial months of last year was affected by the uncertainty caused by the ``uniform sales tax'' issue. Secondly, a spurt in diesel prices and weak freight rates depressed sentiment, which put off fresh vehicle purchases. Thirdly, in the last couple of months, the earthquake in Gujarat affected sales in that Stat e.

This year is expected to be better. In fact, the company's sales in the first two months of the current year, was an improvement over last year.