Commercial vehicle maker Ashok Leyland has drawn up an ambitious growth plan. Launch of over 20 new models of buses and trucks, including their variants, new engine technology and production of completely built-up mini-buses and long-route luxury buses, over the next two years, are part of the strategy.
The Chennai-based company will also launch the modular cab system around 2005. It is investing Rs 140 crore (Rs 1.40 billion), through internal accruals, for the expansion and model upgradation, the company said in New Delhi on Wednesday.
Ashok Leyland executives also indicated plans for "inorganic growth" through acquisitions in the future.
"The thrust will be on range renewal and capacity expansion. This year, we will also lay additional emphasis on increasing our presence in north India, which has traditionally been the biggest market," managing director R Seshasayee said at a press conference in New Delhi.
He said the company is revising its growth targets for the year from the original 7 per cent to more than 15 per cent this year owing to a good monsoon, overall feel good factor in the economy and falling interest rates -- which is prompting customers to either acquire new vehicles or upgrade the existing fleet.
"We, as well as the industry as a whole, will achieve this growth rate despite the cyclical nature of commercial vehicle sales," he added.
Seshasayee also said he is looking for inorganic growth. "We do not have anything firmed up as yet. But we are not ruling out acquisitions in the future," he said.
The company has also drawn up plans to invest Rs 140 crore, through internal accruals, to develop modern modular cabins for trucks which will be launched in 2005-2006.
Leyland will phase out the existing Iveco range of vehicle engines by the year-end and replace them with engines made with technology from Japan's Hino Motors, Seshasayee said.
The Hino series of engines will form the basis for Ashok Leyland's future market growth.
The company will launch various models in the 'E-comet' range with 9-15 tonnage capacity. It will also launch a 16-tonne 140 horse power vehicle, a 160 hp Hino variant, a 160 hp multi-axle, and 160 hp tractor-trailer this year.
Additionally, vehicles fitted with the powerful 260 hp 'J' series Hino engines will be ready for launch this year-end, Seshasayee added.
Executive director Arun Pandey said production capacity has been ramped up to 50,000 units, as well as 60,000 engines, which would suffice the demand requirements until the next year.
Seshasayee said the company is borrowing low interest loans to bring down the cost of debt.
He said the current debt-equity ratio is around 0.6: 1, which the company will keep driving down. "But we will leave a headroom to use up that for any organic or inorganic growth," he said.
He said that though operating margins were under pressure in the first quarter of the year, he expected to improve it in the next months.
He also said that Ashok Leyland had received orders for 3,300 vehicles from Iraq of which the company had LCs for 1,662 vehicles. "We have placed this on a priority list," he added.