Premier Automobiles Ltd is planning to launch its light utility van in September-December 2003 and expects to make "substantial profit" from this project with annual sales of 10,000-12,000 vehicles.
"We will take the feedback of dealers and the market to decide upon the exact timing of the van's introduction," PAL managing director Maitreya Doshi said at the annual general meeting in Mumbai on Friday but refused to discuss the price.
This project has taken less capital investment and the breakeven can be achieved at few 100 vehicles per month as the company has existing land and machinery, in-house research and development, 90 per cent of indigenisation, gearbox expertise and tie-up with Tata Motors Ltd for painting the vans, he added.
Company sources said PAL would introduce the van initially in Maharashtra, Gujarat and few southern states where diesel products had a good market potential.
On the tie-up with Tata Motors, Doshi said it was for five years and the contract was for Rs 1.3 crore (Rs 13 million) of which Rs 90 lakh (Rs 9 million) have already been paid to the Tata group.
The MD said the machine tools division was performing well and had also recorded a profit.
Referring to the financial difficulties faced by PAL, the MD said it was due to a mismatch of liquidity. The company has substantial real estate holdings, which when sold off would bring in a good sum.
"We hope to get the Maharashtra government's approval for slling the Kurla land in one month," he added.