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Ashok Leyland has lined up investments around Rs.1,000 crore as capital expenditure (capex) for FY20

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Ashok Leyland has lined up investments around Rs 1,000 crore as capital expenditure (capex) for FY20

Ashok Leyland, the country’s third biggest commercial vehicle producer, has lined up investments for a slew of projects for FY20 even as the truck and bus maker gets busy to expand its portfolio in the light-duty segment.

The Chennai-based company will be investing around Rs 1,000 crore as capital expenditure (capex) next financial year. These would be in areas of electric vehicles, light commercial vehicles and capacity enhancement programs.

In the current financial year the company has already spent Rs 600 crore towards capex by end of December and a further Rs 200-300 crore is earmarked for the current quarter, a top company official said. The official added that a final call on the size of the investment will be taken before end of March.

One the biggest areas of focus for the company will be the light and intermediate commercial vehicle segment. Through an investment of Rs 400 crore the company is readying a roll-out of a series of products including a new model range under a new brand between now and end of FY21.

“A new range under Pheonix which will be completely different from the current range will be launched in about one and one and half years in the LCV segment. In will not be in the sub-1 tonne segment. We will expand in four and seven tone segment. We will be moving down from the 12 tonne segment and moving up from 1.25 tonne segment”, said Gopal Mahadevan, chief financial officer, Ashok Leyland. This range will debut directly in the Bharat Stage VI version.

Competition

On February 18, Ashok Leyland would be launching a couple of trucks namely the Guru 10 tonne. The launch would help bridge the product gap in the ICV segment. Rival Mahindra and Mahindra recently launched the Furio range of ICVs which are in the 12-14 tonne range category.

Tata Motors is also sprucing up presence in this segment.

“We are not yet fully matured in the LCV industry. We have lots of offering to make in the ICV segment also. Our ICV share has gone up from 10-12 percent about five years ago to 22 percent now. LCV business for us will be as big as bus segment. With these launches we will cover the whole portfolio in the LCV and ICV range. This is going to be a huge advantage going forward for us,” added Mahadevan.

The LCVs won’t be restricted to just the Indian market. Over the course of next 6-12 months Ashok Leyland would be developing and exporting them left hand drive markets. The LCV segment is bigger for Ashok Leyland than the bus segment in revenue terms. Ashok Leyland has a capacity to make 75,000 units a year.

This has forced the company to enhance capacity at its manufacturing plants. “We are augmenting capacity at Hosur plant. Instead of investing Rs 300 crore for a new paint shop we invested around Rs 35 crore to double the capacity through some in-house innovation,” added Mahadevan.

Source: MoneyControl.com

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