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Tata Motors' bus associate to expand


Automobile Corporation of Goa (ACGL), the bus making associate company of Tata Motors, the country’s biggest automobile maker, is looking at a near 50 per cent jump in output this year, led by a recent resurgence in orders.

V Krishnamurthi, managing director of the Bombay Stock Exchange-listed company, said, "We are targeting 6,000-7,000 buses this year. Last year, we ended with 4,822 buses, the highest this company has seen."

The company, in which Tata Motors has 44 per cent stake, makes luxury, standard and mini buses. It has doubled the production capacity to 20,000 units per annum from 10,000 units earlier.

"Some of our investors were asking us to return the money lying unused with us for some time. This is the money we would utilise now. Today, without much investment, we can go up to 20,000 buses per annum,” said Krishnamurthi. ACGL had come out with a rights issue four years earlier, which would be now invested.

It recently saw a change at the top, with Tata Motors’ managing director (India operations) Prakash M Telang and Tata AutoComp Systems’ executive director and chief executive, R S Thakur, quitting the board. Krishnamurthi took over from N R Menon, who retired in July last year.

The turnaround has come at the right time, when rumours suggested the promoters were looking to exit the joint venture company, which posted a loss of Rs 2 crore two years earlier, while a majority of its capacity was unutilised.

The company is now keen on expanding operations outside Goa, with a facility scheduled to come up at Dharwad, Karnataka, where parent Tata Motors has set up the world's biggest bus manufacturing factory.

"We have another 12-acre land in Dharwad. We would be making components and body parts for Tata Motors. Today, we are making the bus doors here and shifting it to Dharwad but this will change once the facility comes up. Construction activity is going on there and before monsoon, we expect to begin manufacturing there," added Krishnamurthi.

The company has secured orders worth Rs 3 crore from Tata Marcopolo Motors, the joint venture company. Tata Motors is also working on another project, (‘Y1’), to also come up in Dharwad.

This jump in bus sales, as well as components and body parts sold to other companies, is expected to generate a turnover of more than Rs 500 crore this financial year, up by 35 per cent per cent as compared to Rs 370 crore posted last year.

ACGL is also looking at securing third-party orders from companies which buy chassis from original equipment manufacturers (OEMs) and give them to bus body builders. Due to a competition clause, ACGL cannot approach OEMs to directly secure a contract.