Close [X]

Ashok Leyland eyes buyouts to break into big league

img

Ashok Leyland, India’s second-biggest commercial vehicle (CV) manufacturer, is in talks to acquire some international companies, in an attempt to break into top 10 of world’s CV makers.

The Hinduja group flagship company, which recently raised its stake in British bus making company Optare Plc, hopes to seal a deal in a year.

 

 

“Our vision is we should be among the top 10 in the world in trucks and among the top five in the world in buses. So, whenever we are going to a new country, we will look for partners,” said Vinod Dasari, Ashok Leyland’s managing director.

This would be the third acquisition by Ashok Leyland since 2006. The Chennai-based company acquired the truck business of Prague-based AVIA in 2006 and bought a 26 per cent stake in Optare in 2010.

Ashok Leyland is scouting emerging markets like Brazil, China and Russia for opportunities. Apart from buying majority stake, Dasari said the company was open to technical alliances and joint venture.

“We are talking to a lot of people. Optare is serving the UK market and recently, it got orders from South Africa. In one-two years, you will see new partnerships from us,” said Dasari.

China is one of the world’s biggest CV markets. But no Indian company is present there. However, the world’s biggest CV maker, Beiqui Foton, headquartered in China, is finalising plans to set up a manufacturing plant in India.

Tata Motors, the market leader in India’s CV segment and the world’s second-largest bus manufacturer, has been more aggressive with its international expansion plans. The city-based company controls 60 per cent of India’s truck and bus market.

After acquiring the CV business of Daewoo, Tata Motors bought a Spanish bus maker, Hispano Carrocera, and formed a joint venture with Brazil’s bus body builder Marcopolo. It also acquired an idle CV plant in South Africa, where commercial operations have begun. However, sitting on reserves of Rs 4,000 crore and after forging two join ventures with Nissan and John Deere at home, Ashok Leyland plans to take the international route more aggressively and benefit from the target company’s technology.

At the Delhi Auto Expo, the company launched India’s first 37-tonne haulage truck, with the highest payload of 27 tonnes. The truck was built on its indigenously developed U-Truck platform. Ashok Leyland also launched a multi-seater, low-floor city bus, the first small city bus from the Optare range, largely localised to suit Indian conditions.

In 2006, the company had signed a memorandum of understanding with the Ras Al Khaimah Investment Authority for setting up an assembly plant in the United Arab Emirates. It is considering the facility, with an initial annual capacity of 2,000 buses, to assemble trucks for Europe.