Eicher Motors on Thursday said its arm VECV will acquire Volvo Group's bus business in India for Rs 100.5 crore.
Definitive agreements have been signed for the integration of Volvo Bus India (VBI) business into VECV, Eicher Motors said in a statement.
As part of the deal, VECV will carve out a separate bus division housing both Eicher and Volvo branded products. The vertical would be headed by Akash Passey, currently Senior Vice President at Volvo Bus Corporation.
The bus division would be responsible for manufacturing, assembly, distribution and sale of both Volvo and Eicher buses in India.
Consequently, the bus manufacturing facility at Hosakote, Bengaluru, and all employees of VBI will be transferred to VECV.
VECV entered into a business transfer agreement on August 12 with Volvo Group India for acquisition, as a going concern on slump sale basis, of the bus business of Volvo Group India, Eicher Motors said.
The agreement is for manufacture, assembly, distribution, and sale of the Volvo buses in India, and other rights forming part of the said business, for a consideration of Rs 100.50 crore, it added.
With the integration of Volvo Bus India into VECV, we aim to shape the future of the Indian bus industry by offering the widest range of transport solutions to our customers," VECV Chairman Siddhartha Lal said.
"Post the completion of the transaction, VECV and VBI will consolidate their bus businesses into a newly formed bus division within VECV. This division will offer Volvo and Eicher branded buses, and will maximise synergies to capitalise on market opportunities, he added.
This strategy will be extended to exports, wherein the new bus division will offer products and services that are complementary with Volvo Buses' core product portfolio in select international markets, Lalnoted.
VE Commercial Vehicles, a joint venture between Volvo Group and Eicher Motors, currently sells Eicher branded trucks and buses and also distributes Volvo branded trucks.
The company also provides aftermarket services and distribution of spare parts for Volvo branded trucks and buses in India.
Volvo Bus Corporation President Hakan Agnevall said that by consolidating the operations of VBI into VECV, "we aim to further develop our bus business and strengthen our position in the Indian bus market. The new bus division will offer a full range of modern buses covering customer needs for heavy, medium and light duty buses.
Volvo Bus India is currently a division of Volvo Group India Pvt Ltd (VGIPL).
In a conference call, VECV MD and CEO Vinod Aggarwal said the company's strong presence in the Indian bus market will be complemented by Volvo Buses' prominent position in the premium bus segment.
"With this integration, VECV will be able to leverage synergies in the areas of product development, purchasing and manufacturing with access to Volvo Group's world-class technology in buses," he added.
The transaction would be completed over the next two months, Aggarwal said. Replying to a query, he said the company would not be taking any debt as part of the deal.
VEC manufactures its range of buses at Pithampur (Madhya Pradesh) based manufacturing plant.
"The new division will also engage further in the dynamic Indian market driven by megatrends such as urbanisation, e-mobility and connectivity, Passey said.
He will join as President of the newly formed VECV Bus Division. Currently, based out of Singapore, he will repatriate to India for this role and report to Aggarwal.