Ashok Leyland Ltd (ALL), part of the Hinduja group and India’s second-largest truck maker, hopes to earn up to a fifth of its revenue from exports and international operations by 2012, according to company vice-chairman Dheeraj Hinduja.
Exports accounted for 8% of the company’s revenue of Rs5,247 crore in 2005-06. “We aim for 15-20% of our business to come from overseas in the next five years,” said Hinduja, adding that this could happen through “exports, possible (overseas) acquisitions and an expansion of our global manufacturing footprint.”
Last year, ALL acquired the Prague-based truck business of AVIA, with a capacity to manufacture 20,000 vehicles a year. It is also setting up a bus assembly unit in the United Arab Emirates.
“We are also targeting South Africa and a few advanced markets outside the United States, Japan and Europe,” said Hinduja. The company already exports trucks to Sri Lanka and Bangladesh, he added.
ALL’s decision to expand its exports business comes at a time when demand for trucks in India is growing fast.
Between April 2006 and February 2007, truck makers sold 2,36,506 units (medium and heavy trucks; the segment in which ALL currently operates)—41% higher than the number sold in the same period in 2005-06.
ALL has a 28-30% share of this market; Tata Motors has a share of around 63%. To cater to the increasing demand in India and elsewhere, ALL is in the process of investing Rs4,000 crore to more than double its capacity to two lakh vehicles and engines. Currently, it has the capacity to make 80,000 trucks and 90,000 engines. ALL is also considering an entry into other segments of the truck market, according to Hinduja. “Apart from heavy commercial vehicles we are actively pursuing an entry into the light commercial vehicle segment,” he said. Over two lakh light trucks were sold in the first 11 months of 2006-07, a 31% growth over the same period in 2005-06.
Last year, ALL lost its foreign partner, Iveco—the truck business of Fiat Spa—to arch rival Tata Motors.
In the first nine months of 2006-07 ended 31 December, ALL recorded a revenue of Rs4,877.18 crore and a net profit of Rs269.8 crore, an increase of 38.84% and 39.17%, respectively, over the corresponding figures for 2005-06.