Mumbai: The country’s second biggest truck maker, Ashok Leyland, is looking at derisking its business model in the face of “many uncertainities in global scenario”.
“We are prepared to face any worst case scenario, which could be an economic slowdown percipitated by global slowdown, which is percipitated by soaring oil prices,” Ashok Leyland Managing Director Seshasayee said.
The world is facing this kind of a situation (soaring oil prices) for the first time, he said, so no one has an idea on how to tackle the situation.
About 68% of the companies portfolio is dominated by trucks, which is a cyclical business. The remaining portfolio is filled with buses, engines, logistic vehicles for defence and genset applications.
Last year the company sold 84,000 vehicles and looks to sell 1.84 lakh units by 2010.
“We see a robust demand from our non-cyclical business model, especially from the defence,” Ashok Leyland CFO K Sridharan said.
As of now, the non-cyclical business model of the company contributes 32% to the revenues. “We want to take it to 45% in the next two years,” Sridharan said.
At its Ennore facility, it has put up an engine facility to make upto 50,000 units a year. At the same place, it would make gear boxes of the same quantity.
The Ennore facility is expected to be commissioned by September this year, he said.
It is putting up an integrated chassis and bus assembly plant in UAE with a capacity of 2,000 vehicles per annum. It is expected to be commissioned by this year-end.
Ashok Leyland is setting up a manufacturing facility in Uttarakhand with a capacity of 50,000 units annually. It would be commissioned by October 2009.
To fund these expansion plans, Ashok Leyland is investing Rs 3,000 crore in the next three years.
Ashok Leyland has decided to target new markets such as Indonesia, Syria, Vietnam, Thailand, Honduras, Venezuela and Russia, it said in a presentation.
The company has forayed into high pressure die casting products for the automotive and telecom sectors at an investment of Rs 120 crore. It has tied up with a foreign company called Ashley Alteams.