Chennai: A sluggish business climate in the US and Europe could mean cheaper acquisition opportunities for India’s second largest truck maker, Ashok Leyland Ltd’s chairman Dheeraj G. Hinduja said on Monday.
The 40-year-old, a third-generation member of the nearly century-old Hinduja Group spoke on the sidelines of the Chennai-based truck maker’s commercial launch of its light truck called Dost in the southern capital. Edited excerpts:
What kind of growth do you see for your group? Are you looking for a sales boost from existing businesses or are you eyeing acquisitions?
Hinduja group has many sectors, and within each sector the plans are laid out for the next three to five years. Some are organic, some have acquisitions planned. So it will be a combination.
In the current sluggish economic environment, overseas acquisitions must come cheap?
Our business process outsourcing (BPO) company, Hinduja global solutions recently bought a BPO company in Canada (OLS Inc)—an acquisition worth 75 million Canadian dollars.
Similarly, with Ashok Leyland we continue to look at acquisitions overseas as well, but as you know this is a consolidated industry, so you do not get as many opportunities as you would like. As you mentioned it is a good time, as (business) conditions globally are not very strong and it makes it a ripe opportunity.
You have said that growing the power sector will be a focus for your business. What is your outlook?
We have the first plant under development in Vishakhapatnam (Andhra Pradesh) and that is 1040MW. Along with that we have a five-year plan for a 10,000MW facility, for which we require acquisitions. So growth in this business will be an organic and an inorganic effort.
How is the economy turning out and what does it mean for your vision?
The plan is really to be in the global top 10 in commercial vehicles segment. I don’t feel that due to any slowdown we will change that approach. And as you mentioned, (it is cheaper to acquire businesses overseas due to slowdown and) we have to take opportunities and look at acquisitions as well at this point in time.
What is your view of the rising interest rates and its impact on your business?
Of course it has an impact without doubt. We had targeted 8.5-9% gross domestic product (GDP) growth this year that has been revised to 7.5-8%. Still, compared to the rest of the world, this is still tremendous growth. Though interest rates are high I think due to the buoyancy in the economy there will be a requirement for vehicles-- light end and heavy end.
I am not seeing a substantial slowdown. The growth rates are not in the 20% range, but compared globally, India is still doing very well in the auto market.