Ashok Leyland, Nissan JV to rework manufacturing plans

Ashok Leyland, Nissan JV to rework manufacturing plans

Mumbai: The Hinduja Group-controlled Ashok Leyland has redrawn its capacity enhancement programmes in view of the global slowdown and a sluggish demand.

“In view of the global slowdown, Ashok Leyland and its joint venture partner, Nissan Motor Co of Japan, are reworking the manufacturing plans including the option of phased implementation of the project," Ashok Leyland’s chairman R J Shahaney said in the annual report.

The company will ensure that future expansion is well aligned to market demands, the company said in its annual report here.

The company had signed an agreement with Nissan in 2008 to form three joint venture companies for the light commercial vehicles (LCV) business in India, technology development and vehicle manufacturing and powertrain manufacturing.

Fiscal and other incentives from the Tamil Nadu government for the project have been secured, although allotment of land for the project is awaited, Shahaney said.

The Indian LCV market has witnessed a tremendous growth in the recent past. During the last financial year, LCVs contributed to more than half of the total CV volumes.

However, in the context of the current slowdown in the automotive industry, Nissan and Ashok Leyland have been working closely and looking at a new manufacturing strategy that would optimise investments, with the option to increase JV production capacity at the appropriate time.

The JV is expected to roll out its first LCV product by early 2011, the company said.

The company has also signed an agreement for a JV with John Deere Construction and Forestry company for manufacturing and marketing construction equipments.

The JV seeks to start trial production by October 2010 and serial production by January 2011, initially rolling out backhoe loaders and four-wheel-drive loaders.

The range will subsequently be expanded to include a full line of construction equipment.

The company also plans to return to non-banking finance business this fiscal to fund commercial vehicles through Hinduja Leyland Finance Limited.

The new company would fulfill the needs of the company’s customers, particularly in regions where affordable financing options are not easily available, the company said.

Meanwhile, Ashok Leyland has incurred Rs970.86 crore towards capital expenditure in FY 09, mainly in the new plant at Uttarakhand.

The Uttarakhand facility would manufacture frame, H series and Neptune engines.

The company has also incurred capital expenditure towards the bus body-building facility at Alwar, it said.