Volvo buys Jaico’s 30% stake in JV, becomes fully owned

Volvo buys Jaico’s 30% stake in JV, becomes fully owned

Bangalore: Volvo Buses India Private Ltd (VBIPL) on Monday announced that it had bought out, for an undisclosed amount, the stake held by its JV partner, Jaico Industries of the Azad Group, thus increasing its ownership share from 70% to 100%.

Akash Passey, managing director, said that the Swedish parent, Volvo Bus Corporation (VBC), intends to make India a global manufacturing hub for Volvo buses for exports to different regions, and that they had targeted reaching a revenue of $1 billion (Rs4700 crore) from Rs500 crore this year, in a time frame of five years.

Rune Lundberg, senior vice president, VBC, said that the company would establish a “substantial industrial presence" in India with additional capacity, more local R&D, and ramped-up hiring from its current strength of 1000 personnel.

“We want to start developing buses in India for India and for export. We see India in particular, and China and Asia in general, as a sort of home market for Volvo," he said.

The Rs500 crore represented a volume growth of 15 to 20% over 2009, and a revenue growth of 20 to 25%, given higher price realization from the sale of multi-axle, inter-city coaches (vis-à-vis low floor city buses), Passey said.

VBIPL has just concluded a deal for 100 multi-axle coaches to VRL Logistics Ltd. Each of these buses costs between Rs90 lakh and Rs1 crore. The buses would be delivered in a 7-month time frame. VRL is the single largest fleet owner in the private sector with some 2800 vehicles. VRL chairman Vijay Sankeshwar said that VRL currently had about 250 coaches, and they were looking to double that figure.

The company had invested Rs100 crore in the JV for setting up its plant at Hoskote near Bangalore, in 2008, and was now looking at an additional Rs100 crore to be spent over the next two years, on capacity expansion and allied facilities.

The plant had a capacity of 1000 currently, and this would be doubled in the two-year time frame, he said.

Passey said that the company was currently building about 600 buses a year, and they were looking at increasing that to 1200 in a couple of years.

Volvo had started to export only this year, and about 15 to 20 units were going out to countries like Sri Lanka, Bangladesh and South Africa, he said.