Mumbai: Ashok Leyland, India’s second largest commercial vehicle manufacturer, is considering giving equity to its shareholders in the light commercial vehicle (LCV) joint venture it has with Nissan Motors, a senior company official said Tuesday.
Ashok Leyland and Nissan have set up a 51:49 joint venture to manufacture LCVs, which would soak investments worth Rs 2,400 crore. At debt-equity ratio of 1:1, Ashok Leyland’s equity contribution would be about Rs 600 crore.
Ashok Leyland proposes to give entitlement to its shareholders to hold stock of the joint venture out of its own 51% share.
Chief financial officer K Sridharan said the company hasn’t finalised the exact quantum of equity it would offer to its shareholders.
“Our long-term plan is to list the joint venture. We are not doing this to raise money, but to reward our shareholders,” he said at the sidelines of an analyst meet.
Sridharan said in order to beat the cyclicality of the commercial vehicle business, Ashok Leyland was aiming to increase the steady business, non-auto engine trading, Defence, spares, and exports to 45% over the next 3 years from current 32%.
Ashok Leyland is moving towards reducing its dependency on the highly-cyclical CV business, which currently is in a bear grip owing to factors like increased interest rates, slowdown in industrial production, and fuel price hike.
During the year, exports increased 21%, engine volumes grew 37%, and spare part sales rose 45%.
In engine trading, the vehicle maker is aiming at doubling volumes in two years and exports are expected to double in three years.
Ashok Leyland has set a target to improve its market share in the truck and bus segment to 33% over three years from the current 28%, it has been maintaining over the last two years. The company is raising capacity to 1,84,000 units per annum from 84,000 currently over the next three years.
Managing director R Seshasayee said the company would try to maintain margins at current levels, about 10%, even though there are pressures like input price hike.
It has margin levers in the form of component sourcing from China, price hikes, and expected fiscal incentives from the Uttarakhand plant, which is expected to go on stream from second half of 2009.
Ashok Leyland has lined up capex worth Rs 3,000 crore over the next two years.
Ashok Leyland and Nissan have set up a 51:49 joint venture to manufacture LCVs, which would soak investments worth Rs 2,400 crore. At debt-equity ratio of 1:1, Ashok Leyland’s equity contribution would be about Rs 600 crore.
Ashok Leyland proposes to give entitlement to its shareholders to hold stock of the joint venture out of its own 51% share.
Chief financial officer K Sridharan said the company hasn’t finalised the exact quantum of equity it would offer to its shareholders.
“Our long-term plan is to list the joint venture. We are not doing this to raise money, but to reward our shareholders,” he said at the sidelines of an analyst meet.
Sridharan said in order to beat the cyclicality of the commercial vehicle business, Ashok Leyland was aiming to increase the steady business, non-auto engine trading, Defence, spares, and exports to 45% over the next 3 years from current 32%.
Ashok Leyland is moving towards reducing its dependency on the highly-cyclical CV business, which currently is in a bear grip owing to factors like increased interest rates, slowdown in industrial production, and fuel price hike.
During the year, exports increased 21%, engine volumes grew 37%, and spare part sales rose 45%.
In engine trading, the vehicle maker is aiming at doubling volumes in two years and exports are expected to double in three years.
Ashok Leyland has set a target to improve its market share in the truck and bus segment to 33% over three years from the current 28%, it has been maintaining over the last two years. The company is raising capacity to 1,84,000 units per annum from 84,000 currently over the next three years.
Managing director R Seshasayee said the company would try to maintain margins at current levels, about 10%, even though there are pressures like input price hike.
It has margin levers in the form of component sourcing from China, price hikes, and expected fiscal incentives from the Uttarakhand plant, which is expected to go on stream from second half of 2009.
Ashok Leyland has lined up capex worth Rs 3,000 crore over the next two years.
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