Ashok Leyland’s new firm to develop eco-friendly engines

June 19th, 2008 - 7:16 pm ICT by IANS  

Chennai/Mumbai June 19 (IANS) Hinduja Group flagship and the country’s second largest commercial vehicle manufacturer Ashok Leyland Thursday announced the formation of a new company - Albonair in Dortmund, Germany - that would focus specifically on environment-friendly auto engines. The new facility will focus on the development, production and sales of environment-friendly diesel engines, technically called ‘exhaust after-treatment systems.’

Though the company had announced the strategic investment earlier, the formation of a company took place here Thursday.

“We already had a group of scientists and technologists assisting us in our R and D (research and development) efforts. It made eminent sense to start a company with them and formalize the working arrangement,” said Ashok Leyland managing director R. Seshasayee.

While the Dortmund facility will be the central R and D hub, it will also cater to emerging markets. “We have not taken any decision on production locations, as of now. But we are working on it and will announce this very soon,” Seshasayee said.

Seshasayee said regulations for diesel exhaust emissions were getting stricter worldwide, with Euro-4 norms expected to be introduced in India and China. “Moreover, while the demand will increase significantly in the next few years in Asian markets, cost effective systems will also be in demand in Europe and the USA.”

The company also said it is not unduly worried about finding money for its expansion projects.

“We may need around Rs.10 billion debt. We have already tied up external commercial borrowing for Rs.7 billion. In addition, there are avenues like short-term borrowings,” chief financial officer K.Sridharan told IANS. “We are in no tearing hurry to raise funds as the market is not right.”

The company has planned a capital expenditure programme of Rs.7 billion during this fiscal and Rs.30 billion over a three-year period. That would include Rs.24 billion for light commercial vehicle project - vehicles, engines and transmission line and research and development - in partnership with Japan’s Nissan Motor Company.

It also has a Rs.1.2-billion project to make high pressure die casting project in association with Alteams.

Additionally, the company is bidding for Citicorp Finance’s commercial and construction equipment loan portfolio. “It is better to acquire a finance company that has a sizeable advances portfolio than starting from the scratch,” Sridharan said.

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