Volvo India buys out partner’s stake in bus JV (Lead)

December 7th, 2010 - 12:32 am ICT by IANS  

Bangalore, Dec 6 (IANS) Transport solutions major Volvo Buses India Ltd Monday increased its equity holding in its bus joint venture to 100 percent by acquiring the entire 30 percent stake of its partner, Azad Coach Builders Ltd for an undisclosed sum.

“In the joint venture formed in 2008, we invested about Rs.100 crore (Rs.1 billion), that included our share (70 percent) of the equity,” Volvo Buses India managing director Akash Passey told reporters here.

Post-acquisition, the Indian subsidiary of the global Swedish major will have the ownership of the production plant at Hosakote, about 40 km from Bangalore.

“This strategic move will provide us greater flexibility to expand and put in place ambitious growth plans over the next five years, including doubling bus production to 2,000 units per annum by 2012 and introducing new products and services,” Passey said.

To meet the growing demand for luxury air-conditioned buses from both private and institutional customers across the country and launch exports, the company plans to set up additional facilities for refurbishment, customer experience lounge, new integral production principles, and a competence development centre and expand the paint shop.

“To execute the order book and ensure timely deliveries, we will increase our manpower by 30 percent from 1,000 employees over the next two years,” Passey noted.

The company also bagged a huge order to sell 100 luxury AC coaches to VRL Logistics Ltd, a leading transport firm based in Karnataka.

“This is the largest ever order we got in India - to supply 100 multi-axle buses to VRL Logistics, which bought 48 Volvo coaches from us since 2003,” Passey said on the occasion.

The cost of each AC bus is estimated to be about Rs.8.5 million.

“We will deliver the 100 coaches over the next six-seven months to VRL,” Passey said.

The Hubli-based VRL is the largest road transport operator in the country, with a fleet of 2,800 commercial vehicles, including 250 buses.

“We plan to buy 550 commercial vehicles in 2011, including 300 trucks and 250 buses, of which 100 will be Volvos,” VRL chairman Vijay Sankeshwar said.

With the economy on the rebound and demand for luxury buses gaining momentum from private operators and state-run road transport corporations, Passey said the company had a strong order book for the next six months from customers across the country.

“We have enough orders for the next six-seven months. At the rate of 75 units per month, we will be able to execute the orders to deliver 450 buses by the first-half of 2011,” Passey asserted.

Over the last nine years since the subsidiary began rolling out its luxury buses for inter-city and intra-city operations, about 3,500 Volvos are currently on the roads across the country.

“We have seen robust growth in 2010 in terms of orders and production. Long-haul luxury travel is getting segmented with higher demands. The new investments are aimed in fulfilling present and future expectations,” Passey added.

The company is projected to post Rs.500 crore turnover in this calendar year (2010) as against Rs.350 crore in 2009.

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