No more major divestment by Ashok Leyland: Official

Chennai  :  There may be some sale of small stakes in some of Ashok Leyland Ltd’s ventures, but the commercial vehicle major will not be involved in any major stake divestment as its investments are in core areas, said a senior company official.

The Hinduja group’s flagship company Ashok Leyland recently divested its holding in Detroit-based Defiance Testing and Engineering Services for an undisclosed sum.

“It was a profitable divestment. The investment in that company was part of our growth strategy. But it was little less to close to our core operations,” vice chairman V. Sumantran told IANS.

Ashok Leyland had acquired the US company offering testing and engineering services to vehicle makers for around $15 million in 2007.

According to Sumantran, the last five years were spent on a careful but clear strategic growth plan.

He said the company was into medium and heavy vehicle manufacturer and decided to grow the scale as without that, one cannot be a long term player.

Sumantran said while defence vehicle segment was growing, it was logical to grow that segment. However, huge growth was happening in the light commercial vehicle (LCV) and in the construction equipment segments.

Ashok Leyland thus joined hands with Japanese Nissan Motor Company to make a LCV and the US construction equipment major John Deere for construction equipments.

The joint venture with Nissan has rolled out goods carrier Dost and passenger vehicle STiLE and soon a bus will be launched. The STiLE is cross badged version of Nissan’s Evalia.

Sumantran said bulk of Ashok Leyland’s investments is over and the company is hopeful of harvesting the returns.

He ruled out exiting the LCV, construction equipment and defence segments as they are strategic for the company.

While the transport and logistics defence vehicles are done under Ashok Leyland, the tactical armoured vehicles are done through a joint venture company.

According to him, the construction equipment joint venture will be launching one more variant of backhoe loader and a wheel loader vehicle.

On the issue of discounts on commercial vehicles, Sumantran said the company does not offer any discounts on its LCVs – Dost and STiLE.

He said the distribution network for LCV is separate and the company has the luxury of trying out fixed price sale model.

On Wednesday, Ashok Leyland will be launching BOSS, an intermediate goods carrier.