NEW DELHI -- Ashok Leyland Ltd, India's second-biggest truck maker, will spend 3.9 billion rupees ($86 million) to expand capacity and on new facilities to build cabins and engines, adding it could raise the funds through new equity.
Ashok Leyland managing director R. Seshasayee told a news conference on Monday the company would spend 1.4 billion rupees to increase vehicle capacity to 67,000 units a year from 50,000 and its engine capacity to 77,000 units annually.
The expansion is scheduled to be completed by July.
Another 2.5 billion rupees would be spent on plans to make cabins for trucks and the new eight litre J-series engine from technology partner Hino Motors Ltd. of Japan.
"We are currently constrained by capacity and are working at 100 percent plus," Seshasayee said at India's biennial auto fair, adding he did not rule out equity funding for the expansion.
The announcement comes amid an industry boom that has lifted Ashok Leyland's sales 38.9 percent in April-December, the first nine months of the 2003-04 fiscal year.
The Madras-based automaker, the flagship of the U.K.-based billionaire Hinduja brothers, mainly competes with market leader Tata Motors Ltd and has a 17.3 percent share of India's commercial vehicles market, the world's fifth biggest.
Government investment in India, the world's 12 largest economy, over the past two years to build a national highway network has boosted demand for trucks to move cement and steel.
A shift in demand to larger, multi-axle trucks from traditional two-axle vehicles has also helped grease sales.
Industry sales of trucks and buses jumped 36.3 percent in April-December from a year earlier to 189,340 units.
Seshasayee said the company planned to introduce trucks and buses in Pakistan and China over the next 12 to 18 months through joint ventures and also expects to begin exporting engine components to Hino Motors in the next fiscal year.
A 3,300-bus export order that it bagged from Iraq this fiscal year was expected to get underway by the end of January, when the first batch would be shipped, he added.
Shipment of the buses had been delayed because of Iraq's lack of infrastructure.
Seshasayee said the company expected to finish this fiscal year with a sales growth of more than 35 percent but expected growth to ease in the next fiscal year.