R Seshasayee M.D Ashok Leyland speaks to Murrali Thalor about the Pantnagar Plant.
How will the Pantnagar plant help Ashok Leyland redefine its role in the CV market?
Firstly the facility that has been put in place is technologically contemporary. It is at a level that can give quality and competitive products at the global level. This will be the place where we will build the U-Truck platform, which has been designed with global benchmarks in place. The world-class product that has been engineered with customer value in mind at high levels of cost and performance competitiveness, is being manufactured at this plant, which has got the process capability. This, I believe, is the major benefit that we will have. Secondly, this is the single largest plant in Ashok Leyland's total manufacturing footprint and that is a significant highlight as it is located in North India. Also its companion plant in Alwar makes buses. Together these plants give the company a significant footprint in the North, where the market is huge. We also have an ambitious plan of rolling out a sales and service network here, which will again be pathbreaking.
What kind of flexibility does the Pantnagar plant offer?
In the first place, the plant is flexible from the point of view of product adaptation. It can make frames of any thickness, size, shape and form. It can make H-series and the Neptune engines and the plant can assemble any type of product.
How will this help the company manage volatile market conditions?
We have been somewhat conservative in building capacities in the past. And when the market moved up, we worked at somewhat lower levels because of capacity constraints. This Pantnagar plant removes capacity constraints. With competitive products, I don’t see why we should not be seeking high market share. With our existing facilities making the current range and the LCV from the Nissan JV also coming into the fold, capacity will be fully utilised in the next two to three years.
To what extent will the new plant make the company competitive?
The investments can be benchmarked. An integrated plant at less than Rs 1,500 crore with 75,000 units per year capacity is a true benchmark in terms of capital cost. Secondly, the products that will be manufactured, including the U-Truck platform, in the plant will be cost-competitive. These are not premium products but value products across the board. At affordable costs, the operators will get significantly better value. In that sense we have both cost-competitive products and a manufacturing plant. Additionally, we have the excise duty and income tax benefits.
Does the plant have the potential to expand the product portfolio, say in other segments like passenger cars?
Technically the plant is capable of making any vehicle in terms of commercial vehicles. Our intention is to make only medium and heavy duty commercial vehicles here.
Has future capacity been built in?
Yes, there is scope for expansion and there's space in every shop for that. The entire layout has been done in such a way to bring the next module. Theoretically, it can go beyond the current installed capacity of 75,000 units. The entire campus is a green campus as there is zero wastage of water. All the buildings are green. As there is no standard yet for green buildings for factories, we could not get any certification. These initiatives will give us competitive advantages since energy will become a major issue in the future.
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