Eicher looking to double capacity in 5 years
Eicher Motors Ltd expects to raise its capacity for trucks and buses to 100,0OO units per year from current 48,000 units over the next five years, a top executive told Reuters on Monday
February 08, 2011 / 08:42 IST
Eicher Motors Ltd expects to raise its capacity for trucks and buses to 100,000 units per year from current 48,000 units over the next five years, a top executive told Reuters on Monday.
The company will invest about Rs 5 billion in the next three years for the capacity expansion plans, Chief Financial Officer Lalit Malik said."For the first time, we have exceeded capacity. When you are crossing capacity, everything - margins, profitability falls in line," he said.Eicher, India's third largest truck and bus maker, will finance the expansion plans at its Madhya Pradesh plant through internal cash flow, Malik said.Commercial vehicle sales in India, a key economic indicator, rose more than 27% in 2010. Eicher sells trucks and buses through VE Commercial Vehicles, a joint venture with Sweden's Volvo.Malik also said the company increased prices by "broadly about 2%" in the January.He said the company is also looking to set up a new plant to manufacture its Royal Enfield bikes."There is a site we are looking at. There is clearly a need to enhance the capacity," Malik said.Eicher is also looking to focus more in its spares business."Spares business is much more profitable than manufacturing. Next two years, you will also see us enhancing our spares business, that would have a positive impact on margins," he said.On Saturday, Eicher's profit for October - December more-than-doubled, as both commercial vehicles and motorcycles showed substantial growth, in line with the fast growing Indian industry."We expect that the whole market will continue to grow. (But) it can not be at the breath-taking pace of last year." Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
