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Volvo to invest Rs. 400 crore to expand India operations

By Motortrend India Staff   |   13 October,2011

Global transport solutions major Volvo AB will invest an additional Rs.400 crore ($80 million) to expand its bus manufacturing operations in India over the next five years, a senior executive said Thursday.

“We will invest Rs.400 crore during the next five years to expand our installed production capacity to 5,000 units per annum in two phases from 1,000 units currently and introduce a range of new products, including hybrid version,” Volvo Bus Corporation chief executive Hakan Karlsson told reporters in Bangalore.

The Swedish firm entered India a decade ago to make heavy duty trucks and forayed into building luxury buses for the domestic market and set up a joint venture with Azad Coach Builders Ltd in 2008 with Rs.100 crore ($20 million) as its share of investment for 70 percent equity stake.

“Our target is to sell about 5,000 buses per annum from 2015 and increase revenue to $1 billion (Rs.4,900 crore) from Rs.560 crore in 2010, selling about 560 buses,” Karlsson said.

The company has projected revenue of Rs.800 crore ($160 million) for this calendar year (2011) by selling about 800 buses at average cost of Rs.1 crore.

“We will also ramp-up our workforce to about 5,000 people by 2015 from about 1,000 presently,” Volvo Buses India managing director Akash Passey said. The company has an integrated manufacturing facility on 125 acres of land at Hoskote, about 40km from this tech hub.

The subsidiary has sold about 5,000 luxury coaches to state-run transport corporations and private carriers during the last decade in India for inter-state, intra-state, inter-city and city commuters across the country. The company is also planning to set up a second manufacturing facility in India but is yet to decide its location.

With the first-move advantage in the country, Volvo claims to have about 70 percent market share in the luxury inter-city coach segment. “In the next four years, India will emerge as our second largest market globally after China from being the fourth largest presently,” Passey added.

The company has witnessed a paradigm shift in the Indian transport solutions business with coaches being built on bus chassis as against truck chassis earlier.

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