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Eicher Motors drops plans for overseas truck unit

Truck major Eicher Motors Limited, or EML, has buried plans to set up an assembly plant in South Africa for making light commercial vehicles, a top company official Wednesday said.

The company has, instead, decided to enter new African markets like Egypt through the export route, Eicher Group chairman S Sandilya said.

"We have dropped plans to set up a manufacturing unit in South Africa. We were exploring the feasibility of setting up a unit there and since the report was not favourable, we have decided against going ahead with it," Sandilya said.

Eicher Motors was planning to set up an assembly plant in South Africa to give a fillip to sale of its light commercial vehicles, or LCVs, in the country.

Currently, around 70 per cent of the group's export revenue comes from export of trucks of below 10 tonne gross vehicle weight.

The company, he added, wants to concentrate on its foray into the heavy commercial vehicle, or HCV, segment in India with Eicher 20.16. The vehicle is scheduled to be in the market by the year-end.

The company would commence pilot production of the vehicle in the next quarter. EML has already tied up loans worth Rs 900 million from banks and financial institutions for part-funding the Rs 1.20-billion HCV project.

"We have already invested around 30 per cent of the total amount and fresh investments would be made for expanding capacities and this investment will spill over to next fiscal," he added. The entire Rs 1.2-billion investment would include expenditure on product development.

Once the total investment at its Pithampur unit is in place, the company would have an integrated capacity of around 20,000 vehicles per annum.

Meanwhile, Eicher Group company Royal Enfield Motors is working towards introducing a 624cc motorcycle, billed as India's costliest bike, by the end of the 2000 calendar year.

Though Sandilya refused to divulge the price positioning of the bike, company sources said that the motorcycle would be priced in the range of Rs 95,000.

The bike is being developed with technical assistance from Fritz Egli of Switzerland.

Commercial production of the bikes for the Indian market would commence in the last quarter of the 2000 calendar year. However, the vehicle would be introduced in the international market by August this year, the sources added.

The bike would have disc brakes and self start as standard features for the Indian market while the export model would have a different styling.

The company is eyeing limited sales with the model. "We intend to touch a sales figure of 2,000 to 5,000 units per annum. This is a niche market product and we are not looking at huge volumes for the model."

This will be the latest introduction in the series of upmarket bikes that the company is introducing in the Indian market. It had recently introduced a 535cc model, also in collaboration with Egli.

This 624cc model will be the only bike to be launched in the country in the top-end segment after the major debacle of BMW's 650cc motorcycle.

REM, company sources said, is eyeing a 40 per cent growth in motorcycle sales during 1999-2000 over last year's sales of about 25,000 vehicles. The volume growth would come from the company's new plant in Jaipur.

The Jaipur plant, which has a capacity of 24,000 vehicles per year, started trial production July 1, 1999. In the first year of operations, the Jaipur plant would make about 8,000-10,000 units of 350cc and 500cc models.

UNI

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