The Abhay Firodia-controlled Bajaj Tempo will foray into the heavy and medium commercial vehicles following a technical collaboration with German truck and diesel technology major MAN (Maschinenfabrik Augsburg-Nurnburg).
The company will invest Rs 250-350 crore (Rs 2.50-3.50 billion) over the next 2-3 years for its latest line of business.
The expansion and modernisation plan will involve the setting up of a separate factory building next to the company's existing facility in Pithampur for a new truck production line (initial installed capacity of 6000 vehicles per annum) and another greenfield plant at Chakan, Aurangabad, for the production of engines and transmissions.
In addition to these, Bajaj tempo is also conducting feasibility tests in Karnataka, Gujarat, Rajasthan and Chhattisgarh for another plant to support its venture into the heavy and medium vehicle business.
Abhay Firodia, chairman and managing director, Bajaj Tempo told Business Standard: "A part of the investment will be made from internal accruals, then we will require about Rs 150 crore (Rs 1.50 billion). Considering the attractive terms in the market, borrowing seems like a good option particularly foreign currency borrowing. We won't even rule out a rights issue to raise the money, though that might not be necessary."
Bajaj Tempo will also build on its existing relationship with MAN by exporting auto components for the MAN range of vehicles, though nothing has been firmed up on that front.
Bajaj Tempo's MCVs and HCVs are expected to roll out into the markets by December 2005. These vehicles will be powered by 155 hp to 410 hp engines and will cost between Rs 35-50 lakh (Rs 3.5-5 million) per truck.
The range will include a variety of vehicles like multi-axle vehicles and tractor trailers and will compete with the Volvo range of trucks in terms of price and positioning.
This is the company's fifth line of business after its 3-wheelers, light commercial vehicles, tractors and light 4-wheelers, it also signals a shift in the focus of a company which has so far restricted itself to the production of very basic utilitarian vehicles mainly intended for the rural and semi-urban markets.
