Hinduja Group of India sees World Cup in Qatar as boon for new operation in Emirates that will be able to produce 2,000 buses and 1,000 lorries a year.
Ashok Leyland formally opens UAE's first vehicle plant
The UAE's first vehicle assembly plant was officially unveiled yesterday, ushering in a new era of industrial production in the country.
Ashok Leyland, India's second-largest lorry maker, opened the plant in Ras al Khaimah under an agreement with the Ras al Khaimah Investment Authority (RAKIA). The 20,000 square metre factory will be able to produce 2,000 buses and 1,000 lorries a year and will also make vehicles from the company's Czech subsidiary, Avia.
An initial investment of US$25 million (Dh91.82m) has been made in the plant and more money is expected to be invested as demand picks up next year.
Dheeraj Hinduja, the chairman of Ashok Leyland, said at the launch of the factory yesterday: "I am sure we will have to have another investment in the next six months.
"RAKIA is not investing in anything, they are just providing support. [Hinduja Group] is putting in the investment," he said. "This is just the first phase."
Mr Hinduja said Ras al Khaimah offered the right infrastructure to support the plant, with two ports and large areas of empty land for the business to grow.
The plant is expected to boost job numbers to about 2,500 from the 220 employees at present.
Ashok Leyland builds and exports buses used typically to transport construction workers.
A formal opening of the Ras al Khaimah plant was initially planned for last year, but it was pushed back because of the global economic downturn.
The plant began assembling buses last year and will now expand its output to include lorries for the construction industry.
Bhimasena Rau, the resident director of Ashok Leyland in the UAE, said production had struggled in the beginning but the factory accepted vehicle orders in April as part of a "soft opening".
"The market was down and [the factory] was slow on investment last year. It was a trial run," he said.
Mr Rau said that $15m had been spent on materials that would help to boost production and efficiency.
Vehicle sales in Qatar are seen as a potential engine for growth for the company because of the awarding of the 2022 FIFA World Cup. Qatar, the first Arab country to host the World Cup, will dramatically increase its spending on infrastructure, with an accompanying boom in other construction, in preparation for the tournament.
In the two weeks since it won the World Cup bid, Qatar has received overtures from infrastructure and contracting companies such as Emaar Properties and Arabtec Construction.
Mr Rau said: "We expect Qatar to be a boon for us in terms of our trucks and buses because where there is investment and infrastructure, there is people, and this is what we need."
Ashok Leyland already has a strong presence in the UAE, controlling 60 per cent of the bus market. The company is one of many businesses owned by the Hinduja Group, a multinational corporation with its headquarters in India. In addition to vehicle assembly, the conglomerate is involved in information technology, media, entertainment, banking and finance, infrastructure, energy and health care.
Gopichand and Srichand Hinduja, more popularly known as the Hinduja brothers, co-chair the group and have high hopes for the assembly plant in Ras al Khaimah. They aim to break into the top 10 vehicle manufacturers in the next five years.
"It's not easy to be in 36 countries, but our hobby is our work", Gopichand Hinduja said.
The Hinduja Group, initially founded by the brothers' father, Parmanand Hinduja, in 1914 in Mumbai, set up office in Iran in 1919 but moved its base because of the 1979 revolution.