Saturday, Dec 18, 2010

(This story was originally published Thursday.)

RAS AL KHAIMAH (Zawya Dow Jones)--Ashok Leyland Ltd. (500477.BY), India's second-largest truck and bus maker by sales, Thursday said it opened the United Arab Emirates' first, export-orientated vehicle assembling factory in the northern emirate of Ras Al Khaimah in partnership with the RAK Investment Authority, or Rakia.

Ashok Leyland, part of India's Hinduja Group, will assemble Avia Ashok Leyland school buses and trucks at the plant in Ras Al Khaimah's Al Ghail Industrial Area, as part of a 2006 memorandum of understanding signed with Rakia, the company said.

"The U.A.E. is a significant part of our total global plan. This facility--equity is held equally 50:50 between Rakia and Ashok Leyland," Srichand Hinduja, chairman of Hinduja Group, told Zawya Dow Jones.

The initial phase of the facility cost between $15 million to $20 million to implement and vehicles will be exported, Hinduja said.

"The facility will not only cater to the growing markets in the GCC (Gulf Cooperation Council) but also to Africa and...European markets too," said Hinduja.

Ras Al Khaimah, the fourth-largest member of the U.A.E., hasn't seen investment inflows to the extent seen in bigger emirates such as Dubai and Abu Dhabi. In recent years, it has built up its raw materials and mining industries, and is also making a foray into real estate and tourism. The emirate is home to the world's largest tile maker, Rak Ceramics, has an international airport and is building up its ports to boost trade.

Rakia--established in 2005 and wholly owned by the Government of Ras Al Khaimah--develops and manages the emirate's industrial parks which includes the free zones and Al Hamra and Al Ghail industrial zones.

"Rakia provided land and facilitations, whereas Hinduja Group provided the cash liquidity for this project," Khater Massaad, Rakia's chief executive officer said.

Manufacturing of buses from the plant has already started and the first trucks will follow by January 2011, Hinduja said, adding that the factory's initial annual capacity is 1,000 buses.

"This will be upgraded later in phase two through the addition of truck manufacturing," he added.

Ashok Leyland aims to sell 95,000 vehicles this year, the company's chief financial officer said in October.

-By Leila Hatoum, Dow Jones Newswires; +971-4-446-1686; leila.hatoum@dowjones.com

Copyright (c) 2010 Dow Jones & Co.

(END) Dow Jones Newswires

18-12-10 0713GMT