Eicher Motors to buy Volvo’s bus business here for `100 cr
Eicher Motors, the manufacturer of Royal Enfield brand of premium motorcycles and commercial vehicles, on Thursday said it has inked a deal to acquire the bus business of Volvo Group India as it looks to strengthen operations in Asia’s third biggest economy.
Eicher Motors’ unit, Volvo Eicher Commercial Vehicles (VECV), will acquire the bus unit in a cash deal for Rs 100.5 crore, Vinod Aggarwal, managing director and CEO at VECV told Financial Chronicle.
The deal to integrate Volvo Bus India into VE Commercial Vehicles is expected to be closed within the next two months, he said.
The move, Aggarwal said, will strengthen Volvo and Eicher’s bus operations in India through synergies in product, purchasing and manufacturing.
Aggarwal said the deal will make the company a large player in the bus business with the widest range.
The pact will cover manufacture and sale of Volvo buses in India, and no debt of the entity has been taken over by VECV, Aggarwal said.
The bus manufacturing facility at Hosakote, Bengaluru, and all 500-plus employees of Volvo Bus India will be transferred to VE Commercial Vehicles as part of the transaction.
The bus business will be consolidated into a new division within VECV and will offer Volvo and Eicher branded buses.
The focus will now be tapping the mid-premium bus segment priced in the range of Rs 35 lakh to Rs 1 crore, Aggarwal said.
Akash Passey, senior vice president at Volvo Bus Corp, will join as president of the new VECV bus division and report to Aggarwal.
Hakan Agnevall, president at Volvo Bus Corp., said the new bus division will offer a full range of modern buses covering heavy, medium and light duty buses.
Meanwhile, Eicher Motors posted a consolidated loss of Rs 55.2 crore for the June quarter as against a profit of Rs 451.8 crore in the corresponding period last year.
Consolidated revenue declined 65.6 per cent YoY to Rs 818.2 crore in the quarter. Hit by the lockdown, volumes fell sharply though the company saw good demand recovery towards the end of the quarter.