BANGALORE, July 10: Volvo India, the 100 per cent subsidiary of the $28-billion automobile giant, Volvo AB, is diversifying its operations to manufacture buses and construction equipment in the country.

In an interview to The Financial Express, Volvo India managing director Ravi Uppal said that the company would shortly be setting up two separate divisions, Volvo Buses and Volvo Construction Equipment. These would cater to the manufacture of city buses and equipment, including loaders, excavators and articulated haulers.

Volvo India has currently two divisions. One is the truck division which oversees the heavy commercial vehicle (HCV) business, while Volvo Penta looks after the construction of power gensets.

The company has already started building resources for new activities. It has commissioned feasibility studies and a marketing survey for the project, he said. The divisions will be fully functional by the year-end, he said. The company is also open to the idea of spinning-off the divisions into separate companies in future.

"Volvo is more interested in being involved with infrastructure projects in the country," said Uppal. The company will concentrate on four areas including bulk transportation of people, heavy-commercial vehicles, construction equipment and power gensets, he said.

"We want to sell products which are needed by the domestic industry. The company does not want to impose anything on customers just because we are manufacturing them," said Uppal. The group has also put the Volvo car project on the backburner, he said.

The company will unveil demo buses by the year-end or early 1998. Volvo will also be setting up a separate assembly line for buses at its Hoskote plant near Bangalore. This may take only 10-12 months to be commissioned, and Uppal hoped that production would begin by the end of 1998.

Volvo is planning to come out with a combination of city buses including the low-floor buses, double-deckers and medium-floor buses. The two-axles buses will be powered by 250 hp engines. The buses which will meet the Euro-2 norms will have a capacity of 250 passengers.

The company has not fully ascertained the cost of setting up the assembly line for buses as it is still in the process of finalising their design, he said. "We want to introduce systems which are engineered to the requirements of customers", he said.

Volvo AB has planned an investment of $350 million (Rs 1,260 crore) investment in the country. The investment will be made in two phases. The first phase entailing construction of Rs 300 crore truck manufacturing plant at Hoskote is already under execution.

The second phase has also been accelerated by activating the expansion of its business activities to buses and construction equipment.

The company is also simultaneously in the process of completing a detailed study for on introducing a metro-system in Bangalore. The study is being carried out as per a memorandum of understanding with the Karnataka government.

Volvo has already completed the pre-study work on the project. "We have already identified critical parameters necessary for developing the metro system," he said.The company will be ready with the final blueprint on the project by December this year. It will contain details including the number of fly-overs, re-routing of the traffic and the specific design of city buses, he said.Volvo is in talks with other state transport corporations in Maharashtra, Delhi, Andhra Pradesh and Tamil Nadu for similar projects.

Heavy commercial vehicles to roll out next year

Volvo India will roll out its first HCV in April, 1998. Ravi Uppal reiterated that there was no delay in the project. "The work is in full-swing and we will come out with our first trailer in April next year," he said.

The company will manufacture 4,000 HCVs at its Hoskote plant with capacities of 25, 35 and 49 tonnes powered by 250-350 hp engines. Volvo is now in the final process of identifying vendors for its trucks. Uppal said the most critical parameter in selecting vendors would be the "capability of the process" used by them.Volvo is in talks with 50 vendors from Karnataka, Tamil Nadu, Madhya Pradesh, Gujarat and Chandigarh.

The shortlisted vendors will be exposed to international techniques. The company is planning to indigenise 100 components. "The items with shorter development period will be manufactured first," he said.The company has other options for localisation. Suppliers of Volvo AB in Europe are willing to open shop in the country, but have asked their Indian licensees to meet the requirements of Volvo India.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.