The company already has a collaboration with ZF for manual gear-boxes and may go in for a manufacturing tie-up with the same company later.

"The company may take a decision on manufacturing only after assessing the market potential for buses with automatic gear boxes", the company's executive director Amol J Sandil told The Financial Express.

Ashok Leyland has started importing trial lots of 25-odd gear boxes from Alison. The buses with automatic gear boxes are particularly popular in Mumbai because the heavy flow of traffic makes it difficult to change gears frequently.

Manual gear boxes are at present manufactured in Leyland's plant at Bhandara.

Passenger vehicles account for 30 to 35 per cent of the company's turnover, while the balance is commercial vehicles. According to company strategy, there are basically four areas inwhich buses are divided: diesel, compressed natural gas (CNG), luxury and minibuses. The routes tapped are: within the city, city to city and between state and state.

The company already has a 50 per cent market share in buses.

Buses with CNG engines are running in Mumbai, while the Delhi state government has placed orders for 10 buses. Buses with CNG engines have been supplied to the Bombay Electric Supply and Transport (BSET). Ashok Leyland hopes to sell around 500-odd buses within this fiscal year.

It would also work with Gas Authority of India Ltd to find out where CNG can be made available at filling stations.

The Delhi government had invited tenders last month for CNG buses in order to replace its existing fleet with more environmentally friendly vehicles by April 1, 2000. CNG is considered a better fuel that diesel in terms of pollution.

Ashok Leyland ended the financial year 1998-99 with a volume loss of around seven per cent with total sales of 29,456 vehicles. The company had sold31, 547 units during the previous year. The company hopes to reverse the trend in this fiscal and in fact has projected a growth.

In the medium commercial vehicle (MCV) segment, the company sold 26,817 vehicles which represents a fall of over five per cent from the previous year's volume of 28,355 vehicles. The company's exports grew marginally from 2,148 vehicles to 2,168 units in 1998-99.