Ashok Leyland Ltd. (500477.BY) said Monday it will invest INR10 billion ($211 million) in the next financial year on its joint ventures with Nissan Motor Co. (7201. TO) and Deere & Co. (DE) to expand its portfolio of commercial vehicles and tap growing demand for such vehicles in India.

The company will also invest a part of the INR10 billion on its vehicle finance arm, Ashok Leyland Finance Ltd., Chief Financial Officer K. Sridharan told analysts during a conference call to discuss its earnings for the third quarter ended Dec. 31.

"Most of the investments will go into our joint ventures," he said without elaborating.

Ashok Leyland, India's biggest truck maker by sales after Tata Motors Ltd., has a tie-up with Nissan to make light trucks. It plans also to manufacture construction equipment through a joint venture with U.S.-based Deere & Co., also known as John Deere.

The Indian government's push to develop highways has prompted several companies such as Daimler AG, Volvo AB, Navistar International Corp. and MAN AG to either form alliances in India or directly sell their trucks and buses here.

India plans to spend about $60 billion over the next five years to build new highways or improve existing ones, covering its vast geographical territory.

Ashok Leyland, the flagship of the diversified Hinduja Group, owns a 51% stake in the joint venture to co-develop, manufacture and market light trucks for the Indian and overseas markets. Nissan holds the remaining.

Saturday, Ashok Leyland said its net profit for the third quarter through December slid to INR433.68 million from INR1.05 billion a year earlier due to rising expenses. Sales rose to INR22.27 billion from INR18.17 billion.

Shares of Ashok Leyland fell as much as 4.05% on the Bombay Stock Exchange in early morning Monday, but recovered later to trade 0.4% up at INR59.60 at 0920 GMT, compared with a 0.7% rise in the benchmark Sensitive Index.

Sridharan said the company expects to sell as many as 10,000 vehicles each month between January and March.

"We have had some logistic issues at our Pantnagar factory and vehicle inventory rose during November which impacted sales," he said. "These issues have now been sorted and, hopefully, we should be able to improve sales."

Ashok Leyland makes trucks and buses at its two factories, one at Pantnagar in the northern state of Uttarakhand and the other at Hosur in the southern state of Tamil Nadu.

Sridharan said Ashok Leyland and Nissan will introduce light truck models by the middle of 2011. Construction equipment with John Deere are expected to be launched by the end of June.

Meanwhile, Ashok Leyland Saturday named Vinod Dasari its managing director, replacing R. Seshasayee, who has been promoted as executive vice chairman.

The appointments are effective April 1.

Dasari is currently the chief operating officer, while Seshasayee has been Ashok Leyland's managing director since 1998.

-By Nikhil Gulati, Dow Jones Newswires; +91-11-4356-3306; nikhil.gulati@dowjones.com
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