Commercial vehicle major Ashok Leyland said operations at its Ras Al Khaimah (RAK) facility in the UAE are gradually returning to normalcy after disruptions caused by the West Asia crisis, while the company advances plans to establish a manufacturing facility in Saudi Arabia as part of its GCC expansion strategy.
Chairman Dheeraj Hinduja said the company experienced disruptions for nearly three to four weeks from late March to early April, impacting production and sales. But, now the market has started to come back, and our production has started once again, he told businesssline, adding full production capacity should return from June.
The RAK facility, which caters to GCC and African markets, produced more than 9,000 vehicles last year despite an installed capacity of around 6,000 units, thanks to additional production shifts, he added.
Hinduja said the company may not achieve similar production levels this year because of the temporary disruption, though demand across the region remains strong.
Ashok Leyland said the facility has evolved into a key export hub, serving Gulf markets as well as African countries. The company added that retail demand in the GCC region continues to be supported through local inventory despite logistics disruptions affecting shipments from India.
Saudi plant
Alongside stabilising operations in the UAE, Ashok Leyland is moving ahead with plans to establish a manufacturing facility in Saudi Arabia, one of the largest commercial vehicle markets in the GCC.
“We have received the approvals from the government in Saudi and are now looking for appropriate land to set up the facilities,” Hinduja said. “It could be anywhere in the next 18 to 24 months that we are able to set something up.”
The proposed Saudi facility is expected to begin with a production capacity of at least 5,000 units annually, with scope for future expansion. The company said local manufacturing in Saudi Arabia would strengthen its positioning in the kingdom, while the RAK facility would continue serving other Middle Eastern and African markets.
Ashok Leyland also said its overseas business has continued to register strong growth, with export volumes increasing from around 8,000 units three years ago to over 18,000 units in FY26. “Our medium-term target is 25,000 units in exports, which we hope to reach in a couple of years from now,” Hinduja said.
Price hike
Hinduja indicated that commodity inflation and elevated fuel prices may eventually require price hikes across the commercial vehicle industry if the cost pressures persist over a longer period. “Commodity prices have increased substantially. Short term, we can manage it, but in the longer run this will have to be passed on,” Hinduja said.
Chief Financial Officer KM Balaji said the company has been relying on a combination of price increases, discount rationalisation, value engineering, sourcing efficiencies and operating cost reduction measures to protect margins.
Capex
Ashok Leyland has earmarked capital expenditure of ₹800 crore to ₹1,000 crore for FY27, largely towards electric vehicles, new technologies, capacity debottlenecking, and battery pack manufacturing, he said.