Scania deal to increase offering in mining

11 September 2006

Larsen & Toubro has just announced a tie up with Sweden-based Scania to distribute its multi-axle trucks. (See: L&T ties up with Swedish heavy vehicle maker Scania) Scania is the world's largest manufacturer of multi-axle trucks. Hino, Volvo and Scania together have about 82 per cent market share in this segment.

J P Nayak, board member, L&T, says that the Scania deal would increase offering in mining and construction. Acccording to him, the distribution tie-up with Scania would need working capital.
Nayak expects the market to grow at 30 per cent in the multi-axle segment. CNBC-TV18 shares with domain-b its exclusive interview with Nayak:

How does Scania fit into your business?
Scania manufactures heavy-duty trucks. These trucks are also used in mining and construction industry. We manufacture and distribute construction equipments.

With every construction equipment there is a need for hauling the material, which has been excavated. For that haulage, purpose, these trucks are necessary.

We will use these trucks and offer it to our customers of excavators. Thus, they can make use of it as haulage trucks.

Is the purpose of this tie-up more to provide a complete package for your customers or are you looking at this as a separate business?
Our basic purpose is to increase our offering to our existing customers group to make the package complete. However, some of this will also have applications outside.