Chennai / London: July 29th, 2010: Ashok Leyland Ltd, the flagship company of the London-based Hinduja Group, announced today that it had reached agreement with Optare plc, a leading bus manufacturer in the UK, to subscribe for a 26 percent stake as a part of long-term strategic cooperation. The investment is estimated at about USD 7.5 million. The deal is expected to further benefit Ashok Leyland in its endeavour to accelerate technology, new product development and to address new markets.

Optare, founded in 1985, has a turnover of about £80 million. Optare has been recognised for its innovative, weight optimised ‘Low Carbon’ range of low-floor, mid-size buses as well as a modern range of city buses. Optare has been a pioneer of the low-floor double-decker in the UK. Their new electric bus product has already secured several orders as more countries in Europe promote cleaner, greener mobility.

Ashok Leyland, a recognised market leader in buses in India, has been advancing its bus business with purpose built bus-plants in Alwar in India and Ras Al Khaimah in the United Arab Emirates, and a new range of both city buses and inter-city coaches. It has expanded its foundations to address growing needs for modern urban mobility in India as well as several international markets.

With the agreement, Ashok Leyland and Optare will embark upon leveraging the synergies they have mutually identified. Ashok Leyland will have access to Optare’s technology including a modern range of mid-size and full-size city buses which will appeal to several global markets.

Optare will seek to improve its competitiveness in the UK and its export markets through access to Ashok Leyland’s lower-cost supply chain, cooperation in new product development and improved management of its working capital. Ashok Leyland will nominate two nominees on the Board of Optare.

The agreement brings together two quality bus-making companies who can trace their lineage to common roots – the Leyland brand, with links to the long history of that company, when it was the largest bus maker in the world. Commenting on the move, Mr. R. Seshasayee, Managing Director, Ashok Leyland and Executive Vice Chairman, Hinduja Automotive said: “This strategic alliance is a critical part of our Global Bus programme, which is under development. In Optare, we have found a European manufacturing partner who shares our vision for state-of-art buses at affordable prices. Together, we will be able to offer future-ready products of high quality and design that are competitively priced to customers in almost all regions.”

Dr. V. Sumantran, Executive Vice-Chairman, Hinduja Automotive and Member of the Board, Ashok Leyland added: “The group has embarked on a course, investing in both the core sectors and adjacent sectors in order to broaden the range of our enterprise. With Optare, Ashok Leyland can build on synergies in the global bus business, and the two companies can simultaneously advance capabilities and market access in a more efficient manner.”

“This new venture will deliver direct benefits to UK bus customers while propelling Optare on to the global stage,” said John Fickling, Optare’s Non-Executive Chairman. “We will benefit from the tremendous opportunities offered by Ashok Leyland not only as an industry giant but as a leader in advanced technology”, he added.

Jim Sumner, CEO, Optare, said: “For the past year, we have focused on turning around our business. However, we have made no secret of our wish to find a long term strategic partner. Now with Ashok Leyland, I am confident of creating an organisation which will become a significant force in the global industry for many years to come. While for the past 10 years we have been leaders in low-floor bus designs, today we are leading the way in low carbon designs,” he added.
The agreement between Ashok Leyland and Optare will be the subject of a General Meeting of Optare’s shareholders to be held in Leeds on Monday 16th August, 2010.

Picture Caption: Ashok Leyland Luxura, Intercity luxury coach

About the Hinduja Group
Hinduja Group is an investment and banking group with a diversified global portfolio of holdings across the manufacturing services and banking sectors. The Group, founded by Shri P.D. Hinduja in 1914 has activities across three core areas: Investment Banking, International Trading and Global Investments. It also supports charitable and philanthropic activities across the world through the Hinduja Foundation. As part of its Global investments, the Group owns businesses in Automotive, Information Technology, Media, Entertainment & Communications, Banking & Finance, Infrastructure Project Development, Chemicals & Agri business, Energy, Real Estate, Trading and Healthcare. www.hindujagroup.com.

About Ashok Leyland
Ashok Leyland is the flagship of the Hinduja Group and a leading manufacturer of commercial vehicles in India with 2009/2010 turnover of US $ 1.6 billion. With seven manufacturing locations at Chennai, Hosur (three plants), Alwar, Bhandara and Pantnagar (Uttarakhand), the Company has a production capacity of 150,000 vehicles. Ashok Leyland has associate companies in the Czech Republic and the UAE and a joint venture in Sri Lanka, besides exports to over 20 countries worldwide. www.ashokleyland.com

About Optare
Optare is Britain’s leading maker of advanced low-floor integral buses and employs around 500 people on two sites – in Blackburn, Lancashire and its main production facility in Leeds, Yorkshire. The company produces a wide range of buses of its own design and manufacture, together with a number of double deck buses and midi coaches which use proprietary chassis. The Optare Solo leads the important midibus sector and more than 4,000 have been sold and are operating in the UK, Continental Europe and North America. In addition Optare has pioneered its ‘EcoDrive’ programme across all of its products which delivers a wide range of low carbon power options, including hybrid, full electric and dual fuel models. In 2009 Optare had a turnover of almost £80 million.

For further information please contact:

For Ashok Leyland:
Vinod Chacko, DGM-Corporate Communications – + 91 98414 16233
Ms. Devdatta Moolchandani, CLEA PR – +91 90030 76909

For Optare:
Martin Hayes, Communications Advisor +44 (0) 207 494 8050 mhayes@automotivepr.com

New strategic alliance: additional points from Optare

The agreement means that Optare will at a stroke be able to strengthen its working capital, access Ashok Leyland’s proven low cost supply chain in Asia and Eastern Europe and improve vehicle whole life costs.

In 2006 Ashok Leyland became the first Indian automotive company to achieve the internationally renowned quality standard TS16949, a world class guarantee of high quality which very few European bus and truck makers have yet achieved. Optare itself is working towards achieving this standard.

The new partnership will enable Optare to utilise the outstanding design and testing expertise within Ashok Leyland to optimise Optare’s current and future vehicle range and increase the competitiveness of these vehicles in both the UK and export markets. The creation of a joint Optare/Ashok Leyland design team will enable 24-hour engineering, speeding up both product development programmes and cost reduction activities.

The agreement, together with the issue of additional share warrants, will deliver to Optare around £5.5m of cash. Optare will use these funds to support investment in the global bus development programme and further reduce both the whole life costs of its products and term debt by an additional £2 million. Following completion of the agreed sale of the Rotherham site and this investment, Optare’s term debt will reduce to less than £1.6 million from £7.5 million just 12 months ago.

Optare’s order book currently stands at a 12 months high of £27.4 million, including a recently announced €3 million order from The Netherlands for 25 Solo buses.

The agreement between Ashok Leyland and Optare brings together two quality bus-making companies which share a common pedigree – the Leyland brand. Both Optare and Ashok have links to the glory days of Leyland when it was by far the largest bus maker in the world with an outstanding and varied product range suited to every market requirement. Now the two parties aim to rebuild that once dominant position, providing a new and significant competitor to companies in Europe, North America and Asia.

For the past 10 years Optare has been the UK leader in low floor bus designs. Today Optare leads in low carbon technology. Tomorrow, Optare through its partnership with Ashok Leyland will lead in providing British operators with buses with lower whole life costs.