RAK facility returning to normal after West Asia disruption. Saudi plant approvals secured. Export target 25,000 units. Commodity cost pressure looms.
Ashok Leyland’s Ras Al Khaimah (RAK) facility in the UAE is returning to normal operations after a three-to-four-week disruption from late March to early April caused by the West Asia crisis. The company is simultaneously advancing plans for a new manufacturing plant in Saudi Arabia. These two developments reset the export narrative for India’s second-largest commercial vehicle maker and carry implications for the broader Indian CV sector’s exposure to the GCC region.
The RAK facility, which serves Gulf and African markets, saw production and sales hit during the crisis. Chairman Dheeraj Hinduja stated that the market has started to come back and production has restarted. Full capacity is expected from June.
Last year the RAK plant produced more than 9,000 vehicles despite an installed capacity of around 6,000 units, achieved through additional shifts. Hinduja indicated that the company may not match that volume this year because of the temporary disruption, though regional demand remains strong. The facility has evolved into a key export hub, with local retail demand in the GCC supported through inventory despite logistics disruptions affecting shipments from India.
Ashok Leyland is moving ahead with plans to establish a manufacturing facility in Saudi Arabia, one of the largest CV markets in the GCC. Hinduja confirmed that the company has received government approvals and is now scouting for appropriate land.
The proposed Saudi plant is expected to begin with a production capacity of at least 5,000 units annually, with room for future expansion. Hinduja expects the facility to be operational within 18 to 24 months. The RAK facility will continue serving other Middle Eastern and African markets, while the Saudi unit strengthens Ashok Leyland's positioning in the kingdom.
Ashok Leyland’s overseas business has posted strong growth. Export volumes have risen from about 8,000 units three years ago to over 18,000 units in FY26. The medium-term target is 25,000 units in exports, which Hinduja said the company hopes to reach in a couple of years.
| Metric | Value |
|---|---|
| Exports 3 years ago | ~8,000 units |
| Exports FY26 | >18,000 units |
| Medium-term target | 25,000 units |
The ramp-up highlights the growing importance of the GCC as an export destination for Indian CV makers. Ashok Leyland’s dual-hub strategy – UAE for general Gulf and Africa, Saudi for the kingdom’s large market – may become a template for other Indian manufacturers seeking to insulate supply chains from regional disruptions.
Hinduja flagged that commodity prices have increased substantially. While the company can manage short-term pressure, he said that in the longer run, price hikes will be necessary if cost pressures persist. Elevated fuel prices add to the inflation risk.
CFO KM Balaji outlined the toolkit used to protect margins:
The company has not yet announced a specific price increase, the chairman’s comments suggest one is likely if commodity inflation continues.
Sector read-through: Input cost pressures are industry-wide. Other Indian CV exporters may face similar margin compression, forcing either pricing action or capacity rationalisation in export markets.
Ashok Leyland has earmarked ₹800 crore to ₹1,000 crore in capital expenditure for FY27. The spending is directed largely toward electric vehicles, new technologies, capacity debottlenecking, and battery pack manufacturing.
The EV capex allocation signals that Ashok Leyland is positioning for domestic and international EV adoption, even as its ICE export business expands. The battery pack manufacturing line suggests an intent to vertically integrate into the EV supply chain. This dual-track strategy – growing traditional CV exports while investing in EV production – is a differentiating factor within the Indian CV sector.
Ashok Leyland’s Gulf strategy is evolving from a single-hub export base to a multi-country manufacturing footprint. The UAE normalisation removes a near-term headwind, while the Saudi plant pipeline adds a multi-year growth lever.
Several factors will determine whether Ashok Leyland’s Gulf expansion delivers on its promise:
Whether the export growth translates into sustained margin expansion will depend on cost pass-through and capex discipline. For broader context on Indian equities, see AlphaScala’s stock market analysis.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.