Volvo-Eicher Commercial Vehicles (VECV), the equal JV between Eicher Motors and Sweden's Volvo, is mulling to invest Rs 288 crore for setting up a new engine plant at its existing facility at Pithampur in Madhya Pradesh. The project is to be funded internally through VECV's cash reserves.

The proposed facility is likely to add 85,000 units capacity per annum to the existing 40,000 units for engines at the Pithampur facility. Out of the total, 30,000 base engines are to be earmarked for the European market, while the rest are expected to be for domestic consumption for both Eicher and Volvo branded products sold in India. These are to be used for Volvo's trucks and buses, besides Eicher's heavy duty commercial vehicle range.

The engines manufactured and assembled in India are to be Euro III and IV-compliant. Also, the new factory is expected to make Euro V and VI complaint base engines, which are to be finally assembled at a new Volvo plant in France.

For local requirement, the new engines plant is slated to commence production by December 2012, while the supply to the European plant is to begin by 2013.

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