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Eicher Motors, which has agreed to transfer its trucks division to a joint venture with Sweden’s Volvo, could possibly deploy the funds to create an engineering business, a top official said.

The company will get Rs 400 crore in cash for transferring the truck and component business to the joint venture and is drawing up plans to use the money, Managing Director Siddhartha Lal said over the weekend.

“We do not want to compete against our own unit. It could very possibly be in engineering,” he said. Eicher’s component business currently produces auto parts for commercial vehicles. Other areas in engineering could include components for cars, bikes and industries. It may also be in the area of design and development, though Lal refused to elaborate.

In December, Volvo, the world’s No 2 truck maker, said it planned to invest $350 million to expand in the fifth-largest truck market through a joint venture with Eicher.  Under the deal, Eicher will transfer its truck, component division and 180-strong dealer network to a joint venture with Volvo. The Swedish firm will also move its dealer network to the JV but continue to own its Indian assembly operations.

“Some of our cash is tied-up in bonds. The rest will come when the JV is formed. We are making the plan though, it is early to comment immediately,” Lal said. “For now, the biggest focus is to make the JV a large and significant business.” Eicher lags Tata Motors and Ashok Leyland in sales but expects the joint venture with Volvo to help it get a larger market share as the market shifts from medium trucks to heavy trucks.

“We have the potential to make large investments to make the changes in the market,” Lal said adding the intent was to route all Volvo truck projects in India, through the yet to be named joint venture.

The Volvo truck group includes Volvo, Mack, Renault and Nissan Diesel trucks. A Volvo India spokesman said the JV will certainly distribute all Volvo truck group launches in India but the company was yet to decide the model to adopt for manufacturing in India. Shares of Eicher ended 2.7 per cent up at Rs 382.25 in the Mumbai market.