I know the way to create custom pageLayout via setup . Can we automate this process of creating page layouts when I am installing the managed package ?
If there is a way , please point me in that direction. Appreciate the help.
You can include Page Layouts in the managed package, and then they will be deployed alongside the rest of your work as normal during install.
It is generally not advised to include overriding page layouts for Standard objects though as nearly all organisations will already have their own page layouts customised in their org and will not want one from a managed package that won't cater for any of their own customisations.
You also can't update Page Layouts via managed packages, only provide new ones and deprecate old ones.
Having typed that all up - it occurs to me that you might be aware of that and are therefore asking what the best way to "replicate" the page layout changes you need in an org having installed a package because you don't want to include the layout in the package. Unfortunately there is no real way to make an incremental change to a page layout that I am aware of.. you could try to push it into an Org via the Metadata API - but that will have the same impact as having included it in the package ie. it can only provide an entire, discrete page layout, there is no way to inject changes "simply" into existing layouts in a target org.
I hope some of that info is useful, and sorry I perhaps can't be more helpful!