core sector communique

Ashok Leyland Turnover at Rs. 7,244.71 crores, up 21%

 

·        Net Profit at Rs 423.67 crores, up 123%

·        Capex and investment plans of Rs. 2,000 crores
over the next 2 years

 

 

Ashok Leyland, the Hinduja Group flagship, has registered a sales turnover of
Rs 7,244.71 crores during 2009-10 compared to Rs 5,981.07 crores in the previous fiscal. Net profit also rose by 123% to touch Rs 423.67 crores
(Rs 190 crores).   

 

The Company effectively contained the increase in raw material prices especially steel and rubber reflected in the rise in consumption of raw material by just 17% at Rs. 5,217.52 crores (Rs. 4,452.25 crores).

 

Employee cost during the year rose by 18% to Rs. 665.93 crores
(Rs. 566.18 crores). Other expenditure went up by only 21% at Rs. 598.42 crores (Rs. 493.21 crores) thanks to the efforts towards cost reduction. Financial Expenses were curtailed by 31.7% at Rs. 81.13 crores as against
Rs. 118.71 crores in the previous fiscal largely through better management of liquidity and working capital.

 

An expenditure of Rs. 3.27 crores (Rs. 13.49 crores) for VRS compensation amortised is an extraordinary item. Income Tax claimed Rs. 121.10 crores
(Rs. 12.45 crores) to give a Net Profit from Ordinary Activities after tax of
Rs. 423.67 crores (Rs. 190 crores).

 

Depreciation for the year was higher at Rs. 204.11 crores (178.41 crores) mainly due to additions during the year, including commissioning of the Pantnagar plant. Other income increased by 42% to Rs. 70.44 crores (Rs. 49.62 crores).

 

“Although the year started sluggishly, the second half has been a very impressive story. The market turned around and we were able to take advantage of the traction in the market to double our sales in the second half compared to the first,” said Mr. R. Seshasayee, Managing Director. “While it helped us finish the year very strongly, it has also given us the right momentum going into the future,” he added.  

 

The Company’s total sales volume rose 17% to 63,926 vehicles
(54,431 vehicles) during 2009-10. This was on the back of improved sales in the haulage and passenger segments. Bus sales remained robust thanks to orders received under JnNURM.

 

Quarter over quarter, the numbers make for even better reading for the fourth quarter with Turnover up 141.3% at Rs. 2,939.04 crores (Rs. 1,218.12 crores) and Net Profit up 318% at Rs. 222.66 crores as against Rs. 53.32 crores in the corresponding previous quarter. Profit from operations before other income, financial expenses and exceptional items rose 371% at Rs. 319.64 crores
(Rs. 67.83 crores). Profit before financial expenses and exceptional item rose 303% at Rs. 321.95 crores (Rs. 79.94 crores).

 

With the inauguration of the modern, fully-integrated manufacturing facility at Pantnagar, Uttarakhand, the Company’s annual installed capacity will be 150,500 vehicles.

 

Production at the new chassis and bus assembly plant at Ras Al Khaimah, UAE, has already begun and, at full capacity, can roll out 2,000 buses to international specifications. These products, which will eventually also include trucks, will be manufactured to feed the neighbouring GCC (Gulf Co-operation Council) and African markets.

 

The Company has earmarked Rs 1,200 crores for Capex over the next couple of years in addition to investments ear-marked for the various joint ventures to the tune of Rs. 800 crores.

 

Having obtained the RBI license for operations as NBFC, Hinduja Leyland Finance is set to commence operations of providing financing for commercial vehicles and allied vehicle financing, initially from 130 centres across 16 states.

 

The developmental activity for all joint ventures are well on schedule. The first batch of Light Commercial Vehicle products as part of the JV with Nissan Motor Company will roll out by early 2011. The JV with John Deere for the construction equipment business is also well on track with pilot production set to commence at their new manufacturing facility at Goomdipoondi, near Chennai, from October 2010 and products set to roll out by early 2011.

 

About the prospects for the current year, Mr. Seshasayee said, “The future appears promising. On one hand, the macro-economic indicators are positive although, on the other, there are issues of rising fuel and raw material prices. Come October, the migration to superior emission norms will happen and I am happy to state that we are ready with the products and the technology to improve our market share. While one may not expect the 30+% growth levels witnessed in 2009-10, we are optimistic of a healthy growth at over 15% for the commercial vehicle industry in this fiscal.”