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Ashok Leyland's net jumps to Rs.78 cr

Our Bureau

CHENNAI, April 22

ASHOK Leyland's net profit for the year 1999-2000 has gone up to Rs. 78.48 crores from Rs. 20.36 crores in the previous year. However Rs. 21.26 crores of this is due to a mandatory change in the norms for valuation of inventory. But for this change, the net profit would have been Rs. 57.22 crores, or 181 per cent over the previous year's figure.

The board of directors of the company has recommended a dividend of 35 per cent, it was announced at a press conference here today.

The company also achieved its highest ever turnover of Rs. 2,602.68 crores, as against Rs. 2,051.49 crores in the previous year _ a rise of 26.86 per cent.

The growth came mainly from increased volumes of sales. Ashok Leyland produced 37,859 vehicles and 6,004 engines last year (29,741 vehicles and 7,185 engines). The company also gained market shares in both passenger and commercial vehicles segments.

While the company made a net profit of Rs. 20.36 crores for the year to March 31, 1999, most of it _ Rs. 14.40 crores _ came from `profit on sale of investments' (Gulf Oil shares). There was no such help from the balance sheet for the year to March 31, 2 000.

The `other income' component fell to Rs. 8.73 crores (Rs. 28.95 crores). The Rs. 28.95 crores contained the Rs. 14-crore profit on account of sale of Gulf Oil shares, but it can be seen that even if that extraordinary profit is not considered, the other income is down by 40 per cent.

Ashok Leyland's Finance Director, Mr. T. Anantha Narayanan, said that this was because earlier the company had higher amount of lease rentals, collected from vehicles the company had leased. That line of business had not been seriously pursued last year, he said. (Last year, the company's income from rental received was Rs. 6.46 crores).

Total expenditure amounted to Rs. 2,352.82 crores, which works out to 90.4 per cent of sales. In the previous year, this was Rs. 1,886.31 crores, 92 per cent of sales. The contraction in total expenditure as a proportion of sales also had a positive impa ct on the net profit.

Interest charges were also lower at Rs. 82.86 crores (Rs. 94.62 crores).

Depreciation was Rs. 82.44 crores (Rs. 76.2 crores) _ an effect of Rs.77.3 crore of capital expenditure. Of this Rs. 77.3 crores, about Rs. 23 crores was R&D related. The expenditure on R&D was more than twice the company incurred in the previous year. I ncreased R&D spend, according to the Managing Director, Mr. R. Seshasayee ``is a phenomenon which you will continue to see in the coming years''.

Provision for taxation was Rs. 14.85 crores (Rs. 2.95 crores).

Addressing the press conference here, Mr. Seshasayee said that while sales increased last year, they were not as good as two years ago. ``Therefore, there is still some headroom", he said, adding that large orders were expected from State Transport Under takings (STUs) and the Army. STUs have been delaying purchases (and, incidentally, payments too) and are expected to place orders in the current year, he said. Delhi Transport Corporation, whom the Supreme Court has asked to take its old, polluting vehic les off the roads, and is therefore obliged to replace about 4,000-5,000 vehicles.

e-com initiatives

Ashok Leyland's Managing Director, Mr. R. Seshasayee has outlined the company's broad plans for ``e-commerce initiatives''.

While not wanting to give details, he said that the initiatives would be ``not only selling old vehicles on the Net'', but ``pioneering efforts in the auto industry''.

Ashok Leyland Information Technology Ltd, a subsidiary of Ashok Leyland, is assisting in the e-initiatives, it is learnt.

Officials said that business-to-business initiatives would be initially to sell spare parts, which would eventually grow into business-to-customers. Ashok Leyland sells about Rs. 200-crore worth of spares every year.

Already the company has made a considerable headway in installing systems for in-bound and out-bound supply chain management, which was partly responsible for bringing down the inventory costs. It is expected that these would be integrated into the e-com merce ventures.

Pic.: The Ashok Leyland Managing Director, Mr. R. Seshasayee, with the Director, Mr. Dheeraj P. Hinduja, addressing a press meet in Chennai on Saturday.