Business

Ashok Leyland net up at Rs. 194 cr.

By Our Special Correspondent

CHENNAI, JUNE 11. Commercial vehicle maker Ashok Leyland of the Hinduja group has reported a net profit of Rs. 193.60 crores (Rs. 120.20 crores) for the year ended March 2004 on a sales turnover of Rs. 3,927.30 crores (Rs. 3074 crores).

The board of the company has recommended a dividend of 75 per cent, up from 50 per cent in the preceding year.

Other income is worth Rs. 18.62 crores (Rs. 15.29 crores). Financial expenses for the year are shown at Rs. 20.79 crores (Rs. 58.51 crores), reflecting a big reduction. The gross profit is placed at Rs. 392.43 crores (Rs. 281.74 crores). Depreciation charges are at Rs. 96.45 crores (Rs. 102.96 crores). The profit before tax and extraordinary items is placed at Rs. 295.98 crores (Rs. 178.77 crores). The extraordinary item for the VRS (voluntary retirement scheme) compensation amortised is Rs. 9.51 crores (Rs. 8.66 crores). The profit before tax after extraordinary items is Rs. 286.46 crores (Rs. 170.10 crores). Taxation has claimed Rs. 92.88 crores (Rs. 49.89 crores).

The company sold 48,654 vehicles during the year, up from 36,444 in the previous year. It exported 3,782 units against 2,550 in the preceding year.

According to R. Seshasayee, Managing Director, a host of favourable factors — ranging from good economic numbers to continued emphasis on road development and chic marketing of money at attractive rates — had all conspired to bring about a resurgence in vehicle demand.

The judgments of High Courts in the recent past on the issue of retirement of aged vehicles had only helped the cause of the industry though there had not been any visible articulation of the Government position in this regard, he said. Overall, the goods' segment of the industry had grown by 45.2 per cent and the bus market had returned to good days with a growth of 18.4 per cent. He saw growth across all regions. Segment-wise, Ashok Leyland had grown by 119 per cent in tractor-trailer with a dominant market share of 50 per cent. In the multi-axled trucks, it grew by 44 per cent with a market share of 37 per cent, up from 33 per cent. In tippers, it grew by 43 per cent with a market share of 27 per cent.

Nontheless, the company had dropped in the overall market share. It share had declined to 31.4 per cent from 32.6 per cent in the preceding year. In the bus segment, the share fell to 53.5 per cent from 61.4 per cent.

The loss in STU (state transport undertaking) business, focus on trucks and capacity constrains (caused by the inability of the component suppliers to keep pace with the stepped up demand) were touted as reasons for this drop in market share.

In the coming years, the company, Mr. Seshasayee said, would focus on capacity expansion through least cost route and strive to roll of technically superior products. While doing these, the thrust would remain on improving productivity and managing the input costs through a variety of exercises, he added.

On the capacity expansion, he said it involved four components. First one would see the capacity go up to 67,000 numbers a year. The second one would revolve around introduction of new aggregates and product improvements. It would also include capacity expansion of cabs, engines and the like. The exercise would also involve optimisation efforts. All these would involve an investment outlay of Rs. 200 crores over the next two years. Further, the proposal would also see improving the capacity of newgen product range to 10,000 a year. This would see another Rs. 200 crore investment over the next couple of years. Indications are that Ashok Leyland would incur a capital expenditure of Rs. 300 crores in the current financial year and another Rs. 250 crores the next year.

Mr. Sesasayee said the company had joined hands with Gulf Oil Corporation to float a joint venture to set up model dealerships offering total transport solutions in Jharkhand, Bihar and north-east region.

© Copyright 2000 - 2009 The Hindu