Ashok Leyland resumes its bus delivery to Seychelles

Lanka Ashok Leyland will re- start its bus delivery to Seychelles after a hiatus of a few years, Umesh Gautam CEO Lanka Ashok Leyland PLC told the Business Times.

"Some time ago we sent them 50 buses and now we're renegotiating a deal for 12 special buses to Seychelles," he said. The company also shipped 22 buses to the Maldives on June 16 in a separate US$1 million deal, he added.

Against a backdrop of uncertainty due to revisions in import duty structure, depreciation of the rupee and restriction on financing/ leasing, Lanka Ashok Leyland saw its sales improve 10 per cent for 2015/ 16 to Rs. 9.1 billion compared to Rs. 8.2 billion in 2014/ 15 driven mainly by 12 per cent growth in new vehicle sales.

"The depreciation of the rupee and frequent changes in import duty structure negatively impacted the company, raising the import costs which eroded its gross profit margin down to 8 per cent resulting in an 18 per cent decline in gross profit to Rs. 760.4 million against Rs. 924.4 million in the last period ”, he said.

Mr. Gautam, said, "the transport industry operates at the mercy of exchange rate volatility, and 2015/16 saw rapid decrease in the rupee triggered by the devaluation in China in August 2015 increasing our import costs which could not be transferred to our customers who had to contend with rising interest rates and changes in vehicle financing regulations."

Profit after tax for 2015/ 16 fell to Rs. 314 million owing to the external environment. Lanka Ashok Leyland maintained its payout ratio at 43.6 per cent with a final dividend of Rs. 25 to its shareholders.