Ashok Leyland bets on exports, volume growth
CHENNAI: Commercial vehicle (CV) major Ashok Leyland thinks it is better placed now than in the past even while coming to terms with the ground realities of the cyclical business. Be it the pandemic-induced business losses or the economic scenario, the Hinduja flagship anticipates exports to pick up and improved volumes on the back of new products launched in the market.
Ashok Leyland CFO Gopal Mahadevan said a healthy mix of products, the medium heavy CV (MHCV) business and the light commercial vehicles reporting growth were all factors to feel upbeat about. Sustainability of acyclical business is crucial, he said, seeking to highlight the 2013-14 period, when a similar scenario prevailed. “To counter the crisis then, we chose to launch a slew of products and the same trend continues even now,” he added.
The acyclical business – be it aftermarket, power solutions, LCVs or defence, had contributed enough to generate cash of Rs 1,200 crore and raise its EBITDTA by 2.8 pc. The CV major, which saw a consolidated net loss of Rs 96.23 crore in the Q2 ended September, has kept its capex plans intact for the current fiscal. With the Q1 a total wipe-out, Mahadevan said, while it is not right to compare the performance vis-à-vis same quarter of the last year, the Q2 indicators were fairly good, resulting in feeling enthused about the forthcoming quarters too.
“Increased volume, better realisation, cost reduction initiatives and export markets opening up,” are feel good factors, he sought to point out.
While the domestic MHCV business saw a 45 pc jump, last year, it was at 57 pc during the same period, Mahadevan said, adding this segment took off only in Q1. Even the aftermarket business since May had been growing.
The veteran also said the CV industry saw sales plunging 75 per cent in April-September period of this fiscal as compared with the year-ago period. With experts anticipating the total industry volumes this year dip to be in the range of 30 per cent only, the onus is on the industry to grow in the rest of the year, Mahadevan said. The Ennore and Pantnagar plant volumes were picking up while at Hosur, full capacity utilisation is just around the corner.
On exports, Mahadevan said, its global revamped vehicle strategy placed it better than in the past “owing to us catering to the lefthand and right-hand driving markets.” Access to new markets like Africa and SEast Asia had been enabled. From Q1 to Q2, the exports went up 8.5 pc with MHCV sales of 6,994 vehicles.