Ashok Leyland records Q1 loss, cost-cutting initiatives continue

Chennai, July 17, 2013: Reflecting the continuing slowdown in the commercial vehicle segment, Ashok Leyland recorded a net loss of Rs 141.75 crore in the first quarter of 2013-14 as against a net profit of Rs 66.94 crore for the corresponding quarter in the previous year. The CV manufacturer posted a turnover at Rs 2,363.81 crore for the quarter as against Rs 3,026.89 crore for the year-earlier period. However, various cost control measures have helped it remain positive on the EBIDTA front. Loss from operations before Other Income, Finance Costs and Exceptional Items stood at Rs 71.92 crore as against a profit of Rs 151.45 crore a year ago. Apart from a drop in volumes, heavier discounting of vehicles to compete in the marketplace eroded profits, the company said in a press release.

Vehicle sales for Q1 were 14,900 units as against 20,239 units in the previous quarter with domestic volumes at 12,960 units as against 17,335 units, a drop of 25.2 percent over Q1 in 2012-13. The Dost SCV sold about 400 units fewer with 6,824 units sold in the quarter as against 7,248 units in the year-earlier period. Volumes from overseas operations were 1,940 units as against 2,904 units in the previous period. Managing director Vinod Dasari said “Although the entire commercial vehicle industry has had a very tough Q1, Ashok Leyland has remained focused on being future-ready by staying committed to our product development, network expansion and cost control programmes.”

“What we are experiencing is one of the harshest and steepest of downturns and while we are combating it, the situation has given us an opportunity to streamline our processes towards becoming a leaner and far more customer-oriented organisation.” To effectively address the tough situation expected to last for this fiscal, Ashok Leyland has initiated concerted efforts to reduce its breakeven point. Its manufacturing footprint is being rationalised to improve asset utilization. Efforts are on to reduce debt and steps have been taken to reduce operational expenses.

With regard to the remainder of the year, Dasari said, “Although the market is still very volatile there are some green shoots showing. We are focused on preparing ourselves for a revival which is bound to come hopefully sooner rather than later. We are seeking to capitalise on our gains in the ICV space with the launch of the Boss vehicle which should win us market share. This will be followed by the introduction of the Neptune engine on select multi-axles models and the N-Truck with a revolutionary, new, world-class cab. The JnNURM 2 should prove to be an ideal launch pad for the Janbus. To support all this, we will continue to be aggressive in our network expansion,” he said.