Ashok Leyland’s FY2020 profit slumps on subdued demand

Commercial vehicle major, Ashok Leyland clocked profit after tax of Rs 240 crore in FY2020, down 89% year on year (2019 PAT: Rs 1,983 crore) on the back of subdued demand. The company's FY2020 revenue slipped 40 percent to Rs 17,467 crore year on year (2019 revenue: Rs 29,055 crore).

The company sold 125,253 CVs in FY2020, down 37 percent compared to last FY2019. EBITDA for the year was at 6.7 percent.

The Q4 FY2020 revenue was Rs 3,838 crore, down 57% year on year (Q4FY2019 revenue: Rs 8,846 crore). The CV major clocked a loss of Rs 57 crore in Q4FY2020 (Q4FY2019 profit: Rs 653 crore). During the last quarter of FY2020, the company sold 25,504 units, compared to 59,521 units for the same period in FY2019.

Even before the Covid induced lockdown hit businesses, the automotive industry, especially the commercial vehicle segment has been tackling a rough patch spread over six quarters, on the back of several factors including weak economic activity, transition to BS VI and revised axle norms.

Vipin Sondhi, managing director and CEO, Ashok Leyland pointed out that, “This has been a challenging year for the industry, which witnessed a significant decline in volumes (42%). Consequently, Ashok Leyland also saw a reduction in volume. Despite the drop in the volumes, we have been able to achieve an EBITDA of 6.7 percent, owing to the pan-company efforts to drive profitability. Despite the challenging times we continued our legacy of introducing new and innovative technology in the industry. The unique Modular Business Platform AVTR, gives our customers the flexibility to choose vehicles as per their requirements. This BS VI Platform with the innovative i-Gen6 technology, which is an indigenous solution using mid-NoX technology suited for Indian conditions, will be a game changer in the industry. There has been a very positive customer response for AVTR and the enquiries received for AVTR, as well as our LCV range is a very encouraging sign for the quarters to follow.”

Gopal Mahadevan, whole time director and CFO, Ashok Leyland added that, “We continue our productivity and cost reduction programs started earlier in the year. These initiatives have helped us achieve a sizeable reduction in costs. We are also focusing on improving cash flows and conserving resources for future growth initiatives.”