CEO Shenu Agarwal says safeguard duty on steel will affect short-term margins but expects prices to stabilise by Q2
23 May 2025 | 386 Views | By Darshan Nakhwa and Yukta Mudgal
Ashok Leyland is bracing for short-term margin pressure in the first quarter of FY26 due to rising steel prices following the imposition of safeguard duties. However, the company remains optimistic that commodity volatility will ease by the second quarter, limiting the full-year impact on profitability.
“We are looking at ...
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Ashok Leyland is bracing for short-term margin pressure in the first quarter of FY26 due to rising steel prices following the imposition of safeguard duties. However, the company remains optimistic that commodity volatility will ease by the second quarter, limiting the full-year impact on profitability.
“We are looking at certain challenges as far as commodity pricing is concerned, especially with the announcement of the safeguard duty on steel,” said Shenu Agarwal, Managing Director & CEO of Ashok Leyland, during a media briefing.
In April, India imposed a 12% safeguard duty on select steel products for a period of 200 days, aiming to curb the influx of cheap imports and protect domestic manufacturers. The move comes as India—currently the world’s second-largest crude steel producer—continues to grapple with rising steel imports. According to provisional government data, India remained a net importer of finished steel for the second consecutive fiscal year (2024–25), with inbound shipments reaching a nine-year high of 9.5 million metric tons.
Agarwal said that steel prices have already been on the rise since March, a trend that is expected to continue through the early part of the fiscal year. “Q1 definitely seems to have an impact on profitability because of the steel,” he said.
However, the company is undertaking a number of internal initiatives to mitigate the blow. “We are taking initiatives internally to see how much of that we can reduce in terms of impact through cost savings and other measures,” Agarwal said.
Despite the short-term pressure, Agarwal is confident that steel prices will stabilise as the year progresses. “We believe that this should settle down. The prices of steel should stabilise very quickly after Q1. So sometime in Q2 or early Q3, we think the semblance will come back in the price of steel,” he added.
Importantly, Agarwal clarified that the company doesn’t foresee a significant hit to full-year profitability. “We don't see the whole year profitability to be largely impacted by this. Yes, Q1 seems to be challenging, but we are taking a lot of initiatives to reduce the impact.”
The Ashok Leyland chief also pointed to positive trends in other commodity categories that may offer a partial cushion. “Rubber, which [prices] increased by 7–8% last year, is now getting normalised. Some other commodities are also helping,” Agarwal said.
“Overall, I think the impact should not be that high, despite steel going up. But in any case, we are fully prepared to face this,” he said.
In FY25, Ashok Leyland incurred total standalone expenses of ₹34,758.43 crore, up slightly from ₹34,727.70 crore reported in the year-ago period. The cost of material—the biggest expense—incurred by the company fell by 5% year-on-year. The company’s operating margin for the full year stood at 12.7%, up from 12% in the previous year.