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Wednesday, May 08, 2002

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Ashok Leyland net rises marginally -- Steps up dividend to Rs 4.50

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Mr R. Seshasayee, Managing Director, Ashok Leyland Ltd, and Mr Dheeraj G. Hinduja, Director, at a press conference in Chennai on Tuesday.


ASHOK Leyland has reported a net profit of Rs 92.25 crore for 2001-02 as against Rs 91.68 crore in the previous year. This represents a 0.6 per cent increase, the company's Managing Director, Mr R. Seshasayee, said at a press conference here on Tuesday.

The board of directors has recommended a dividend of Rs 4.50 per share (45 per cent) as against Rs 4 last year.

The net profit would have been higher but for the Rs 9.2-crore deferred tax liability. Profit before tax was Rs 132.20 crore as against Rs 101.94 crore in 2000-01. "Profit before tax increased about 30 per cent, even though the top line was flat," said Mr Seshasayee.

He said that these results were achieved despite a drop of 8.6 per cent in sales (to 29,673 units from 32,475 in the previous year). The drop was mainly due to two reasons: (a) the segment where Ashok Leyland is strong — passenger vehicles — shrank about 33 per cent, because potential buyers (State transport undertakings) put off purchases, and (b) the geographical area where the company is strong, viz., the South, also shrank by around 60 per cent, because low procurement prices dampened rural purchasing power.

This "tectonic shift" affected the company although the turnover was "a new watermark", Mr Seshasayee said.

The company sold 33 per cent fewer buses last year — 8,422 units as against 12,486 in the previous year. The decline was in line with the shrinkage in the bus market. On the other hand, goods vehicles sales rose 6 per cent to 18,413 units from 17,393 units. This growth was lower than the growth of the market. Overall, Ashok Leyland's market share dropped to 32.4 per cent from 36 per cent a year ago.

Exports too dropped about 10 per cent to 2,170 vehicles from 2,411. One of the main reasons was the bad shape of the Sri Lankan market.

Spare parts sales increased 7 per cent to Rs 549.2 crore from Rs 512.9 crore previously.

Mr Seshasayee said that despite the volume dip in several segments, the company could maintain profitability, selling more of the more profitable types of vehicles.

He also pointed out some of the "five-year highest" achievements — return on investments, cash profits and EPS (Rs 7.76).

He said he expected STU orders to materialise this year— the company has received an order for 1,360 buses from the Tamil Nadu Government. Supplies against the order have just commenced.

Further, the company would continue with its plans for rationalisation of production in the current year. Accordingly, production of engines would happen increasingly at the Hosur-I plant and gearboxes at the Bandra plant. In future, all vehicles of Ashok Leyland would have only Hino engines and ZF gearboxes. A Hino CNG engine has also been developed.

Among the products that Ashok Leyland proposes to launch this year is a mini bus, meant for exports. Mr Seshasayee said that the company would also look at "service products", such as annual maintenance contracts (for fleets), night service and residual life forecasting, for revenues.

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