The Hindu Business Line : Leyland net rises 61%

Mr R. Seshasayee, Managing Director, Ashok Leyland, and Mr Dheeraj G. Hinduja, Vice-Chairman, at a press conference in Chennai on Friday. — Shaju John

Chennai , June 11

TRUCK and bus maker Ashok Leyland Ltd has reported a net profit of Rs 193.58 crore for 2003-04, which is 61 per cent more than the Rs 120.21 crore the company achieved in the previous year.

Earnings per share stood at Rs 16.28 from Rs 10.11 previously.

The company's board has recommended a dividend of Rs 7.5 per share (75 per cent) compared with Rs 5 per share for last year.

Profit came from record sales - the company sold a little over 48,600 vehicles compared with 36,400-odd vehicles in 2002-03.

Turnover increased to Rs 3,927.27 crore (Rs 3,075 crore).

Profit could have been more but for the increase in input costs.

Raw material costs rose to 60 per cent of sales last year, compared to 52 per cent.

Steel prices were more than one-and-a-half times the previous year's levels; copper prices increased 30 per cent. "Nickel was not available for love or money," the Ashok Leyland Managing Director, Mr R. Seshasayee, said at a press conference here today.

Electricity costs also went up, but the company was able to neutralise it by efficiency improvements. In a year, when the total industry sales grew 40 per cent, Ashok Leyland lost market share.

It ended the year with a 31.4 per cent share, down from 32.6 per cent in the previous year.

It lost market share in buses — its traditional stronghold — where its share declined to 53.5 per cent from 61.4 per cent. Mr Seshasayee attributed this to capacity constraints.

Although Ashok Leyland produced 46 per cent more vehicles than in the previous year, it focussed on the `goods segment', ceding market share in the bus segment.

In the fourth quarter of last year, the company's sales stood increased at Rs 1,293.21 crore, against Rs 1,046.37 crore in the corresponding quarter of the previous year. Net profit was Rs 87.32 crore (Rs 66.34 crore).

Mr Seshasayee today announced the formation of a joint venture with Gulf Oil Corporation, called Gulf Ashley Ltd, to run truck dealerships. Ashok Leyland will hold 70 per cent stake.

Both Gulf Oil and Ashok Leyland belong to the Hinduja group. This business would start initially in Jharkhand, Bihar and Assam.

Ashok Leyland is also working on developing a Euro III engine with common rail fuel injection system.

More production, sales but for lack of parts

Mr R Seshasayee today hinted that the company could have sold more vehicles if it could have produced more. But production increase could not happen beyond a point because the components suppliers could not deliver.

He said that about 80 per cent of the components suppliers were able to keep pace with the increased production schedules. However, the remaining 20 per cent posed a constraint.

"I cannot produce a vehicle unless all the components are supplied," Mr Seshasayee said.

During the press conference, Mr Seshasayee said the company had begun to source components from China.