The Hindu Business Line : Ashok Leyland Q4 net lower, topline rises

Future plans
Ashok Leyland would invest Rs 550 crore in the next two years on raising vehicle (and aggregates) capacity from 77,000 units to 100,000 units, modernisation of the plants, R&D and an Rs 50-crore corporate office in Chennai.
The company would look at acquisitions in areas such as engineering design and components.

More investments: Mr R. Seshasayee (left), Managing Director, Ashok Leyland, and Mr Dheeraj G. Hinduja, Vice-Chairman, announcing the company's results at a press conference in Chennai on Saturday. - Bijoy Ghosh

Chennai , April 29

Ashok Leyland's net profit for the fourth quarter of 2005-06 was down at Rs 133.45 crore compared with Rs 142.76 crore in the same period last year because of lower deferred tax credit.

However, profit before tax was higher by 10 per cent at Rs 184.78 crore(Rs 168.47 crore). Deferred tax credit in the fourth quarter was Rs 4.5 crore (Rs 18.6 crore).

Turnover (including excise) for the quarter was Rs 2,003.38 crore (Rs 1,677.97 crore).

At a press conference, the company's Managing Director, Mr R. Seshasayee, said the Supreme Court's order against overloading of vehicles also helped increase sales. For the full year 2005-06, Ashok Leyland achieved a turnover of Rs 6,053.10 crore, up 26 per cent from Rs 4,810 crore for the previous year. Net profit for the year was Rs 452.30 crore (Rs 355 crore). Net profit included Rs 30 crore of `profit on sale of undertaking'. (Ashok Leyland had sold its Ductron Castings division to group company Ennore Foundries Ltd last April for a consideration of Rs 64 crore.)

Also, the company had to incur an (notional) expenditure of Rs 3.53 crore for the year against an income of Rs 10.57 crore, on account of foreign exchange fluctuations.

Dividend at 120 pc

The company's board of directors has proposed a dividend of Rs 1.20 per share of Re 1, or, 120 per cent.

Last year, Ashok Leyland sold 61,655 vehicles against 54,750 vehicles in the previous year. The company sold close to 4,000 more buses and over 5,000 goods vehicles. Exports were comparatively down at 4,800 vehicles against 6,800, but that was because there was a bulk order from Iraq for 3,300 vehicles in 2004-05.

At the press conference, Mr Seshasayee said that Ashok Leyland would invest Rs 550 crore in the next two years on raising vehicle (and aggregates) capacity from 77,000 units to 100,000 units, modernisation of the plants, R&D and an Rs 50-crore corporate office in Chennai. Mr Seshasayee said that the company's 400-seat design office was "nearing completion". Orders are streaming in for designing vehicles for manufacturers abroad. Ashok Leyland has said in a footnote to the statement of results that the promoter, LRLIH of UK (in which the Hindujas and Iveco of Italy are major shareholders) has said that it intended to ask for conversion of the FCCB bonds it holds into equity shares. When it does, the move will restore LRLIH's holding in Ashok Leyland to 50.93 per cent.

He said the company planned to sell engines from 20 hp to 500 hp, for gensets, industrial and marine applications, for which it had a tie up with Escorts.

Mr Dheeraj Hinduja, Vice-Chairman, said Ashok Leyland would look at acquisitions in areas such as engineering design and components.

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