The Hindu Business Line : Ashok Leyland Q1 net up 27% at Rs 88 cr

The company sold 2,099 goods carriers fewer than in the corresponding quarter last year, but then it also sold 2,995 more buses, and so the quarter ended well.

Notably, while Ashok Leyland’s sales in terms of volume grew only by 6.6 per cent, its turnover (net of excise) rose 13.8 per cent, which means that the company was able to sell more of higher value products.

Interest Rates

Turnover for the quarter was up 13.8 per cent at Rs 1,621 crore (Rs 1,424 crore). Net profit was up at Rs 88 crore (Rs 69 crore).

Ashok Leyland feels that the slowdown in commercial vehicles (goods) sales was mainly due to postponement of purchases on an anticipation of a fall in interest rates.

The company has in the recent past observed that with freight being amply available, freight rates being firm and no slippage in repayments to financiers, the demand for good carriers would only pick up when interest rates settled.

Forex Gains

“We expect sentiments to change for the better and deferral of vehicle purchase to end with interest rates settling down.

There is therefore a revival possibility in the third quarter,” Mr R. Seshasayee, Managing Director, Ashok Leyland, said in a press release today.

Secondly, while sales grew 13.8 per cent, total expenditure grew by only 10.8 per cent. Mr Seshasayee explained to Business Line that this was partly due to forex gains—savings in repayment of foreign exchange loans arising out of appreciation of the rupee.