Hinduja flagship Ashok Leyland has reported a massive fall in its net profit at ₹28 crore for the third quarter ended December 31, 2019 when compared with ₹381 crore in a year-ago period, on the back of a 39 per cent decline in sales of medium and heavy commercial vehicle (M&HCV) market on account of the economic slowdown.

The company, which is the second-largest player in the M&HCV segment, saw its December revenue fall 36 per cent at ₹4,016 crore as against ₹6,325 crore in the year-ago quarter, according to a statement.

Its EBITDA (earnings before interest, tax and depreciation) fell to 5.6 per cent from 10.3 per cent in the year-ago quarter.

“The industry continued to witness a decline in volume. Ashok Leyland also witnessed a volume drop in this quarter. Despite this, we have been able to achieve an EBITDA of 5.6 per cent,” said Vipin Sondhi, Managing Director & CEO, Ashok Leyland Ltd.

Excess capacity created in the market after the revision of axle load norms in July 2018, coupled with a slowdown in the economy and infrastructure projects and the resultant lower freight availability continue to weigh on the M&HCV demand prospects.

“We continue our productivity and cost reduction programmes started earlier in the year. These initiatives have helped us achieve a sizeable reduction in costs. We are also focussing on cash flows and conserving resources for future growth initiatives,” said Gopal Mahadevan, Whole Time Director & Chief Financial Officer, Ashok Leyland Ltd.

Nine-month profit down

For the nine-month period ended December 31, 2019, its net profit fell to ₹297 crore when compared with ₹1,330 crore in the year-ago period.

Revenues stood at ₹13,629 crore as against ₹20,209 crore, a decline of 33 per cent.

 

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