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Spiralling power costs and increased marketing spends have dragged down Ashok Leyland’s first quarter net profit by 22 per cent at Rs 67 crore, from Rs 86 crore in the corresponding quarter last year.
The company reported a 19.7 per cent increase (year-on-year) in turnover at Rs 3,007 crore for the quarter ended June 30, 2012.
“Our profits have taken a hit largely because of the robust brand-building and marketing initiatives that we kicked off during the quarter, including the signing on of Mahendra Singh Dhoni as our brand ambassador. Marketing spends have been Rs 15 crore more. We were also hit by spiralling power costs,” said Mr Vinod K. Dasari, Managing Director.
Cost control
“We have been trying to control power costs by consuming lesser power and addressing work schedules better.”
The company sold 27,487 vehicles in the quarter (19,277). Domestic volume was up 3.6 per cent at 17,335 units, while international operations grew 14.4 per cent.
The increased volumes were largely driven by the light commercial vehicle, Dost, and the gradual improvement in the southern markets, which were depressed last year.
The company’s profit from operations before other income, finance costs and depreciation stood at Rs 241 crore, marginally lower than the previous year’s Rs 245 crore owing to higher overheads, said a company release. Employee costs were higher by 7.3 per cent at Rs 268 crore.
Depreciation increased 5.4 per cent, to Rs 89 crore. Other expenses rose to Rs 310 crore (Rs 207 crore) on account of higher sales overheads.
Mr Dasari said: “Although the market outlook is tepid, we are cautiously optimistic for the coming months. We will focus on introducing new products, building our network and continue our brand-building efforts to improve our market share.”
Defence project
Ashok Leyland plans to launch the Jan Bus, Avia trucks and the Neptune series engines this year. Stile (a multi-functional vehicle) and Partner (at the higher end of the LCV segment) are the launches from the Nissan joint venture.
In the Defence sector, the company is developing a range of tactical and armoured vehicles with global partners.
The company has obtained shareholders’ nod to raise up to Rs 1,650 crore via qualified institutional placement, non-convertible debenture and/or debt.
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