Ashok Leyland to sell loss-making arms to cut cost

Written by R Ravichandran | Chennai | Updated: Jul 22 2014, 06:40am hrs
Commercial vehicle major Ashok Leyland has proposed to sell three of its subsidiaries, including two overseas arms Albonair GmbH in Germany, Avia Ashok Leyland Motors in the Czech Republic and Albonair (India) in the next 12 months. The move to sell all the loss-making companies is aimed at consolidating its operations further as well as cut mounting costs, said ALL sources.

For FY14, ALL had consolidated its 13 subsidiaries and five joint ventures. It had also taken into consideration the share of profits/losses of its four associates. The three subsidiaries Avia Ashok Leyland Motors, Albonair GmbH and Albonair India were, however, excluded from the consolidation exercise as these they were held for sale i.e., these entities were kept for sale in next 12 months, the company said in its latest annual report.

Germany-based Albonair GmbH, which is involved in developing complete solutions for Selective Catalytic Reduction (SCR) and Urea Dosing System (UDS), conforming to Euro 4, 5 and 6 emission standards for commercial as well as passenger vehicles, has reported a loss of R69.35 crore on a turnover of R70.04 crore in FY14.

Similarly, ALL had to shut down Avia Ashok Leyland Motors, its Czech subsidiary based in Prague in July 2013, owing to poor sales. Avia Ashok Leyland, manufacturer of 6.5 tonne to 12 tonne trucks, had sold around 1,003 vehicles only in 2012 and it could not make further progress due to European economic problems. Though the Czech subsidiary provides continued after-market support for warranty and spare parts to all its customers, but found it difficult to run the factory due to low volumes.

The Czech subsidiary reported a turnover of R29.68 crore with a loss of R84.21 crore. Similarly, Albonair (India), the Indian arm of Albonair GmbH, has reported a loss of R59.27 lakh on a turnover of R10.06 crore. However, capitalising on its Czech subsidiarys tech know-how, ALL a few months ago, had introduced the Boss range of trucks under its Avia technology platform in India.