At a time when the company is facing an economic slowdown, particularly on the commercial vehicles front, Ashok Leyland Ltd has struck a major deal with the Delhi Transport Corporation (DTC) which is expected to boost both its topline and bottomline in the forth coming quarters.

The company on Thursday said that it got a major order worth close to Rs 1,200 crore, including Rs 480 crore order for supply of supply of 875 high-end Ultra Low Entry (ULE) and a 12-year maintenance contract worth Rs 710 crore.

It assumes significance at a time when the company had to cut production and go for production holidays during the last quarter due to poor offtake from the market, particularly on the commercial vehicles front, which is considered to be major revenue earner for the company over the years. Though it is now known that the DTC deal will have an immediate impact on the company?s bottomline and topline, but certainly it is expected to boost its business in the quarters to come, analysts here said.

?The uniqueness of this order is that we have been contracted to offer a truly comprehensive urban transportation solution,? said R Seshasayee, managing director, Ashok Leyland. ?Besides delivering these fully-built buses, we will train key personnel like drivers and mechanics and will maintain the buses to ensure uptime, by setting up exclusive maintenance depots,? he added.

It is important to notice that the company has reported a 63% drop in its December sales as compared to the same month last year and the cumulative sales of April-December 2008 almost dropped 23% as compared to the same period last year, due to a sharp fall in the commercial vehicle sales during this period, the analysts pointed out. The company has been even struggling to wipe out the inventory pile up over a period of time, the analysts added.

Earlier in November, the company had to go for production holidays at its plants due to global meltdown which affected the domestic commercial vehicles market heavily due to lack of liquidity. Hit hard by slowdown and inventory pile-up, Ashok Leyland recently approached its vendors for price renegotiation due to funds crunch.

On the latest deal, Ashok Leyland said that the drivers will be trained at the company?s state-of-the-art Driver Training Institute, situated at Burari near New Delhi, which has been set up jointly with the Government of Delhi.

Commenting on the deal, R K Verma, secretary cum transport commissioner & CMD, DTC said, ?We are happy that Ashok Leyland which has spearheaded the induction of CNG in our bus fleet, is now partnering us in our modernization drive. I am confident in Ashok Leyland?s capabilities to offer us world class buses and provide the crucial long term support.

Great Catch

•Rs 480 crore order for supply of supply of 875 high-end ULE

• 12-year maintenance contract worth Rs 710 cr

• Expected to boost ALL?s business in the forthcoming quarters

• The company struggling to wipe out inventory pile up over a period of time