Commercial vehicles major Ashok Leyland Ltd (ALL) expects to sell 89,000 vehicles in the current financial year against 63,926, a growth of close to 40%. Of the projected total sale, the domestic market will account for nearly 81,000 units (inclusive of LCVs) and the remaining will come from exports. Last financial year, the domestic market accounted for 57,947 vehicles and exports were at 5,980 units.
The company projected the current growth based on the assumption that the industry will grow anywhere between 15% and 20% growth and the ability to recover cost from a possible price hike in October 2010 due to emission norm III and production from Pantnagar plant, sources in the know here said. Based on the sales growth, the company is targeting an operating profit margin (OPM) of 10% with upside for the current financial year on volume ramp up and contribution from the Pantnagar plant provided the BS III norm price hike is accepted, the sources added. The company said that its sales may be affected in the December quarter owing to possible interest rates hike and the rise in prices out of BS III emission norms.
As part of its expansion, new engine development, LCV roll-out plan with Nissan and R&D, Ashok Leyland expects to spend anywhere between 1,200 crore and Rs 1,500 over the next two years. Out of this, the company expects to spend Rs 700 crore to Rs 750 crore in FY 11, the sources pointed out.
Due to switch over to new emission norms, the company sees that the price per unit will go up around Rs 40,000 and it hopes to recover the cost of change despite challenging.
The truck major will ramp up its Pantnagar capacity to 1,200-1,500 vehicles per month by August-September and further by 3,000 vehicles a month in December quarter. The same will touch 4,000 vehicles a month by March 2011, the sources added.