Buoyed by recovery on the commercial vehicles front, Hinduja group flagship company Ashok Leyland Ltd (ALL) has reported a more than 450% rise in its quarter three (Q3) net profit for the financial year ended December 31, 2009 to Rs 104.63 crore as against Rs 18.87 crore for the corresponding period in the last financial year, making it a ?turnaround period? for the company.
Sales revenue was also up 81% at Rs 1,815.53 crore as against Rs 1,004.49 crore. Sales volume for the quarter showed an increase of 101% at 16,129 from 8,011 and parts sales rose by 91%. Profit after financial expenses saw a jump to 659% at Rs 140.69 crore, which was Rs 18.53 crorein Q3 of 2008-09. The phenomenal improvement in profitability is to be viewed in the context of a near collapse situation that prevailed during the corresponding period in the previous year.
Despite a 220% increase in production volume at 19,411 vehicles compared to the last year figure of 6,060 , financial expenses decreased by 59% to Rs 16.21 crore from Rs 39.4 crore in same period last year, thanks to prudent working capital management, shift from credit sale to ?cash-and-carry? system and an appreciable reduction in inventories.
?This quarter signals the return to normalcy. The common theme in the results is the improved profitability even though sales volume recovery is not quite complete?, said R Seshasayee, managing director. ?Out of the near 5,100 vehicle orders that we had bagged from various STUs under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the company has delivered more than 2,000 buses by December last year. We hope to deliver most of the balance vehicles before March 2010.? he added.
On future prospects, Seshasayee said, ?A rebounding economy, anticipated industrial growth and renewed activity in infrastructure development and construction will help drive demand. The government?s stimulus package has certainly helped in improving the sentiments. I hope the government will continue the stimulus for the commercial vehicle industry until growth momentum take stronger roots?.
K Sridharan, chief financial officer, ALL, said, ?We hope to post better volume and sales in Q4 than Q3 and we expect to end the financial year with 65,000 units or little above, representing a 20% growth over the previous financial year.?
Though ALL reported a degrowth of 13% in the first nine months of current financial year against previous one, but it expects to coverthe loss and post a healthy 20% growth over last financial year, he pointed out.
On rising costs of inputs, he said, given the sharp hike in steel, rubber and nickel prices (Rs 5 per kg, 50% and 70%, respectively), the company is reeling under margin pressure.