Ashok Leyland expects better demand in coming quarters: Readies products, dealers & vendors

The company could save over Rs 500 crore in the last fiscal through its KS4-2.0 cost optimisation program and says it would continue to do so this fiscal. The brand is not dependant on imports from China and is not seeing any impact on its operations at the moment. More details below.

By:June 27, 2020 10:52 AM


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With expectations of a better demand pickup quarter after quarter, Hinduja group flagship Ashok Leyland (ALL) has readied its products, dealers, vendors and is awaiting the complete lifting of lockdown to capture the demand growth. “We could see there is a demand, particularly from the freight side, but due to lockdown in some places, the growth momentum has been slow. We have had seen two years of challenging times with a significant volume drop of around 40% each year. A lot depend on the timing of the lifting of lockdown as we have set everything in place,” said Vipin Sondhi, MD and CEO, Ashok Leyland, at a video conference with the media persons here on Friday after the Q4 results. “Every coming quarter will be better as economy has opened up. The biggest stimulus the state and central governments can give is to lift the lockdown completely to enable everyone to get back to work. We are well placed today and have worked at all levels, including operational costs, products, vendors, dealers, quality and cash fronts. Hence, lifting of lockdown will be crucial for the growth momentum,” Sondhi pointed out.

He said, “Response to our new platform ‘Avtr’, which addresses the higher tonnage segment between 18.5 and 55 tonne, has been encouraging, though the cost may be higher as it benefits immensely the customers on a long- term basis given its TCO. We have a full range of trucks to offer customers a choice. Similarly, our LCVs like Dost, Partner, Mitr are also expected to perform well given the last-mile connectivity once economy picks up.”

Referring to LCV platform Phoenix Sondhi said, “We are ready with this next-gen light truck platform but due to Covid impact, we have to postpone the launch of new products under this platform. Since the model is ready and the demand is picking up gradually, we will launch Phoenix platform in next three months.” Phoenix will address the five-seven tonnage segment, where ALL has no presence.

Chief financial officer and whole-time director Gopal Mahadevan said: “The capital expenditure in the current fiscal will be much lesser than last fiscal as we have made enough investments over the last two years. According to the original planned investment of `2,000 crore in last fiscal, the company had invested around `1,227 crore and the residual amount will be invested in this fiscal. This will, however, be decided only after some time. We are working on cost optimisation and want to emerge much stronger by the end of this fiscal.”

According to him, the company could save over Rs 500 crore in the last fiscal through its KS4-2.0 cost optimisation programme and would continue to do so this fiscal, with more measures and capabilities. On the China aspect, Sondhi said, “We are not dependant on imports from China and we don’t see any impact on our operations. In fact, we are seeing our vendors gearing up to fill the gap in whatever they source from China through local manufacturing.”

On the exports front, Sondhi said, “We have products for both left-hand and right-hand driven markets under both Phoenix and Avtr platforms. We have been in coordination with our dealers in countries such as Africa, Middle East, SAARC countries to push our next-gen products. We want to strengthen our footprint further and grow our international business further as we seek to become one of the top 10 CV makers globally in the near future.” The company has already become No 3 player in the global bus segment in December 2019.

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