Ashok Leyland looks to grow global business, focus on Africa to continue

To expand the business of ALL further, the company has decided to grow the domestic M&HCV business, step up domestic and international LCV business and execute special initiative to strengthen international markets.

By:Updated: Feb 13, 2021 11:58 AM
ashok leyland

Hinduja flagship commercial vehicle major Ashok Leyland (ALL) on Friday said that it plans to grow its international business on the back of reopening of the countries post the Covid-19 lockdown and the company will continue to focus on strengthening its presence in Africa. The company is in the process of getting into financial tie-ups for funding in Africa with dealers and end-customers.

Speaking to mediapersons through virtual mode on Friday, Gopal Mahadevan, chief financial officer, ALL, said that as the international market opens up, it expects that the company’s vehicle volumes will grow.

“International business is important for us. We are better placed today than four year ago to grow the international presence by scaling up our exports business. We have wider range of products both right-hand drive and left-hand drive including LCVs. Apart from our traditional markets such as the Middle East, Sri Lanka and Bangladesh, our focus now will be on African markets. We believe that after a couple of quarters, we can see a substantial increase in exports volumes.”

He said that sufficient capacity is available in the M&HCV segment. The company may have to add capacity in LCV segment, if it has to move further. ALL’s domestic LCV volumes for Q3 FY21 were at 15, 991 units and was sequentially higher by about 46% over Q2 FY’21 (10,952 units) and also higher than Q3 FY’20 by 27% (12,574 units).

Exports volumes for Q3 stood at 2,941 units and was sequentially doubled over Q2 FY21 (1,491 units) and was also higher than Q3 FY20 by 24% (2,371 units). “ LCV is important for us, not only for domestic front, but also for international market,” he said.

To expand the business of ALL further, the company has decided to grow the domestic M&HCV business, step up domestic and international LCV business and execute special initiative to strengthen international markets.

Mahadevan said the company’s capex plans are on track and it had spent `450 crore as on date. The company has also brought down net debt to `2,880 crore in Q3 from `3,076 crore in Q2 FY21, further strengthening the balance sheet of the company.

He said the volumes in M&HCV increased on a year-on-year basis in the December quarter after eight straight quarters of decline. The demand for M&HCV will increase, given the Centre’s plan to increase spending on infrastructure projects.

The company had reported a standalone net loss of `19.4 crore for the quarter ended December, as sales of its commercial vehicles remained under pressure due to the pandemic-induced economic downturn, and revised load carrying norms. It reported a net profit of `27.7 crore in the year-ago period.

He said it had hiked the prices in January and if prices of commodities and some precious metals continue to increase then, the company may have to go for another price hike. “But it will be at a time when the economy will be growing. So, we are confident that it will be absorbed by the market,” said Mahadevan.

Commenting on the semi-conductor shortage, he said it is a global issue affecting the automobile industry. “ We have not been impacted by that, at the end of December, we had 3,000 vehicles as inventory. We hope that in another two to three months, things will be sorted out by the semi-conductor manufacturers,” he said.

While the bus volumes continued to lag, these are expected to recover with the opening up of restrictions. Bus transportation is the lifeblood of transportation in any state. The company sees primary and replacement demand for buses coming from state transport units next year. “Also with school and offices opening up, things will further improve,” he said.

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