Ashok Leyland sees commercial vehicle market revival by July

ALL believes the focus on digital will help leverage the benefits of efficiency and cost. Customer requirements will be at the core of all the digital initiatives.

By:June 26, 2021 9:14 AM

Hinduja flagship commercial vehicle major Ashok Leyland (ALL) on Friday said it expects the commercial vehicle market to revive by July and the company would ramp up the production as well as increase the number of shifts depending on the evolving situation. The company sees good opportunities to grow the exports, while it expects LCV,  defence and parts business complementing the expansion of the overall business.

Vipin Sondhi, MD, ALL, speaking to media persons in the virtual mode said, he expects the company to take a call on increasing the production by July and review whether to increase the shifts, depending on the Covid-19 pandemic situation. “ We had seen demand coming in from the third quarter of last fiscal and the fourth quarter augured quite well for us,” he said.

He said the practice of price increases was an ongoing process which is based on the hike in input prices and the company had increased the prices in the third and fourth quarter of the last fiscal.

Speaking about the LCVs, he said the demand was driven by e-commerce coupled with growth in the rural economy. In Q4, LCV volumes had grown by 7% y-oy,  and for the full year of FY21, LCV domestic volumes grew by 4%, although on the low base of FY20. This has been achieved despite the fact that the first three months of FY21 had been a complete washout and even when the LCV industry had de-grown by 11.5%.

“LCV  vertical virtually completes ALL’s presence as a complete commercial vehicle major. We will be launching many more offshoots of Bada Dost in the coming days from the  Phoenix platform,” he said.

He said the Phoenix platform, on which the LCVs are built, will throw up more and more variants over the next quarter to expanding the presence further in the segment. Last year in September, ALL launched the Bada Dost LCV, out of the Phoenix platform.

He said the bus segment, currently under stress, would bounce back once the lockdown situation completely eases out, as India mostly travels by buses. With the state governments putting in plans to replenish their old fleet, the company hopes to grab significant orders from them. “ We have started making fully-built buses at our plants so we can provide customised services,” he said.

On the global business, Sondhi said the company will continue to make foray in the international markets. The company made further inroads in GCC and Africa and with the markets opening up, the company will be intensifying efforts to spread the wings further.

Speaking about the company’s electric vehicle plan, Gopal Mahadevan, CFO, ALL said the UK subsidiary Switch Mobility will spearhead it, while the vehicle production will happen in India. Switch Mobility has an Indian subsidiary Switch Mobility Automotive for business of manufacture and sale of electric vehicles.

ALL believes the focus on digital will help leverage the benefits of efficiency and cost. Customer requirements will be at the core of all the digital initiatives. The emerging businesses such as electric vehicle (EV) and customer solutions (CSB) will assist in complementing the core business.

Mahadeven said the company will have a capex of `750 crore for FY 22, mainly to debottleneck the fast-growing light commercial vehicle (LCV) portfolio, apart from investing in the company’s existing manufacturing facilities, across the country.

Riding on the increased volume play, ALL had reported a  net profit of `241 crore for fourth quarter of FY21 as against a net loss `57 crore in the corresponding quarter last year.  The Ebidta was at 7.6% as against 4.8% last year.

The company reported a revenue of `7,000 crore in Q4 FY ’21 as against `3,838 crore in the same period last year, registering a growth of 82%, year on year.

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