Chennai-headquartered commercial vehicle major Ashok Leyland is optimistic about sustained growth in FY2024. In fact, the company is upbeat about domestic demand and exports across product segments.
“We are happy about growth in FY2023, it was wholesome. All the zones (read 8-9 geographies identified by the company) across categories including the North and East where we have been weak is strong now, we have increased our market share from 19 percent a few years ago to 25 percent in FY2023,” said Shenu Agarwal, CEO, Ashok Leyland.
For the fiscal year 2023, the revenue came at Rs 36,144 crore, up 67 percent, and a net profit of Rs 1,380 crore, up 155 percent. The company sold 103,480 M&HCV trucks, 10,767 buses, up 184 percent and 66,669 LCVs, up 28 percent in the country. The exports came at 11,289 units, which was up by 2 percent YoY, but Ashok Leyland claims it was the only CV maker to be in the positive compared to its competition in the country.
Agarwal credits the robust performance on the back of new product launches, debottlenecking of capacity, and cost optimisation strategy that helped Ashok Leyland.
Gopal Mahadevan, CFO, Ashok Leyland stated that while the company has been tight on its capex similarly to the industry for the last few years, it may spend about Rs 600 crore to Rs 750 crore next year. The focus however will be on new product development, debottlenecking, and routine investment in manufacturing. But nothing major in terms of capacity expansion. At present, the company is seeing about 80-85 percent capacity utilisation, but that is on the back of cyclical demand. “We are looking at further improving productivity, production is not a constraint for us.”
Partnerships, electrification and future focus
The automotive industry globally is undergoing a paradigm shift. Strategies and plans that worked a few decades ago are no longer ideal.
“We believe the future will be the era of partnerships. The future will not be similar to what has happened in the last 20-50 years. Ashok Leyland is very open to partnerships. We have been partnering with customers and technology providers, like NTPC, Adani, Reliance, and Toyota among others,” says Agarwal.
He further elaborates that for the industry to introduce newer technologies it will be imperative for everyone to work together, especially when it comes to a new energy mix as the whole ecosystem needs to be developed.
Going forward, the company aims to launch one or two “new electric vehicles by Q3 or Q4 of FY2023”, one being the Dost small commercial vehicle (SCV) on which it has been working for a long-time.
“A lot needs to happen for the market to be ready for electric vehicles. When the ecosystem will be ready is not in our control. The question is not about the volume of electric vehicles or hydrogen vehicles, but about how much time the market will be ready,” shares Agarwal.
What’s more, the company is bullish that with the demand for shared transportation along with replacement demand for old vehicles, the bus segment is further expected to bring volumes. This is in addition to the demand for trucks on the back of infrastructure growth.
When asked about volumes in the hydrogen-powered internal combustion engine (H2ICE) trucks, Agarwal said that the technology is too nascent to be expected to be looked at just in terms of numbers. The idea is to demonstrate its potential.
Speaking about funding for its electric vehicle subsidiary, Switch Mobility, Mahadevan said that the company has been talking to investors, but was looking for a strategic partner, and not just a financial investment. If the need arises, he says Ashok Leyland is well-capitalised to pump in money.