According to him, its not the volume but higher tonnage vehicles which give them strong growth momentum both in turnover and EBITDA margins.
Buoyed by an impressive performance in the just concluded FY18, Hinduja Group flagship Ashok Leyland (ALL) has plans to ramp up its capacity with an investment of Rs 1,000 crore and launch 20 new vehicles in the current financial year.
The company sees that the Indian truck industry is on the strong growth path, at least for next two years. The industry which saw a robust 20% growth in fiscal 2018 to end with 856,000 units, will post a higher single digit or even a double-digit growth in the current as well next fiscals on the back of GST, pre-buying due to Euro-VI emission norms and followed by new scrappage policy implementation, said Vinod K Dasari, managing director, at the company’s annual global conference here on Wednesday.
“We are bullish on our growth path and we expect to better the industry’s growth in the coming years. We see the scrappage policy will throw an additional opportunity of 700,000 new vehicles. We have proved critics wrong with our innovated Intelligent Exhaust Gas Recirculation (iEGR) technology by selling over 100,000 units under this tech during last fiscal. With the launch of 20-odd new models/variants, targeting higher and intermediate tonnage segments, the company sees both its turnover and EBITDA margins going up substantially,” Dasari said.
Responding to questions, Dasari said, “Though the discounting will continue to be there, at times irrational by some players, but the price will shoot up going forward due to increasing commodity prices, particularly steel price, which will augur well for the company. In fact, we have increased the prices by 3% effective April, which was followed by others. We expect further price hikes going forward.” On the investments, he said: “We will be investing Rs 1,000 crore in the current fiscal to improve our capabilities as well ramping up capacities across our plants.”
According to him, its not the volume but higher tonnage vehicles which give them strong growth momentum both in turnover and EBITDA margins. The company hopes to post a 25% growth in turnover in fiscal 2018 to Rs 25,000 crore with its continued double-digit EBITDA margins, he said. The company is yet to announce its Q4 and annual results. Ashok Leyland posted a 21% growth in FY18 volume to 174,873 units compared to 145,085 units in the 2017 fiscal, with its M&HCV segment (the value segment) growing 16% to 131,432 units.