Due to higher demand for trucks and buses, net sales during the period increased 10.79% y-o-y to Rs6,617.89 crore.
The country’s second largest commercial vehicle manufacturer, Ashok Leyland on Thursday beat estimates by reporting a net profit of Rs476 crore during the January-March quarter against a net loss of Rs140 crore during the same period last year on the back of healthy demand for its products in the medium and heavy vehicles segment.
Due to higher demand for trucks and buses, net sales during the period increased 10.79% y-o-y to Rs6,617.89 crore. Total volumes in the M&HCV segment during the quarter increased 10% y-oy- to 38,643 units while light commercial vehicles sales increased 3% y-o-y to 8,978 units during the last quarter of FY17.
The Chennai-based vehicle manufacturer registered substantial increase in raw material cost along with the finance cost which adversely impacted the operating profit (earnings before interest, tax depreciation and amortisation) which fell by 6.83% y-o-y to Rs730 crore. The operating margin during the quarter dropped by 212 basis points to 11.03% from 13.12% in the corresponding period last year. The company’s earnings received a significant boost due to a reduction in tax provisioning of Rs325 crore during the quarter, following the amalgamation of Hinduja Foundries Limited, a sick company of the group, with itself.
The demonetisation effect as well as the Supreme Court order on BS-III vehicles and a delay in purchase order by some companies in the overseas markets hit ALL’s margins in Q4, the management said on Thursday.
The company closed the fiscal with standalone revenues of Rs21,332 crore recording a yearly rise of 7%. The net profit rose 214% to Rs1,223 crore as compared to Rs390 crore in the previous fiscal. It also increased its all India market share to 33.8%, a gain of 1.1% over last year.
The company’s shares on Thursday closed 4.56% up at Rs86.05 on the Bombay Stock Exchange. ALL has recommended a dividend of Rs1.56 a share.
The company has retired over Rs700 crore in debt and on a standalone basis, the debt/equity ratio has come down sharply to 0.1:1. Though it lost 12% of the market share in the bus segment, its overall market share gone up by 2.3% to 36.3% during the Q4, said Vinod K Dasari, managing director, Ashok Leyland Limited.
Addressing press conference, Dasari said: “The highlight for us this year is the growth in profits and our pan India market share. Our continued focus on controlling costs has paid rich dividends and helped us achieve a double-digit Ebitda for the ninth straight quarter.”
Dasari said that the dependence on core business (commercial vehicles) has come down from a peak of 80% to 62% at present. “We seek to bring it down further to 50% in the next two to three years through means of exports, defence sales, spare parts, power solution business and overseas operations,” he said.