Ashok Leyland net up 123% at Rs 423 cr in FY10

CHENNAI: Hinduja group’s flagship and commercial vehicle major, Ashok Leyland revved up its performance in 2009-10, which was a turnaround year 2009-10 by posting a 123% jump in net profit at Rs 423.67 crore against Rs 189.99 crore in the previous year. Net sales increased by 21% to Rs 7244.71 crore ( Rs 5981.07 crore). The board has stepped up dividend to 150% against 100 per cent paid in 2008-09.

On the back of strong economic recovery and a phenomenal increase in the CV market covering almost all user segments since the second half of 2009-10, ALL reported a sharp jump in net profit at Rs 222.66 crore in the fourth quarter against Rs 53.31 crore. Net sales also doubled to Rs 2939.04 crore ( Rs 1218.12 crore).
During 2009-10, EPS improved to Rs 3.18 ( Rs 1.43). On a paid up capital of Rs 133 crore, reserves and surplus increased to Rs 2202.54 crore. Focusing on operational cost control, even while continuing the capex, the company slashed financial expenses to Rs 44.03 crore ( Rs 81.13 crore).

Company MD, R Seshasayee told media persons on Thursday, " It was a pretty smart recovery and we remained very strong financially. It was an year of sluggish start and a strong finish. We rode through the crest of recovery wave".

He said return on capital employed improved to 13.2% ( 8.7%) though it has to catch up with 23.2% reported in 2007-08. With no additional capital infusion, debt: equity ration was maintained at 0.9.

Last year, since the second half, there was a spurt in demand on the back of a strong recovery in the economy. But, the growth was dampened by factors like increase in fuel price, hike in CRR, NBFCs pushing up lending rates and the roll back of stimulus package and hike in excise duty by 2%.

The total industry volume increased by 33.5% on lower base. ALL increased its total sales by 17% to 69,926 vehicles ( 54.431 vehicles). While saw a marginal growth in buses, it reported lower sales to defence and lower exports. This year, with the economy doing well and infrastructure getting Government’s highest priority, the industry should see a healthy growth of 15%.

In the case of ALL, with its Pantnagar plant in Uttrakhand going on stream, total capacity has been ramped upto 1.5 lakh. While not disclosing the sales targets, he said, in the last quarter, its market share increase to 27% and it is hoping to add a couple of points more this year. It has geared itself to launch 25 models over 18 months.

On the capex front, last year, it incurred Rs 810 crore plus Rs 142 crore on joint ventures. This year and next year, it has planned a capex of Rs 1200 crore on its ventures and Rs 800 crore on joint ventures. Mr Seshasayee said it will enter the LCV market early next year through its JV with Nissan. The new investments will see the company adding about 2000 workforce in the next two to three years to the existing 13,000.

Initially, bulk of the production will come from ALL’s Hosur facility. Since it has surplus assembly line and paint shop there, it will entail a modest investment of Rs 100 crore. The JV will also make LCV through contract manufacturing at Renualt-Nissan’s Oragadam facility near Chennai. Stating the LCVs will carry dual branding, Mr Seshasayee said, " We will be pricing the products very aggressively.

He said the other joint venture with John Deere for the construction equipment is also well on track with pilot production slated to commence in October this year and products set to roll out by early 2011. Asked about Nissan’s interest to team up with ALL for the car project, he indicated the company is equally interested in the venture. But, he refused to go into details.