Ashok Leyland spends 40% of Rs 750 crore FY21 Capex by September

Ashok Leyland spends 40% of Rs 750 crore FY21 Capex by September

Ashok Leyland, the Hinduja Group flagship company and India’s second-largest commercial vehicle manufacturer, has spent Rs 290 crore of its FY2021 Capex of Rs 750 crore by September end. The CV maker has also said that it will spend the remaining amount on new product development, automation and technologies along with other areas of expansion, said Gopal Mahadevan, whole-time director and CFO of the automaker.

As Ashok Leyland also claimed, it has reduced the net debt by Rs 1,200 crore to Rs 3,076 crore. Meanwhile, Gopal Mahadevan further said that Ashok Leyland’s capacity utilisation levels are improving sequentially.

In the previous fiscal, Ashok Leyland announced a 40% cut in its Capex of Rs 2,000 crore. The company spent Rs 1,200 crore. However, this year, despite the pandemic, the CV company is in course to spend its full Capex.

Ashok Leyland has reported a consolidated net loss of Rs 96.23 crore in the second quarter of the current financial year. Its revenue from operations during the second quarter stood at Rs 2,837 crore, down 28% YoY, as compared to Rs 3,930 crore in the same period a year ago.

The automaker recorded 3,762 units of truck sales in October 2020, up 13% as compared to October 2019. The third largest global bus manufacturer recorded a massive YoY drop of 90% to 119 units in the bus segment, as compared to 1,230 units registered in October 2019. Total M&HCV sales of Ashok Leyland in October 2020 was down 15% to 3,881 units in October 2020, as compared to 4,570 units recorded in 2019.

In the light commercial vehicle segment, Ashok Leyland reported an 11% surge in sales to 5,004 units last month, as compared to 4,509 units recorded in the same month a year ago. Overall vehicle sales of the homegrown automaker was down 2% to 8,885 units in October 2020, as compared to 9,079 units from the same month a year ago.

In the domestic market, the CV maker is betting big on the VTR and Bada Dost series in the LCV segment to boost its sales. According to Ashok Leyland, its addressable market size has increased after the introduction of its Bada Dost LCV in the 3-3.5 tonne segment. Ashok Leyland is also targeting to fill the vacuums in the LCV segment, which will eventually increase its addressable market to 65% from current 34%.

However, the bus segment continues to remain impacted because of the Covid-19 pandemic induced crisis situation. The social distancing norms have kept the schools closed and forced several companies to continue with work from home facilities for the employees limiting corporate transportation. These have led to reduced utilisation of commercial vehicles as compared to pre-Covid times.

Ashok Leyland witnesses 7% of its total sales volume coming from export markets. The commercial vehicle manufacturer ships trucks and buses to several overseas markets across the world. Export has been a major thrust area for the automaker. With the reopening of several global economies, Ashok Leyland is experiencing revival in its sales, said Mahadevan.

As Mahadevan said, “With countries easing restrictions, the Middle East and SAARC region will remain our focus. There are also opportunities in the African and select South East Asian markets.” Besides this, Ashok Leyland is expecting the LCV segment to boost its sales volume in the domestic market.

The CV maker has increased the price of its product range in October 2020. As it claims the reason behind this price hike was the increased commodity price resulting in pressure mounting on the automaker. Hence, Ashok Leyland announced the price hike to offset some of its increased operational cost.

Also Read: Tractor sales likely to grow 10%-12% in FY21: Ind-Ra

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