Hit by higher finance cost, increased depreciation and a muted market in its southern strongholds, Hinduja group's flagship company Ashok Leyland posted around 10 percent reduction in net profits last fiscal though overall sales went up by 15 percent, said a top company official.
"We were hit from many sides. The mining ban in Karnataka and uncertainties in Andhra Pradesh impacted the company as it has a major presence in the southern region. Further the intermediate commercial vehicle (ICV) range grew in which we were not strong. Further higher depreciation and finance cost affected the company's net profit," managing director Vinod K. Dasari told reporters here Monday.
Ashok Leyland closed last fiscal with a turnover of Rs.12,841.99 crore and a net profit of Rs.565.98 crore as against Rs.11,177.11 crore and Rs.631.30 crore posted the previous fiscal.
During the period under review, the company's finance cost went up by Rs.67 crore and depreciation by Rs.85 crore as compared to previous year's figures.
"This year the focus will be on reducing the working capital requirements. This will be largely facilitated by building of cabin's in-house contrary to the earlier practice of getting it done from outside," said chief financial officer K. Sridharan.
According to Dasari, the company is targeting total sales of 146,000 units -- 110,000 units medium and heavy commercial vehicles (M&HCV) and 36,000 units of the "Dost" light commercial vehicle (LCV).
Ashok Leyland will be expanding its M&HCV capacity at a new facility near here though the actual numbers - production and investment- are yet to be fixed, said Sridharan.
According to him, a memorandum of understanding (MoU) was signed with the Tamil Nadu government Monday to invest a total of Rs.4,150 crore to be shared by Ashok Leyland as well as Ashok Leyland Nissan Motor Company Ltd - a joint venture with Nissan Motor Company.
Once the project goes on stream in two years time, Ashok Leyland will unlock production capacities at its existing locations as the production of Dost LCV will move over to the new facility.
According to Dasari, the company can increase its production at its Pantnagar plant in Uttarakhand by operating the third shift.
Dasari said the company would make the Avia range of trucks at its Pantnagar plant and launch the same during the course of this year.
Queried about the status of the company's new engine called Neptune, Dasari said trials were held with army and civilian trucks fitted with the engine.
He said the company would make around 100 trucks with Neptune engine and sell them this fiscal.
Ashok Leyland will also start selling "Jan" bus - a one step bus - and a new range of trucks.