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Ashok Leyland, the Hinduja Group flagship company in India, has registered a turnover of Rs 83,047.17 million during 2006-07 helped by a robust market demand through the year. This reflects a 37 per cent growth over the last fiscal's turnover of Rs 60,531.08 million. Net profit also rose by 35 per cent to touch Rs 4,413 million, against Rs 3,273 million of last year, said its managing director R
Seshasayee.
The company's gross operating margin moved up by 30 per cent to Rs 7,026.85 million (Rs 5,400.70 million). Better management of funds has resulted in lower financial expense of Rs 53.32 million (Rs 164.53 million). Gross profit for the year is at Rs 7,681.56 million (Rs 5,565.91 million), up 38 per cent, Seshasayee said.
There is a 34 per cent improvement in profit before tax of Rs 6,045.06 million (Rs 4,523 million), after depreciation of Rs 1,505.74 million (Rs 1,260.06 million), and+ an extraordinary item: an expenditure of Rs 130.76 million (Rs 84.51 million) for VRS compensation amortised. In 2005-06, there was a one-time extraordinary gain of Rs 301.66 million on the sale of DCU to Ennore Foundries.
Provisions for taxation are higher for 2006-07: current taxation is at Rs 1,350.50 million (Rs 1,130.50 million); deferred taxation at Rs. 230.20 million (Rs 72.30 million) and fringe benefit tax at Rs 51.50 million (47.00 million). On an enlarged paid-up equity share capital of Rs 1,323.87 million (Rs 1,221.59 million), earnings per share have risen 23 per cent to Rs 3.38 (Rs 2.74) for a onerupee share.
"Our figures this year reflect how well we rode the boom in the market," said Seshasayee. "Significantly, this is the second consecutive year we improved our market share when total industry volume grew. We fielded products that improved customer profitability and supported them with a host of value-added services. We fully utilised our enhanced capacities and helped suppliers realise theirs through de-bottlenecking. We reduced our operating cost by 200 basis points thanks to Gemba initiatives."
During 2006-07, the company's total sales volume reached an all-time high of 83,094 vehicles (61,655 vehicles), a rise of 35 per cent. The company's market share in the M&HCV segment rose by 0.8 per cent to 28 per cent.
There were a few other revenue boosters. International operations grew by 23.5 per cent over the previous year's sales by selling 6,025 vehicles (4,879 vehicles). Engines sales grew by 23 per cent while Leyparts saw record sales of Rs 3,288 million reflecting a growth of 26 per cent. With the market seeking more and more fully-built solutions, the nascent fully built vehicle division of the company added nearly Rs 2,300 million to the top line.
Moving forward, Seshasayee said at Prague-based AVIA Ashok Leyland Motors, operations had been stabilised and an annual output of 1,400 vehicles was targeted. As for the chassis and bus assembly plant at Rakia, the company expected operations to kick-off by March '08. Closer home, the integrated manufacturing plant being set up at Pantnagar, Uttaranchal, the first phase of production is scheduled to be completed by the second half of the financial year 2008-09 and the second phase by March 2010.
State-of-the art technology is being sourced from across the globe with layouts being made for lean manufacturing and automation, he said.
As part of the thrust to offer fully built vehicles, there are quite a few buses and trucks in the pipeline. The company is targeting a share of the airport bus market and has lined up three buses under the brand name Avion for this segment. In the area of trucks, on the anvil are the 4,921, 3,135 Tipper and 2,518 Mining Tipper.
Work is on in full swing on development work on Euro IV-compliant engine.
Among other business streams, the company, through Ashley Design and Engineering Services (ADES), recently acquired a Detroit-based testing services firm which would help ADES to expand its customer base and serve leading auto makers in the US and provide the ability to offer greater value-added service propositions from engineering design and development to testing.
Ashok Leyland is all set to launch AL TRUX that will market quality pre-owned trucks that will help customers improve the residual value of their assets.
While continued thrust on infrastructure development and sustained economic growth would be the key drivers fuelling growth, increase in input costs and hardened interest rates could slow down the rate of growth, pointed out Seshasayee.
R Rangaraj
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