Ashok Leyland plans Rs 1,000 cr capex this fiscal

The Hinduja group flagship company Ashok Leyland has earmarked Rs 800-1,000 crore during the current fiscal, for capital expenditure and joint ventures. The company has reported a net profit of Rs 631.30 crore in 2010-11, up 49 per cent compared to the previous year.

Speaking to reporters, K Sridharan, chief financial officer, Ashok Leyland, said, “Our capex for this year will be around Rs 800 crore to Rs 1,000 crore. The investments will be equally spread between our own operations and in joint ventures.”

He noted that the company had invested around Rs 1,000 crore last year. “The proposed investment will be funded from internal resources as well as debt funds to the tune of Rs 500 crore”.

He added: “We are looking at various options for debt. It could be external commercial borrowings (ECB), perpetual bonds or plain vanilla debentures.”

Ashok Leyland registered a sales turnover of Rs 11,117.71 crore in 2010-11 compared to Rs 7,244.71 crore, an increase of 53.5 per cent.

Company managing director Vinod K Dasari said the company’s sales target for the current fiscal is 110,000 units, from 93,337 units.

“This fiscal is going to be a year of growth and consolidation for Ashok Leyland in our quest to be among the global top 10 in trucks and top five in buses. On the exports front, our focus will be on consolidating our presence in the SAARC markets while at the same time target the growing markets of Asia, Africa and CIS,” he said.

Rising interest costs and diesel prices are going to be growth dampeners but since the fundamentals remain strong and the economy continues to be on a growth trajectory, he said, adding he was cautiously optimistic.

“Our strategy of de-risking the business by focusing on other revenue streams like spares, defence and diesel gensets paid good dividend last year,” he said. Last year, the company earned Rs 712 crore from spares business, Rs 363 crore from defence sales and Rs 331 crore from selling gensets.