Ashok Leyland bottom line grows 28.5% to Rs 171.5 cr

CORPORATE SCORECARD

Ashok Leyland, the Hinduja group flagship company, posted a profit after tax at Rs 171.51 crore for the quarter ended March 31, 2007. This is an increase of 28.5 per cent from Rs 133.46 crore in the corresponding quarter last year.

Net sales for the fourth quarter were Rs 2,290 crore, 32 per cent increase over Rs 1,735 crore in the previous year.

"We rode the market well this year," Ashok Leyland Managing Director R Seshasayee said addressing reporters. "This is the second consecutive year in which we improved our market share in the key medium and heavy commercial vehicles (M&HCV) segment, when the total industry volume grew. Thanks to a number of initiatives such as de-bottlenecking our supply chain, improved asset and inventory turns and better utilisation of enhanced capacities, we reduced our operating cost by 200 basis points in 2006-07."

In FY07, the company's total sales volumes rose 34.8 per cent reaching an all-time high of 83,094 vehicles. Total vehicle production went up 28.4 per cent, logging an all-time high of 83,549 vehicles, Seshasayee said.

In the M&HCV segment, Ashok Leyland's major revenue earner, the company logged vehicle sales of 76,736, witnessing its market share rise 0.8 per cent to 28 per cent. TIV sales in the segment surpassed overall market growth during the period, showing 33 per cent increase, and overall sales increasing 37 per cent.

Exports rose 23.5 per cent over the previous year with sales of 6,025 vehicles this year from 4,879 vehicles last year. Engine volumes increased 23 per cent, with Leyparts recording a growth rate of 26 per cent with sales of Rs 329 crore. Seshasayee said the fully-built solutions, primarily in the M&HCV segment, added Rs 230 crore to the top line in FY07. "We expect about 20 per cent of our total turnover to be contributed by overseas markets in the next four years," he added.

"We have seen constant buoyancy in the economy over the past year, even in the face of some negative sentiments and slackening of demand, but did not see a slowdown at any point of time. The underlying demand on freight is quite strong, time lags before turnaround is low and vehicle resale values are high. This shows the fundamentals of the market will continue to be robust," Seshasayee said.

Ashok Leyland's net sales for 2006-07 increased 37 per cent to Rs 7,168 crore for the period ended March 31, 2007, from Rs 5,248 crore in FY06. This was marked by an excise duty outgo of Rs 1,137 crore on gross sales of Rs 8,305 crore in 2006-07. Gross sales in FY07 increased 37 per cent from Rs 6,053 crore in the previous year. Net profit for the year rose by 35 per cent to touch Rs 441 crore from Rs 327 crore last year.

Profit before tax improved 34 per cent to Rs 605 crore this year from Rs 452 crore in the previous year after depreciation of Rs 151 crore and expenditure incurred on VRS amortisation of Rs 13 crore during 2006-07.

The sale of Ductron Castings units to Ennore Foundries last year netted Rs 30 crore. The company's gross operating margins moved up 30 per cent to Rs 702.68 crore in FY07 from Rs 540 crore last year. Better management of funds resulted in lower expenses of Rs 5.33 crore this year compared with Rs 16.45 crore last year, the company said.