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Ashok Leyland's UK arm bets big on exports

Ashok Leyland's UK arm bets big on exports

T E Narasimhan  |  Chennai 

Ashok Leyland’s UK arm, Optare, said it would focus more on exports, taking advantage of its parent's global network. Group's flagship company holds 75 per cent stake in the bus & coach maker.

Presenting its half-yearly report, said it had appointed a new export distributor in Australia via the parent’s network to take advantage of the increased market demand.

Recently, won orders in Australia for the whole single-deck product range. Further sizeable orders are expected in 2014 through its dealers in Australia, said the company.

Double-decker order
The company also received funding from a regional growth fund of £1.5 million linked to developing new products for exports. In November, announced it had secured a £23-million refinancing from Barclays.

The new double-decker product is expected to be launched next year.

Optare’s order book as of September stood at £22.5 million. “The market continues to move from Optare's strong provincial customer base to larger operating groups. We are continuing to focus on both types of customer segments to increase volumes in our traditional single-deck UK market,” said Optare.

The company is now building its Euro-VI compliant vehicles for delivery in the fourth quarter of financial year 2014.

On the financials, Optare said its operating losses reduced 33 per cent to £800,000 compared with the first half of 2012 when it had a loss of £1.2 million. Gross margins increased to 10.3 per cent (from 5.4 per cent in the first half of 2012), primarily on a stronger product mix and continued focus on material cost savings.

The company was successful in restructuring debt with bank facilities of £23 million. Optare said administration costs reduced 10 per cent as overall headcount reduced from 443 to 396 at the end of September.

Cost reduction
Further cost-reduction programmes are in place to deliver around £1 million of savings in fixed costs in 2013-14, said Optare.

John Fickling, Optare’s chairman, said: “We have made to improve efficiency and reduce fixed costs. We continue to invest in people, innovation and new product opportunities for the UK and export markets we look to the future of the Company with increased confidence.”

Optare’s board said it sees an increase in UK demand in 2014, particularly for single-deck buses, as the larger operating groups invest in new vehicles. Additionally, an increasing proportion of future sales are expected to come from exports that will help reduce the risk of the group’s dependency on a cyclical UK market.

First Published: Sat, December 21 2013. 22:17 IST