Ashok Leyland plans Rs 750 cr capex in FY22
Commercial vehicles heavyweight Ashok Leyland is looking to invest Rs 750 crore for FY22 as it evaluates de-bottlenecking at its existing facilities to improve efficiency.
The Chennai-based company posted a revenue of Rs 7,000 crore compared to Rs 3,838 crore for the same quarter of the last year. The Hinduja flagship’s PAT was Rs 241 cr against a loss of Rs 57 cr in Q4 last year.
Gopal Mahadevan, Whole Time Director & CFO, Ashok Leyland, gave an overview of the financials, seeking to point out that the company had staged a good recovery in Q4. “Our market shares have been growing steadily quarter on quarter in MHCV and in LCV, volumes have really picked up. All other businesses including aftermarket and power solutions have done exceptionally well. The focus on cost and productivity continues,” he added.
He also said the sharp increase in raw material prices, steel prices hitting the roof coupled with uncertainty in interest rates hitting non-banking financial institutions (largely catering to CV players) had dented its performance.
On capex, Mahadevan said last year, it had spent about Rs 670 crore, and it has earmarked an investment of Rs 750 crore this year. There is scope to de-bottlenecking at existing plants, he said, adding it will continue to tap growth opportunities in the light commercial vehicles (LCV) segment.
The Andhra plant which predominantly caters to the bus segment, had been commissioned in March. The volumes had fallen off quite sharply, but the company remains confident for public mobility to pick up soon.
“The challenges in the market due to COVID-19 impacted the volumes and performance of the company and industry in the H1 of FY 2020-21. However, the company and the industry saw healthy sequential recovery in the H2 of FY 2020-21, post the gradual removal of the lockdown,” Vipin Sondhi, MD, Ashok Leyland, sought to point out.
Ashok Leyland plans Rs 750 cr capex in FY22
He also said the company bore the brunt of volume de-growth for eight consecutive quarters, but its market share in Q4 moved upward, with trucks showing a surge of 27.6 per cent. Ecommerce and rural economy uptick drove the sales of LCVs, he said, adding it continues to bet on LCVs. The Phoenix platform, under which ‘Bada Dost’ was launched last September, would be used to announce newer LCV variants. For Q4 FY’21 the LCV volume was 17,042 units, 112 pc higher than last year volume of 8,057 units.
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