Increased infra activity drives Ashok Leyland profit up three-fold

CHENNAI:Hinduja Group-owned Ashok Leyland posted a three-fold growth in first-quarter net profit at Rs 370.10 crore helped by higher sales riding on increased infrastructure activity in India.

The company’s net profit stood at Rs 111.24 crore a year earlier. “The Total Industry Volume registered 84 per cent growth primarily driven by surge in infrastructure spend resulting in higher sale of Tipper and MAVs. There was also the impact of base effect,” said Vinod Dasari, Managing Director, Ashok Leyland Limited.

The company’s domestic sales of medium and heavy commercial vehicles rose 47 per cent to Rs 6250 crore. The truck major, which had seen a turnaround in the sales of its light commercial vehicles last year, sold 33 per cent more LCVs to 11,481 units compared to the year-ago quarter.

Ashok Leyland’s total revenue rose nearly 38 per cent to Rs 6,300.11 crore in the quarter, while earnings before tax, depreciation and amortisation rose 10.4 per cent compared with the 7.2 per cent increase a year ago. “We continued our focus on profitable growth and tight control on working capital, in a market which operated on heavy discounting and credit push,” said Dasari, adding, the firm has been facing pressure on realisation and increasing raw material prices during the quarter. The company also said that exports during the first quarter have risen by 24 per cent and that it will pursue its strategy to de-risk itself from cyclicality of demand in LCVs and MCHVs.

“Our net cash in the balance sheet is Rs 1,165 crore. Focus on operating costs, product mix, and material cost optimisation will continue, even as we pursue growth,” said Gopal Mahadevan, CFO, Ashok Leyland.