‘Auto industry faces twin challenges of rising input prices, global chip shortage’

CHENNAI:  Commercial vehicles major Ashok Leyland has been witnessing an uptick in demand, but a sharp increase in prices of commodities and shortage in the supply of semiconductors remains a cause for concern, said its chief financial officer Gopal Mahadevan.

Mahadevan said that the global auto industry, in fact, is affected by these two challenges. “We are constantly in touch with our suppliers to address the supply constraints, he said, adding that to offset raw material price increase, Ashok Leyland has hiked prices by around 1.5 per cent.

“There has already been a price hike in January and if commodity prices and some precious metals continue to increase, then we may have to go for another price hike.  But as the economy is on a growth path, we are confident that it will be absorbed by the market,” he said on Friday.

Volumes in the heavy commercial vehicle segment rose on a year-on-year basis in the December quarter after eight straight quarters of decline. Mahadevan also highlighted that the government’s push on infrastructure will further give a boost to their business.

He also added that the company has incurred around Rs 450 crore in capex and Rs 260 crore investments during this fiscal. In the quarter ended December, the firm has posted a net loss of Rs 19 crore,which includes exceptional item of one-time VRS cost of Rs 85 crore.