Leyland sees 450% surge in net profit

Ashok Leyland, the commercial vehicle maker, has reported a 450 per cent increase in net profit for the quarter ended December 31, at Rs 104.6 crore as against Rs 18.9 crore for the corresponding period in the last financial year.

Sales revenue was up 81 per cent to Rs 1,815.5 crore from Rs 1,004.4 crore. Sales volume for the quarter rose 101 per cent to 16,129 units from 8,011 and parts sales rose 91 per cent.

Despite a 220 per cent increase in production volume at 19,411 vehicles (6,060 vehicles in last year’s quarter), financial expenses dropped to Rs 1,621.3 crore (Rs 3,940.9 crore), a fall of 59 per cent. “This was due to prudent working capital management, shift from credit sale to a ‘cash-and-carry’ system and an reduction in inventories, said R Seshasayee, managing director.

Employee costs rose by 42 per cent to Rs 173.6 crore from Rs 122.5 crore, due to the fact that in the corresponding period of the previous quarter, the company had cut working days and employees had taken a voluntary salary cut. The current year also had the impact of a wage settlement at the Hosur units.

“This quarter signals the return to normalcy. The common theme in the results is the improved profitability, even though sales volume recovery is not quite complete,” added Seshasayee.

Of the near-5,100 bus orders it bagged from various state transport companies under the Jawaharlal Nehru National Urban Renewal Mission, the company delivered more than 2,000 by the end of December. “We hope to deliver most of the balance before March 2010,” said Seshasayee.

On the prospects for the year, Seshasayee said, “A rebounding economy, anticipated industrial growth and renewed activity in the areas of infrastructure development and construction will drive the demand. The government’s stimulus package has certainly helped in improving the sentiments. I hope the government will continue the stimulus for the commercial vehicle industry until growth momentum takes stronger roots.”

source: Business Standard

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