[1]Chennai: Hinduja Group owned commercial vehicle major Ashok Leyland on Tuesday reported a net loss of Rs 141.75 crore for the first quarter ending June 30, 2013 as the company announced it has undertaken an internal drive to cut costs in capital expenditures due to poor market conditions.
The company had posted a net profit of Rs 66.93 crore during the same period of previous fiscal. Announcing the results, Ashok Leyland Chairman Dheeraj P Hinduja, however, sounded confident that the cost-cutting measures would result in good returns in the years ahead.
"Last year the whole industry has fallen by 25 per cent. This year in the first quarter we are seeing a decline of 12 per cent already," he said at the company's 64th Annual General Meeting here.
"Looking at the (market) condition, the management has taken huge initiatives in cutting costs, capital expenditure and most of the capital expenditures have already gone in. The years ahead, as the economy holds up, you will see, very good returns from Ashok Leyland as our capex are cut, and at the same time, there is an internal drive to see how far can we cut these costs further," he said.
Hinduja said the company was also eyeing new overseas markets and had established its first sales office in Nigeria as part of the initiative.
Responding to a shareholder's query, he said, "The overall market share (of the company) during last year gained by three per cent from 23.5 per cent to close to 26.5 per cent" in the commercial vehicle market.
"What we are experiencing is one of the harshest and steepest of downturns and while we are combating it, the situation also affords us an opportunity to streamline our processes towards becoming a leaner and far more customer-oriented organisation", Ashok Leyland Managing Director Vinod K Dasari said.
The Chennai-based company registered a turnover of Rs 2,363.81 crore for the quarter ended June 30, 2013 as against Rs 3,026.89 crore in the corresponding quarter of the previous fiscal.
Shares of Ashok Leyland touched its 52-week low of Rs 15.65 intra-day. They closed 9.4 per cent down at Rs 15.80. To address the tough situation that is expected to last this fiscal, Ashok Leyland had initiated concerted efforts to reduce its break-even point, a company statement said.
"Manufacturing footprint is being rationalised to improve asset utilisation. Focused efforts to reduce the debt have been accelerated and steps have been taken to reduce operational expenses", it said.
Sale of vehicles for the April-June quarter stood at 14,900 units as against 20,239 units sold during the corresponding period in the year ago period. Sales in domestic market dipped by 25.2 per cent to 12,960 units during the first quarter from 17,335 units sold during corresponding quarter of previous year.
Apart from a drop in volumes, heavier discounting of vehicles to compete in the marketplace further eroded profits, it said.
"Although the market is still very volatile, there are some green shoots showing. We are seeking to capitalise on our gains in the ICV (intermediate commercial vehicle) space with the launch of the BOSS vehicle which should win us market share.
"This will be followed by the introduction of the Neptune engine on select Multi-Axle vehicle models and the N-Truck with a new, world-class cab. We will continue to be aggressive in our network expansion and all these are going to help us to be future-ready,", Dasari added.
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