Truck companies' prospects depend on when lockdown is lifted: Ashok Leyland
The domestic market outlook for the truck industry this fiscal depends on when the Covid-19 lockdown is lifted while currently vehicle production is on, senior officials of Ashok Leyland Limited said on Friday.
They also said the company is also looking at increasing exports with a larger portfolio of products and it is not dependent on component imports from China.
Speaking to reporters, Vipin Sondhi, Managing Director and Chief Executive Officer, said the vehicle production at the company plants are happening and the components are being received from suppliers.
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He said opening up of the economy is the biggest stimulus for the industry while the focus should be on Covid-19 containment zones to prevent the spread of coronavirus.
Queried about the export markets, Sondhi said the company is looking at increasing its exports with its left- and right-hand drive commercial vehicles.
Sondhi said Ashok Leyland is present in the Middle East and in some parts of Africa. The major enabler for increasing the exports is the availability of both left- and right-hand drive vehicles in the company's portfolio.
Gopal Mahadevan, whole-time Director and Chief Financial Officer, too said that the business outlook depends on when the Covid-19 lockdown is lifted.
He said once the lockdown is lifted industry is expected to witness demand for vehicles. A lot depends on when the lockdown is lifted.
On the capex planned for this fiscal, Mahadevan said the company had already completed major investments in the modular vehicle platform AVTR and in the light commercial vehicle (LCV) project Phoenix.
He said the capex for FY21 can be told only during the second quarter of the current year.
With the recent violent face-off between Indian and Chinese soldiers at the border and the subsequent calls to boycott Chinese products, Sondhi said Ashok Leyland is not directly dependent on components from China.
However, he added, the company's tier-I vendors may be importing components from China.
Queried about the report about large-scale retrenchment of workers at its Uttrakhand plant, Sondhi said all the permanent employees are still with the company while he remained silent on other class of workers.
Asked about the sale of BS 4 emission norm trucks as 'scrap', Sondhi said the company has been focusing on cutting down the inventory of such vehicles.
Mahadevan added that scrapping happens at every company but it was not a strategy for Ashok Leyland. The company had planned to reduce the inventory in a methodical manner.
The company closed last fiscal with a consolidated revenue of Rs.21,951 crore and a net profit of ₹460 crore as against the FY19 revenue of ₹33,197 crore and a net profit of ₹2,195 crore.