Ashok Leyland

Ashok Leyland posted a set of very disappointing numbers for Q2FY14. The second largest commercial vehicle maker of India, posted a net loss at Rs.25 crore v/s net profit of Rs.142 crore in Q2FY13 on a 20% drop in total revenue at Rs.2650 crore. The only good news here is that the loss for Q2 was lower than the Rs.142 crore loss it posted for Q1FY14. The loss in Q2 would have been much higher but for the Rs.48 crore coming in from sale of long term investment. Its EBITDA % improved from 1.5% in Q1 to 3.1% in Q2 in the current fiscal due to better cost management. The total vehicle sales during the quarter was down 22% (YoY) and the down turn only seems to continue with the company, for October, showing a 21% (YoY) decline.

The interest outgo of Rs.124 crore v/s Rs.101 crore in Q1 and this was because debt shot up by another Rs.1400 crore (YoY) during the quarter. The company is sitting on a debt of around Rs.6000 crore and by end of current fiscal, hopes to bring it down by Rs.1000 crore through sale of non-core assets. The tax outgo of Rs.66 crore v/s Rs.25 crore in Q1 also did not help matters.  The months ahead looks challenging as has been indicated by the drop in October sales. H2 could remain challenging thought he company could improve operating efficiencies, which in turn could help the earnings.