Ashok Leyland

Ashok Leyland tanked on the back of its poor performance for Q3FY14. The second largest commercial vehicle maker of India, posted a net loss at Rs.167 crore v/s net profit of Rs.74 crore in Q3FY13. This loss was despite the company adding on Rs.134 crore through stake dilution in its non-core business and sale of some assets. Its total income also came off, down 19% (YoY) at Rs.1953 crore. 

The company tried its level best to boost sales by offering aggressive discounts but it ended up only lowering its realizations, which came down 1% (YoY) and 4% (QoQ). EBITDA was also in the red, posting a loss of Rs.97 crore. Sequentially, NPM fell 758 bps. Its interest costs have risen from Rs.107 crore in Q3FY13 to Rs.115 crore in current Q3. Rs.485 crore working capital reduced in current Q3 and Rs.800  crore till end of 9MFY14. Inventories have also reduced from 7500 to 4100 in Q3.

The management though is optimistic about the coming months. The company plans to continue lowering its costs and reduce debts by around Rs.1000 crore by selling non-core assets. Debt has come down by Rs.750 crore in current fiscal. It gave a VRS to some 500 executives and that has helped bring down operating costs marginally. The company has stated that it is hopeful of Q4 being much better as its new range of heavy trucks under the name of CAPTAIN is expected to do well. Plus orders from JNNURM are also expected to kick off in Q4.