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Jul 20, 2011, 08.56 PM IST | Source: CNBC-TV18

Ashok Leyland targeting at 27% market share for FY12

Ashok Leyland's first quarter net profit fell 30% from a year ago to Rs 86.25 crore. K Sridharan, chief financial officer of Ashok Leyland said, the company is targeting at 27% market share for FY12.

K Sridharan, chief financial officer, Ashok Leyland

Ashok Leyland s first quarter net profit fell 30% from a year ago to Rs 86.25 crore. Its net sales for the April-Jun quarter were also slow, up 6.3% year-on-year to Rs 2,495.51 crore.

In an interview with CNBC-TV, K Sridharan, chief financial officer of Ashok Leyland said, the company expects to sell 107,000 units in FY12. The domestic side would be somewhere close to 95,000-96,000 vehicles. The export would be around 12,000, he added.

He further said, the company is targeting at 27% market share for FY12.

Also read: High costs, fin expenses drag Ashok Leyland Q1 net down 30%

Below is the transcript of the interview. Also watch the accompanying video.

Q: The problem for your profitability this time is the increase in interest and depreciation. Is that likely to continue till the rest of the year?

A: Hopefully, the working capital levels should be brought under control. We need to knock off something like Rs 400-500 crore out of our working capital which is very much within our reach. So, its not a difficulty.

Q: When would you be able to knock off Rs 400-500 crore, when will it show up?

A: Over the next few quarters. It wont happen overnight.

Q: What are your thoughts on depreciation?

A: It was more over the capex that we incurred last year and the full year impact so that is what is hitting us now. These should be the levels of depreciation going forward also.

Q: Is this a one off or could we see this throughout FY12?

A: It will be at about the same levels in the subsequent quarters also.

Q: How much would this affect your projected earning per share (EPS) in FY12?

A: Nothing like specific affecting. The depreciation, which is appearing in our first quarter, would be at about the same level for subsequent quarters also.

Q: I heard you indicate earlier that you are holding out your full year volume growth guidance. What would that entail in terms of domestic sales that you hope to book in the 107,000 units guidance? What might it mean in terms of a monthly run rate that Ashok Leyland hopes to hit?

A: The domestic side would be somewhere close to 95,000-96,000 vehicles. The export would be around 12,000. You can workout the run rate as we have achieved about 19,000 in the first quarter. The rest of it will have to happen in the balance nine months.

Q: The reason I am asking this actually is because through the past year Ashok Leyland saw somewhat lumpy performance in terms of sales where its started picking up towards the year end, basically the quarter that we have just put behind us. Are you confident that sales growth may remain at a very steady pace from here on or do you there is likely to be a little bit of turns and twist because of the way the cycle is moving?

A: There are always turns and twist in our commercial vehicle industry. Generally, the second half would be much more than the first half and the last quarter will be 35% of the total full year volume. So, this is always the case and this year wont be an exception.

Q: Would you hold as well with the guidance that you have set out earlier of 10.5 to 11%.

A: Hopefully yes, absolutely. 10.5%, we gave a guidance of 10.5%.

Q: What do you think would aid that? Is there is the possibility of pushing through some price increases or given the environment it maybe difficult to push through price increases for CV makers and companies like yours?

A: The ramp up of the Pantnagar plant is a main focus for us. That would give us that benefit.

Q: What you hope to achieve in terms of market share? You did lose a little bit of market share to your closest peers over the year gone by, is there a market share target as well that Leyland has along with that sales growth target of 14%?

A: Yes, we are targeting to be around 27%, the market share. There could be ups and downs between the months. But overall for the full year, we are targeting at 27% market share.

READ MORE ON  Ashok Leyland, K Sridharan
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