To cross 80,000 units in FY07: Ashok Leyland

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Hinduja Group flagship Ashok Leyland has announced its second quarter results. The company's Q2 net profit was up at Rs 95.3 crore (Rs 953 million) from Rs 75 crore (Rs 750 million).

CFO of Ashok Leyland , K Sridharan says that though they have given a guidance to the market at about 78,000 units, they should be crossing 80,000 units this financial year, which will translate to about 25% growth over the previous year.

Excerpts from CNBC-TV18's exclusive interview with K Sridharan:

Q: Can you start with your sales picture and whether you lost any market share to Tata Motors  in this quarter?

A: We gained market share by about 70 basis points compared to our March 2006 position. Infact in the month of September we further increased our market share to the magical number of 30% plus. We hope to consolidate our position around this penetration.

Q: Your operating margins have slipped a little bit in this quarter to 8.1%. Could you outline why that happened and whether you see operating margins slipping further during the course of the year?

A: Basically, the operating margins slippage was well predicted primarily because of the cost increases on the material front, primarily in rubber and non-ferrous metals. Apart from that, we also had a poor mix in the current quarter where sales to the defence sector were much less than the previous year.

We do have an order book position from defence, which we would be supplying in the next quarter as well as in last quarter of this current financial year. We will have more passenger sales happening in the second half of the year where we have order book positions from State Transport Corporations. Both these factors should restore our margins back to the last year's levels.

Q: You have already sold about 37,000 units in the first half of this financial year, do you think by the end of it you would have crossed about 75,000 or more?

A: We should be crossing 80,000 vehicles though we gave a guidance to the market at about 78,000 vehicles, which will translate to about 25% growth over the previous year.

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