Worst behind CVs; will meet export guidance: Ashok Leyland

Vinod Dasari, MD, Ashok Leyland said that the company might see double-digit margins in Q4 if volumes come back.
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Nov 21, 2014, 10.14 AM | Source: CNBC-TV18

Worst behind CVs; will meet export guidance: Ashok Leyland

Vinod Dasari, MD, Ashok Leyland said that the company might see double-digit margins in Q4 if volumes come back.

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Worst behind CVs; will meet export guidance: Ashok Leyland

Vinod Dasari, MD, Ashok Leyland said that the company might see double-digit margins in Q4 if volumes come back.

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Vinod Dasari (more)

MD, Ashok Leyland |

Exports as percentage of contribution to rise to 14-15% by FY16-end

- Vinod Dasari (MD )

In an interview to CNBC-TV18 Vinod Dasari, MD,  Ashok Leyland spoke about the latest happenings in the company and the way ahead. He said that auto player’s exports are likely to grow 30 percent in FY15 and the company is on track to achieve export guidance.

Around one-third of the company’s revenue will come from outside India over next five-six years, he added. Also, the company will make announcement on another export order in 10 days.

Continuing his optimistic tone, he said worst is over for the commercial vehicle (CV) sector . Ashok Leyland will be able to sustain margins at these levels and its market share has grown across all segments, he said.  Ashok Leyland has turned profitable for the first time in six quarters.

Below is the verbatim transcript of Vinod Dasari's interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.

Reema: You have bagged a large project order worth USD 79 million from Africa. When will it contribute to your revenues?

A: This is not an order like we get other export orders for large things. If I compare this with Sri Lanka order which was for one type of vehicles or couple of types of vehicles in a very large number. What we are doing in various parts of Africa is what we did in parts like Sri Lanka and Bangladesh many years ago was helped the local economy build a transport infrastructure. So, we will sell trucks, we will sell buses, we will sell light commercial vehicles (LCVs), we will sell spares, we will do driver training, we will set up service training.

Overall, we want the country to come up and get lot more active in the transport industry. I know that these are seeds that we are sowing and these are small orders but as those countries become mature and much more developed, they will buy lot more. Today, we are successful in Sri Lanka because we have been having a joint venture with the government now for over 25 years.

Sonia: What kind of potential do you see in the Africa market through this model that you spoke about? How big it is and how much market share are you eyeing?

A: Africa will take time. It is not going to be an overnight thing where Africa will suddenly contribute a huge amount but over the next five-six years it’s our goal to make 1/3rd of our revenues to come from outside India. I would say that a substantial chunk of that 1/3rd will come from Africa in five-six years time and every country in Africa is trying to get out of their past and grow significantly. There is tremendous potential, everywhere I go I feel there is tremendous potential.

It is not going to be an overnight thing and that’s not what our intent is. We are investing our time and energy and we will probably be putting up modular plant in some of these countries. We haven’t decided which one but we have tried this experiment in Middle East; we have built a plant for four a day in Ras Al Khaimah seven years ago. Today we expanded it and we are now producing ten a day in that plant. So that’s another example of how we use local skills and local suppliers to help build the economy as well as sell in that market.

Sonia: You said to us that 1/3rd of your revenues will come from outside India over the next five-six years but what about in the very near-term. How much export growth are you targeting one year from now and how much will export contribute to your overall revenues by the end of FY15?

A: Compared to last year’s first half our exports grew by about 25 percent and if you take the quarter, we grew by about 40 percent. I had said previously that this year I expect our exports to grow about 30 percent roughly and we are on track to achieve that. Usually exports used to be 8-10 percent our sales. This year they will be somewhere closer to about 14-15 percent of our sale. So we are halfway mark as to where we want to be five years from now. Where will I be export as a percentage of total in FY16. It’s little difficult to say because it backs a question as to exactly when and how much domestic commercial vehicle (CV) volume will come back.

Sonia: For export orders that you are getting, will you be increasing your capex or is it just Leyland providing capabilities to these orders?

A: These are all small plant, these are modular. They will be done with local partners where we will provide the capabilities. We are not going to spend millions of dollars in investment. It will be very small, all within the capex numbers that we have said.

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