Some corrections in retail inventory in Nov, optimistic about Q4 demand: Ashok Leyland's Shenu Agarwal

The company is very bullish on the LCV market in the long term.

Ashok Leyland, the flagship company in the Hinduja Group, saw a 3 percent year-on-year decline in the wholesale sales. "November performance was just a one off blip, it was temporary. There was some corrections in the retail inventory in November but we're already into December and it (demand) looks good. Also quarter four we're very optimistic about the demand overall," said Ashok Leyland MD and CEO Shenu Agarwal.

There was also a 10 percent decline in demand within the medium and heavy vehicle commercial (MHVC) segment.

In an interview with CNBC-TV18, Agarwal discussed various topics including the light commercial vehicles (LCVs), MHVCs, market, price hikes, electric vehicles (EVs), the defence sector, and more.

Agarwal reiterated that the company maintains its projection for the MHCV industry to grow by 8-9 percent in the financial year 2023-24. He emphasised that this forecast, initially made at the beginning of the fiscal year, remains unchanged.

Speaking about the LCV industry, he said it might grow by 4-5 percent in FY24, but it hasn't happened so far. "Still hopeful that LCV will see a positive growth in the remaining four months (of FY24)," he added.

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Price Hikes and Discounting

Agarwal said that the company has not decided on the price increase as yet. Also, there is no major shift in discounting. "I think the discounting levels are quite consistent with what we've seen in the past in the industry," he said.

LCV and MHCV Market

The company is very bullish on the LCV market in the long term. "LCV is a last mile delivery vehicle. This market will grow leaps and bounds into the future," Agarwal said.

Speaking of market share and products in this segment, he added, "We still have only 20 percent market share and we operate in a particular segment in LCV, so for us it is both about expanding our product range as well as gunning for more market share in the LCV."

Defence

On defence orders, Agarwal said the company has substantial amount of orders. "We have a strong order pipeline for FY25 so defence business is doing well and will continue to do so for next 2-3 years," Agarwal said.

Defence revenue is seen at Rs 800-1000 crore in FY24, he further added.

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EV space

Ashok Leyland's capex for FY24 is at Rs 500-750 crore which includes investments on EVs and other alternative fuels, Agarwal said.

Particularly for electric buses and electric LCVs, Ashok Leyland's subsidiary company Switch handles all the activities related to these two products. It is funded by Ashok Leyland.

Speaking about the latest notification by Ministry of Road, Transport, and Highways (MoRTH) mandating all N2 and N3 category (commercial) trucks produced from October 1, 2025, to be equipped with factory-fitted air-conditioned cabins for drivers, he said that the industry welcomes this step. "It will help in efficiency and productivity of the vehicles we have presently or will be there in the future, he added.

Ashok Leyland reported a 181 percent (YoY) surge in consolidated net profit at Rs 561 crore for the September quarter 2023-24 riding on higher sales. The company had incurred a net profit of Rs 199 crore in the same period last fiscal year.