CV space under pressure; discounts galore: Ashok Leyland

Ashok Leyland improved its market share by 300 basis points to 25.5 percent during the September quarter, but continues to face pricing pressure, said the company’s Managing Director Vinod K Dasari in a conference call with analysts.

The commercial vehicle industry is going through a rough patch with overall volumes dropping 25 percent in the first half of the year, Dasari said. That has led to truck makers offering hefty discounts to attract buyers, he said.

Things have not got any better in October, with Tata Motors reporting a 30 percent drop in commercial vehicle sales and Ashok Leyland, 15 percent.

Ashok Leyland reported a net loss of Rs. 25 crore for the September quarter, compared with a net profit of Rs 143 crore in the year-ago period.

Quarterly sales declined 23 percent to Rs 2498 crore, weighed by a steep decline in sales of medium and heavy commercial vehicles. On the positive side, the company managed to lower its inventory 25 percent to 5882 units, even as it appeared to have come at the cost of margins.

The reduction in inventory has helped the company improve its working capital marginally.

“We may release up to Rs 1,000 crore via working capital management and non-core asset sale,” Dasari said.