Ashok Leyland’s sales drop by 3.92% in May 2008

Hinduja flagship company, Ashok Leyland has reported a decline of 3.92 percent in its commercial vehicle sales in May 2008 to 5,576 units, against 5,804 units in May last year.

ALL’s domestic sales during the month dipped by 5.05 percent to 5,161 units, as compared to 5,436 units a year ago. However, exports jumped by 12.77 percent to 415 units during May 2008, from 368 units in the corresponding period last year.

Ashok Leyland, Nissan set up three new JV cos, to invest Rs 23 billion

Ashok Leyland Ltd. and Nissan have set up three new joint venture companies, with a total investment of around Rs 23 billion, for the manufacture of LCVs, powertrains and technology development. ALL and Nissan had signed their master cooperation agreement in October last year, and have formalized it now.

Ashok Leyland Nissan Vehicles Pvt. Ltd., which will make LCVs, will be 51 percent owned by Ashok Leyland and 49 percent by Nissan. Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain manufacturing unit, will be 51 percent owner by Nissan and 49 percent by Ashok Leyland, while Nissan and ALL will both have a 50 percent stake in Nissan Ashok Leyland Technologies Pvt. Ltd.

‘The balanced joint venture structure facilitates meaningful contribution from both partners and the best opportunity to leverage their respective strengths,’ said R Seshasayee, MD, Ashok Leyland. ‘We took another important step in the creation of a solid structure that will allow Nissan and Ashok Leyland to enter successfully the LCV market in India and global markets,’ added Carlos Tavares, executive vice-president, Nissan.

Ashok Leyland Nissan Vehicles Pvt. Ltd. will have an initial capacity of 100,000 vehicles per annum, which may be scaled up later. The plant, which will be set up near Chennai, will be operational by the end of 2010.

Ashok Leyland to manufacture construction equipment

The Hinduja group flagship company, Ashok Leyland will soon be getting into a new line of business – the company will start manufacturing construction equipment. The company is, reportedly, looking for a technology partner, but may also decide to go on its own.

Ashok Leyland, already a leading manufacturer of tippers for the construction industry, has the research and development, technology and manufacturing strengths needed to get into the construction equipment manufacturing business. With a booming construction sector, getting into this new line of business is likely to add synergies boost the company’s bottomline over the long term.

Some of the biggest names in the construction equipment manufacturing business – Caterpillar, Komatsu, JCB, Hitachi and Samsung – are already present in India. Tata Motors is getting in soon, and now, with Ashok Leyland also having decided to get on the bandwagon, this is one sector which should see a lot of action very soon!

Ashok Leyland to double capacity, declares 150pc dividend

The Hinduja Group’s flagship company, Ashok Leyland has announced a net profit of Rs 180.57 crore for the quarter ended March 31, 2008. This is a 5.28 percent growth over the corresponding period a year ago. The company had a net profit of Rs 171.52 crore in the fourth quarter of the financial year ended March 31, 2007.

Ashok Leyland’s total income rose to Rs 2,573.61 crore for the last quarter, up from Rs 2,307.9 crore in the year-ago period. The company’s board of directors has declared a dividend of 150 percent, at the rate of Rs 1.50 on every share of face value of Re 1 held, for the year ended 2007-08.

For the year-ended March 31, 2008, the company announced a net profit of Rs 469.31 crore, a 6.35 percent growth over the year-ago period. The company had a net profit of Rs 441.29 crore in the financial year ended March 31, 2007. The total income rose to Rs 7,803.12 crore for the year ended March 31, 2007, up from Rs 7,238.98 crore last year.

‘In terms of topline, we compensated for the slowdown in the truck market by significantly improving our share of the bus market, international operations, as also the engines and spares businesses,’ said AL’s managing director, R Seshasayee. ‘Our bottomline benefited from some aggressive value engineering, sourcing initiatives and higher productivity,’ he added.

The board has approved the appointment of Vinod K Dasari as an Additional Director on the company's board. Further, R Seshasayee would be re-appointed as Managing Director for three years, effective April 1, 2008.

Ashok Leyland will also spend Rs 3,000 crore in capex over the next three years to more than double its annual capacity, which is currently 84,000 vehicles. The company will launch its iBus this year and also extend its range of tractors. Further, Ashok Leyland's bus assembly unit in the UAE will commence operations this year, with capacity being doubled to 2,000 units.

‘Margins continue to be under pressure, but if the revival comes, capacity won't be a constraint for us,’ said Seshasayee. He added that Ashok Leyland is also looking for acquisitions abroad, and that the company would continue to focus on 'second hemisphere' markets. 'We are expanding our presence in foreign countries and we are also looking for some acquisitions. Some strategic markets include Indonesia, Syria, Vietnam, Thailand, Honduras, Venezuela and Russia,' said Seshasayee.

On the domestic front, Ashok Leyland's upcoming plant in Uttarakhand is likely to be commissioned by March 2009. And by the 2010, the company will roll out its first products in partnership with Nissan.

Ashok Leyland not sure of being able to acquire Valeo

The acquisition deal is not likely to go through

Commercial vehicle manufacturer, Ashok Leyland has expressed doubts over being able to successfully close its bid to acquire French auto component manufacturer Valeo, saying there are many complexities involved in the deal. ‘We are still considering the deal, but we are not very sure whether we will be able to close it,’ said K Sridharan, CFO, Ashok Leyland.

‘Ashok Leyland is a complete commercial vehicles manufacturer and I don't think it will be possible to shift the focus to an auto component maker,’ said Sridharan. ‘I am not saying that it will not happen, as we have not completely closed the deal yet, but I really do not forsee a possibility,’ he added, and also said that Ashok Leyland had not invested much time and resources on the diligence process.

According to earlier reports, the Hindujas were pursuing the Valeo deal, which, if it went through, would have been worth up to US$1.5 billion.

New JVs to drive growth in the Indian commercial vehicles sector

There's just no stopping the Indian CV sector now...

The commercial vehicle segment in India will soon witness a lot of action from new as well as established players, even as new joint ventures are being formed, investments are being made and products are being readied for launch.

The recently announced Daimler Hero Motor Corporation (DHMC) will also start making trucks under a new brand name by the year 2010, and apart from catering to the Indian market, the company will also explore the export market.

Daimler Trucks, a division of Daimler AG, has five truck brands in its portfolio – Mercedes-Benz, Sterling, Freightliner, Western Star, and Mitsubishi Fuso. With a wide range of trucks to choose from Daimler Trucks’ range, and with the Hero Group’s marketing and supplier network, DHMC could be in a powerful position in the Indian CV market within the next five years.

Initially, the company will only look at light and medium commercial vehicles, and will add HCVs to its lineup only after 2012. Apart from introducing CVs from the Daimler Trucks range, DHMC will also develop light, low-cost CVs especially for the Indian market.

DHMC isn’t, of course, the only new player in the Indian CV scenario. Nissan has tied up with Chennai-based Ashok Leyland, and will manufacture LCVs and small trucks for the Indian market. Navistar, the world's fourth biggest manufacturer of trucks, has tied up with the Mahindras to produce HCVs for the Indian market. And German company, MAN (Europe's third-largest CV manufacturer), had formed and a JV with Force Motors, and the company has set up a new manufacturing plant near Indore, in MP, to build up to 24,000 CVs per annum.

Older, more established players are also taking steps to ensure that they stay at the top of their game. Volvo, for example, has picked up a stake in Eicher Motors, investing US$350 million in the new partnership, and the Swedish company will now control Eicher’s truck, bus and auto components businesses.

Whichever way you look at it, the Indian CV segment looks all set for some frenetic activity over the next few months.