Chennai: Sales of commercial vehicles in India are likely to grow by 15% in the ongoing financial year, K. Sridharan, chief fiscal officer at Ashok Leyland Ltd, said in an interview.
The Chennai-based flagship company of the Hinduja Group sold 63,926 vehicles in the year to 31 March, up 17.4% from the previous year. Of this, the domestic market accounted for 57,947 vehicles.
Strong numbers: Ashok Leyland’s CFO S. Sridharan.
In March, Ashok Leyland sold 10,067 vehicles, up 97.4% year-on-year. Domestic sales rose 110% to 9,299 vehicles, while exports increased 14% to 768 vehicles.
The company’s net profit in the March quarter surged to Rs222.66 crore from Rs53.32 crore a year earlier. Net sales rose 141% to Rs2,939.04 crore.
On a consolidated basis, Ashok Leyland expects better than 10% margins in the ongoing fiscal year. Edited excerpts:
You crossed your indicated rate in terms of volume growth you wanted to do last year. What is the target you have set for fiscal year 2011 (FY11)?
In FY11, we expect the total industry volume to move up by more than 15%. We should be notching up at least a couple of market share percentage improvement. Taking all that into account, one should expect that in the domestic market, we should register more than 20% growth.
That will be an even higher rate than in the year gone by. Do you see that much volume momentum?
Yes, that is right. We haven’t yet announced the April numbers, but going by the feel of the market, in April we should be in a position to hold on to our market share level. Going by the overall run rate that is happening, I would expect the industry should post even much higher growth rate.
What would that mean in terms of units that you hope to sell in FY11?
We haven’t got a fix on it, but going by these arithmetic, one can say that one should target closer to 80,000 in (the) domestic market and couple of thousand(s) in the export market. We should be well above 85,000.
How much of the JNNURM (Jawaharlal Nehru National Urban Renewal Mission) order book bumped up the fourth-quarter performance and how much comes into the early part of this year?
Last year, we sold closer to about 3,800 or so. Another 1,200 needs to be performed in this year and this month we did about closer to 150. I would expect the balance to be completed before June.
What are the early trends for your sales in April?
The way I see April numbers, it is a very unusual April when compared with the last year, where we sold less than 2,000 vehicles. This year, certainly, it will be at least 200-250% improvement over the last year’s base level.
Going by this run rate, we should be in the region of 6,000 vehicles. So I would expect that this year, if the run rate continues at these levels, the total industry volume as well as Ashok Leyland should be posting more than 20% growth.
With this kind of volume momentum, how much pricing elbow room are you getting, because the only thing worrying about the auto space is the input pressure you have started facing?
We did have a price cost increase happening on the steel front and the rubber front. Tyre continues to be in shortage for us, but we did take a pricing action in April in line with the way the market moved. About 1.5% pricing action on 15 April; we are yet to benefit from that because quite a lot of pre-price increase and vehicles are getting sold. I would expect that the price potential to price out should be there given the current uptrend happening.