Chennai: Ashok Leyland Ltd, India’s second largest commercial vehicle maker, has reported a 15% fall in net profit in the three months ended September, even as revenue grew marginally because fewer trucks were purchased amid rising interest rates.

It also didn’t have a one-time gain that boosted profit in the year-ago period.

The Chennai-based company had a net profit of Rs80 crore on sales of Rs1,746 crore in the fiscal second quarter, compared with a profit of Rs95 crore on sales of Rs1,675.72 crore in the year-ago quarter.

Testing time: Ashok Leyland managing director R. Seshasayee.

“The market sentiment remains subdued, with all eyes set on the interest rates. However, all demand drivers continue to be robust and a revival will be cued by softening of interest rates," said R. Seshasayee, managing director of Ashok Leyland, in a statement.

Rapid interest rate increases, taking rates to a five-year high, have resulted in much steeper costs of financing for truck operators and led to a decline in sales of trucks. Ashok Leyland, reported a one-fifth dip in domestic sales of trucks in the first six months ended September.

“What saved us in the first six months is the bus market," said a company spokesperson. Bus sales for Ashok Leyland within India have more than doubled to 9,940 units from 4,298 units in April-September 2006. Despite a fall in sales of trucks, the Hinduja group company is confident of a market recovery in the coming months.

“We are proceeding with our capex (capital expenditure) and product upgradation plans. Financial expenses have risen largely on account of external commercial borrowings to find capital expenditure," said Seshasayee’s statement.

Interest costs or financial expenses went up to Rs25 crore in the six months ended September, from Rs80 lakh in the corresponding period last year.