Pantnagar plant to be ready by April, says Ashok Leyland

October 1st, 2009 - 9:38 pm ICT by IANS  

Alwar (Rajasthan), Oct 1 (IANS) Commercial vehicle manufacturer Ashok Leyland says it has not whittled down investments planned for this fiscal on account of the economic slowdown, and denied it had put the Rs.1,300-crore facility it was setting up at Pantnagar on the backburner.
“We have reduced our capex by Rs.1,000 crore, but we are not cutting down on investments already planned,” company executive director for marketing Rajive Saharia said at a media briefing here.

“It (the upcoming Pantnagar facility) will be inaugurated in five to six months. I cannot say for sure, but I think it’s April,” Saharia said Wednesday, referring to reports that his company could shelve plans to build light commercial vehicles (LCVs) at the Uttarakhand unit.

Ashok Leyland reported a Rs.7.77-crore first quarter net profit this fiscal, as against the Rs.50.56 crore earned in the same quarter in the last financial year — reflecting an 84.6-percent plunge.

Net sales similarly more than halved to Rs.912.45 crore from Rs.1,887.98 crore in the corresponding period in 2007-08.

Incidentally, in his address at the 60th annual general meeting July 28, company chairman R.J. Shahaney had dwelt on the truck and bus major’s efforts to “conserve cash and increase focus on non-cyclical businesses”.

“The company’s capital expenditure plan of about Rs.3,000 crore was accordingly pruned to around Rs.2,000 crore over a three-year horizon. Investment plans and capacity enhancements were either re-cast or deferred while a freeze was put on all discretionary expenses,” Shahaney had told shareholders.

As part of a strategy to cut losses, Ashok Leyland has pared down production across board, bringing out 4,685 units in August as against 6,568 in the corresponding month last fiscal.

Similarly, while its production in the April-August 2008 period stood at 36,360 units, it was slashed by more than half to 16,050 units in the first five months this fiscal.

“We have merely reviewed our capacity. We didn’t need the surplus capacity of 15,000 units,” said Saharia.

The company is now looking at the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) — a central government initiative aimed at fast-track planned development in identified cities — to push sales of its buses and add to the bottomline.

Saharia said under JNNURM, Ashok Leyland would supply 5,000 buses to various state transport corporations (STCs) this fiscal.

The company has already delivered 300-350 buses across various STCs, he said, adding that the challenge lay in meeting the different specifications of sundry states. “For each one, we have to tailor the buses. We are doing it.”

Also of immediate priority is supplying 875 low-floor — ultra low entry (ULE) — buses to the Delhi Transport Corp (DTC) by next February, ahead of the October Commonwealth Games, from its new bus body facility in Alwar.

Costing between Rs.50 lakh to Rs.55 lakh each, the compressed natural gas (CNG)-powered buses are expected to bring between Rs.44 crore to Rs.48 crore by the end of the current financial year to the company that saw its net profit plummet to Rs.189.99 crore in 2008-09 from Rs.469.31 crore the previous fiscal.

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