Chennai-based, Ashok Leyland, India's second largest commercial vehicle maker has reduced its investment size and plans to save Rs 1,000 crore in the next three years, as part of a conscious effort to trim its capital expenditure.
Ashok Leyland, which has been one of the worst hit automotive companies due to dwindling demand recently, will cut its capital expenditure for the next three years to Rs 2,800 crore from Rs 4,200 crore planned earlier, a senior executive from the company said today.
It is also reducing production by almost 30 per cent at the Uttarakhand plant to 50,000 units per annum from 70,000 units per annum scheduled earlier. It, therefore expects to save Rs 700 crore from the cut.
Speaking to reporters on the sidelines of a CII event on International Financial Reporting Standards 2009 (IFRS), K Sridharan, Chief Financial Officer, Ashok Leyland, said, "We will spend about Rs 900 crore this year and Rs 1,200 crore in the next three years as part of the capital expenditure. We are looking to shave off at least Rs 600-800 crore in working capital during the same period."
The company is looking to get rid of 2,000 vehicles in the by the end of this month, thereby reducing its inventory size to 6,000 units from 8,000 units.
In addition, to speed up sales in the rural and semi rural areas, Ashok Leyland will set up a captive vehicle financing arm by the middle of next financial year with an initial outlay of Rs 100-150 crore. This outlay will be raised at later stages, said the official.
This finance arm will operate mainly in areas where finance from conventional sources including banks and non-banking finance companies do not have the reach.
The finance arm will be a part of the Ashok Leyland group and would finance only company manufactured vehicles like trucks and buses.