Ashok Leyland net slips 16%

Commercial vehicle maker Ashok Leyland has reported 16 per cent fall in net profit at Rs 80.33 crore for the quarter ended September 30, 2007, compared with Rs 95.36 crore in the corresponding period a year ago, on the back of a slowdown in the domestic commercial vehicle market.

For the second quarter, net sales was up four per cent to Rs 1,745.89 crore compared with Rs 1,675.72 crore in the same period of the previous financial year. Operating profit was almost flat from a year earlier at Rs 133 crore.

For the half year ended September 30, 2007, net profit was up 2.4 per cent to Rs 168.52 crore compared with Rs 164.51 crore in the same period a year ago, primarily due to higher bus sales.

"Garnering more than half of the market share in the bus segment has helped the company offset the impact of the slowdown in the goods segment," said a company statement.

Net sales for the half year went up 8.6 per cent to Rs 3,367.03 crore compared with Rs 3,099.59 crore in the year-ago period, on the back of higher sales volume at 37,033 units, compared with 36,903 units in the previous financial year, despite a five per cent fall in the country's medium and heavy commercial vehicle segment, the statement added.

Financial expenses increased to Rs 25.38 crore (Rs 88 lakh). After charging a higher depreciation at Rs 87.91 crore (Rs 69.22 crore), PBT (before extraordinary item) stood at Rs 248.18 crore (Rs 231.14 crore).

Amortised VRS compensation, net of tax, was at Rs 4.95 crore (Rs 4.59 crore). Provisions for taxation were at Rs 71.45 crore (Rs 60.58 crore) and Rs 3.25 crore (Rs 1.45 crore) for fringe benefit tax.

R Seshasayee, managing director, Ashok Leyland said the company had managed to retain volumes in a falling market and was going ahead with its capex and product upgradation plans in anticipation of market recovery.

"Financial expenses have risen largely on account of external commercial borrowings to fund capital expenditure at existing and new manufacturing locations," he added.

He further said that the market sentiment remained subdued with all eyes set on interest rates. However, all demand drivers continued to be robust and revival would come with softening interest rates, Seshasayee said.