Ashok Leyland to consider price hike next month

Commercial vehicles major in tie-up with ICICI, SBI for vendor financing

Faced with increasing pressure due to rising input costs commercial vehicle major, Ashok Leyland will visit the issue of increasing prices next month. Ashok Leyland has also tied up with banks like ICICI and the State Bank of India (SBI) for vendor financing at competitive rates.

Speaking to Business Standard on the sidelines of 'Improve' an annual exercise of the company to improve productivity and increase savings, J N Amrolia, executive director of Ashok Leyland, said that the company was slated to have a dealers meet in May and the issue of effecting a price increase would then be discussed.

"As of today, we have not decided anything on increasing prices. We have our dealer conference next month and we will take a view then on when to increase prices or by how much to increase prices," Amrolia said.

Indian automobile companies have been facing the brunt of an unprecedented 106 per cent increase in steel prices over the last one year. While car manufacturers have periodically increased prices commercial vehicle manufacturers are yet to resort to any such move.

Ashok Leyland claimed that for the financial year 2003-04 the company had been able to save as much as Rs 21 crore through its 'Improve' programme.

"Initiatives like 'Improve' are more significant today as we have been able to effect substantial savings. Most of these savings are continuous and hence we are in a position to absorb increased costs rather than pass them on through price increases. The Rs 21 crore savings can be added straight to our bottomline," Amrolia said.

This year the company saw 2,500 employees participating in 'Improve' and close to 450 projects were reviewed. "This captures the mood of the company and also ensures that the employees contribute directly to the fortunes of the company," he said.

The company has also tied up with leading banks like ICICI and SBI for vendor financing at about seven per cent. "We have a vendor base of about 600 but this initiative is targeted at the small and medium sized vendor. We expect about 120 of our vendors to benefit from this as earlier they used to contract finance at rates of close to 13 per cent," S Nagarajan, executive director- manufacturing, Ashok Leyland, said.

On the export front, Amrolia said that the company expected close to eight per cent of its revenues from exports this year also. "We expect to export close to 3,300 vehicles to Iraq this year," Amrolia said. On future growth, Amrolia said that the company expected to keep pace with an estimated market growth of between 10 and 12 per cent.