Leyland puts up German arm Albonair for sale to cut debt

Hinduja Group flagship company Ashok Leyland has put its foreign subsidiary Albonair GmbH on the block as a part of its strategy to reduce debt.
Albonair GmbH, with headquarters in Dortmund (Germany), has developed complete solution for selective catalytic reduction and urea dosing system conforming to Euro 4,5 and 6 six emission standards for commercial as well as passenger vehicles.
Leyland has invested euro 46 million in Albonair GmbH.
Talking about the company's plans to reduce about Rs 4,300 crore debt, Ashok Leyland Chief Financial Officer Gopal Mahadevan said the strategy is based on the company's profitability, containing working capital and selling some non-core assets.

"One, the company may become more profitable that will translate into cash. Second, we are working on reducing the working capital. Working capital was Rs 1,400 crore last year, but today it has come down to Rs 700 crore. We want to reduce it. Third, we are looking at selling some non-core assets including Albonair GmbH," he told reporters.
"We are in the process of selling Albonair GmbH only. We are looking at prospective buyers. Total investments in Albonair business is about Euro 46 million," he said.

At present, the company's debt-equity ratio is 1.1:1. Ashok Leyland aims to bring it down to 1:1.

"The process is on. It is very much on track," Mahadevan said.
As of second quarter ending September 30, 2014 the debt stands at Rs 4,323 crore while it was Rs 4,700 crore as of March 31, 2014.
Ashok Leyland Managing Director Vinod K Dasari said in a statement said focus on reducing working capital, lowering debt and increase in sales in the first six months of the current financial year held the company to strengthen its bottom-line.
"We have been sharply focused on reducing working capital and lowering debt. Healthier sales realisations have helped strengthen our bottom-line and not only have we gained market share, we have returned to profitability after five successive quarters", he said.

Buoyed by 25 per cent growth in its overseas operations in the first half of this fiscal, Leyland is also working on a strategy eyeing to get one-third of its total revenues from exports.
"We are working on our export strategy. We expect our exports to account one-third of our revenues on the medium term," Mahadevan said.
Noting that the company is currently serving Bangladesh, Sri Lanka and the Middle East, he said the three markets account for 80 per cent of the total exports.
The company had shipped 2,735 vehicles to the three overseas regions during the six-month period as against 1,953 units during corresponding period a year ago.

Besides targeting the three markets, he said, the company was also looking at entering newer geographies including Africa, South America and South East Asian markets.