 "Ashok Leyland set to change track after expansion spree")
Commercial vehicle (CV) major Ashok Leyland has said it made an impairment charge on its balance sheet of Rs 558 crore in 2015-16. And, had disposed of the shares in Ashok Leyland John Deere at a loss of Rs 233 crore.
In a letter to the shareholders, Chairman Dheeraj G Hinduja said in 2016-17 and beyond, the cornerstone of the growth plan would focus on the core business of CVs. A portfolio rationalisation, already in process, would see progressive exit from non-core and non-performing businesses. The impairment charge of Rs 558 crore in 2015-16 included one of Rs 107 crore towards Albonair Germany, Rs 150 crore towards Optare Plc of the UK and Rs 5 crore towards Albonair India.
“The company and its joint venture (JV) partner (Nissan Motors) are in discussion to resolve the uncertainty with respect to the continuity of the JV operations represented by three companies,” it said. These companies are Ashok Leyland Nissan Vehicles, Nissan Ashok Leyland Powertrain and Nissan Ashok Leyland Technologies.
Leyland said considering the significant uncertainty in continuity of the JV operations and the accumulated losses of the JV entities, it had provided for the carrying value of the investment in the said companies, aggregating Rs 296 crore. In 2014-15, it said it had made an impairment provision of Rs 214 crore in the three Nissan JV entities.
The loss at Ashok Leyland Nissan Vehicles came down to Rs 61.9 crore in 2015-16 from Rs 791.2 crore a year before. AL has 51 per cent stake in this company. Nissan Ashok Leyland Powertrain's profit was Rs 71.9 lakh in 2015-16 as compared to a Rs 3.1 crore loss a year before. Nissan Ashok Leyland Technologies made a profit of Rs 5.05 crore, as compared to a Rs 9.8 crore loss a year before.
In the major JV, for construction equipment with John Deere, the company said as mentioned earlier that it had disposed the shares in Ashok Leyland John Deere at a loss of Rs 233 crore. The JV company has reported a loss of Rs 75.9 crore in 2015-16 as against Rs 29.6 crore a year before. AL attributed the poor performance to market conditions. It also said two of the JVs/associates under liquidation were Ashley Airways and Automotive Infortronics.
Managing Director Vinod K Dasari earlier said AL had decided to focus on its core business of CVs, with related diversification. He agreed it was a bad decision to get into unrelated areas; it was done with good intent, “but somehow things didn't work out...instead of spending the time and energy to revive a dead business, let it go and focus on the core business.”
Hinduja said AL would give more thrust in international markets. In the target clusters, it would develop products specifically for the identified markets. It is doubling the capacity of its Ras-Al-Khaimah plant (in the UAE) this year and a new assembly unit in Bangladesh is in the offing. Further units in Africa are under active consideration.
To leverage availability of the in-house developed Neptune engines and respond to growing application needs, the power solutions business would be implementing an updated strategic road map, he added.
Future plans include introduction of Euro VI-compliant engines and exhaust system variants, commercialisation of hybrid and electric buses, and introduction of a modular business programme for both truck and bus variants.
