Commercial vehicle major Ashok Leyland today said that its joint venture with Nissan to manufacture Light Commercial Vehicle (LCV) near Chennai will be delayed by six months due to the current economic slowdown and delay in land acquisition. The company will scale down investment in the project.
Meanwhile the company has brought down capex plan by Rs 1,000 crore for the next three years to Rs 2,000 crore from Rs 3,000 crore, which was earlier planned.
Speaking to reporters after announcing company’s results R Seshasayee, managing director, Ashok Leyland said that current assumption to start production (Nissan project) at Pillaipakkam, near Chennai, would be 2011.
He added, initial investment along with the partners in the Nissan project was Rs 2,000 crore which has to be scaled down. Seshasayee did not comment on how much percentage it would come down.
The joint venture partners initially was planning of produce 3,4 and 6 tonne vehicles, now in addition to that Nissan is looking at producing some more products for overseas markets this will also lead to offer larger portfolio.
Meanwhile, AL has lost its market share by 1.8 per cent in 2008-09 due to the current economic slowdown in the commercial vehicle industry.
The company has reported a 70 per cent drop in the net profit for the quarter ended March 31, 2009 which stood at Rs 53 crore as compared to Rs 180 crore, a year ago.
Terming the year as a turbulent year and challenging , Seshasayee said that one disturbing trend was the segmental shift is the steeper fall in demand for higher capacity vehicles such as tractor trailers and multi-axle vehicles at least temporarily retarding the modernisation of India’s vehicle composition.
He said that the company had lost its overall market share by 1.8 per cent, which is not a “good news”. However it maintained its market share of 46 per cent in the bus segment.
Company’s overall sales dropped to Rs 1,218 crore from Rs 2,565 crore, a drop of 52 per cent during the last quarter ended March 31, 2009.
In terms of units, sales in 2008-09 dropped to 54,431 units in 2008-09 from 83,307 units in 2007-08, a drop of 34.7 per cent.
