Dheeraj Hinduja, executive chairman, Ashok Leyland, said, “We are looking at the development of new products with alternative fuels and most of the future capex will go towards that but diesel isn’t going away anytime soon and we will be ready with our range of products and do efficient resource allocation.”
Truck and bus major Ashok Leyland will focus more capex on its alternative fuel products going forward as the company works towards being “future ready.”
Dheeraj Hinduja, executive chairman, Ashok Leyland, said, “We are looking at the development of new products with alternative fuels and most of the future capex will go towards that but diesel isn’t going away anytime soon and we will be ready with our range of products and do efficient resource allocation.”
That includes making sure electrification programmes undertaken by its EV-arm Switch are “well-funded” even as “funding discussions with potential investors continue.”
The capex push comes on the heels of the company’s decision to electrify its entire light commercial vehicle range including mass market entry level products like Dost. “We are looking at electrification of the LCV range under Switch and we will launch both Bada Dost and later Dost this calendar year,” said Hinduja. “The trend in the light segment is to move towards electric and discussions with logistics and e-commerce players forecast significant volumes,” he added.
Beyond new green products though the company’s legacy capex cycle is already in place. “We had undertaken a large part of capex in 2020 so we have enough capacity to cater to the demand uptick and there is no need for expansion,” said Hinduja.
There will be some product capex though to plug gaps in the LCV segment but otherwise the company is “well covered,” he added.
Ashok Leyland turned in a top gear Q3 performance with net profit of Rs 361 crore, up from nearly Rs 6 crore in the year-ago period. Revenue at Rs 9,030 crore was up 63% over Rs 5,535 crore in Q3 FY22. The company reported an EBITDA of Rs 797 crore (8.8%) compared to Rs 224 crore (4%) last Q3. The company generated enough cash to reduce its debt to the tune of Rs 635 crore. Its net debt right now is Rs 2043 crore with a debt equity ratio of 1:0.3 compared to 1:0.4 last Q3.
With “industry volumes inching towards the FY2019 peak and softening of commodity prices particularly steel which has contributed to margins positively” the company is looking at growth trot. While global markets have seen “challenges” due to inflation uncertainty in Europe and the UK and the Ukraine war, Ashok Leyland is looking to grow its international sales in its target markets like the Middle East, ASEAN and Africa.
