Hit by declining sales of heavy vehicles, Hinduja flagship Ashok Leyland on Wednesday said it corrected its inventory levels by over 50% during the the October-December quarter compared with the preceding quarter. The company’s inventory level has come down from 7,500 vehicles to about 4,200 vehicles now.
“We have been correcting. As a practice we do not push vehicles into the system, for us or for them to sit on inventory. In fact, we keep track of dealers to ensure they are leaden with inventories and if we find they are not able to sell, we try to shift the inventory out, because we do not want vehicles to be standing at dealership levels,” chief financial officer Gopal Mahadevan said in a concall with analysts a day after the company announced its October-December earnings.
Ashok Leyland said it is on track to reduce debt by Rs 1,000 crore by the end of this fiscal and that it managed to trim about Rs 750 crore over the last two quarters by sale of non-core assets and non-core investments.
“The current net debt is Rs 5,400 crore, down from the peak debt levels in August of Rs 6,153 crore. We have been able to do this by sale of non-core assets and investments, not only in the current quarter but also in the previous quarter when we had the DTE sale,” he said.
The company said the commercial vehicle market has been down and hopes recovery will happen soon. “There has been seven quarters of continued decline, and that has been something that this industry has never witnessed. And we hope December is the bottom of the barrel,” said Mahadevan.
In absence of domestic demand, the company is focusing on sprucing up export plans. Without giving away an absolute timeline the company said it aims exports to contribute at least 33% to the revenues from present 10% in the medium-term.
“We are actively pursuing an export strategy where we want to ensure, that in the medium term, our exports will account for at least a third of our revenue. Today we are at about 10% of our revenues and we want to get back to our third and basically the areas where we are looking at you know to grow is actually in West Asia, South East Asia, Africa and the Latin America,” said Mahadevan.
The company posted a net loss of Rs 167.20 crore in during the October-December period, against a net profit of Rs 74.14 crore in the same quarter last fiscal. In Q2FY14, the company had reported a net loss of Rs 25 crore. Total income during the quarter declined by 19% to Rs 1,968.62 crore, against Rs 2,420.46 crore in the same period last fiscal. Sequentially, the total income was at Rs 2,498 crore.