Ashok Leyland Limited (ALL), India's second largest manufacturer of commercial vehicles has reported a net loss of Rs 197m for the 1QFY01. The company's sales have fallen by 6.7% YoY to Rs 4,447 m mainly due to fall in overall volumes and lower realisations in the 1QFY01.
ALL's operating profits fell by 21% YoY to Rs 190 m and operating margins fell to 4.3% in the 1QFY01. The impact of imposing uniform sales tax across the country has resulted in a decline in sale of commercial vehicles as prices of these vehicles has gone up.
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In the medium duty vehicle segment the company has managed to increase its market share in the 1QFY01 to 34.3% YoY from 33.8% in the 1QFY00. This is mainly due to discounts the company has offered so as to push volumes, however this has impacted the company's operating margins.
However the company's sales in the medium passenger vehicle segment has done very well in the 1QFY01. This demand has sprung due to replacement of old buses by state transport undertakings as these account for over 70% of sales in this segment for the industry. ALL's vehicle growth in the 1QFY01 has gone up by 115% to 3,362 vehicles.
LCV Goods (less than 7.5T GVW)
Commercial vehicle sales for the industry have slowed down in the current year, mainly due to imposition of uniform sales tax across the country. This has lead to an increase in prices of commercial vehicles in many states. The softening in freight rates too has lead to poor demand of medium goods vehicles.
On the positive side ALL's launch of CNG buses in the capital and the transfer of its engine division into a joint venture will boost its profitability in future.
On the current price of Rs 54, ALL is trading at 8.2x FY2000 earnings.
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