Ashok Leyland bets on growth

Wed, 19 May 01:30 pm

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Indian markets continued to languish in the red over the last two hours of trade. All indices were seen trading below the dotted line led by stocks from the banking and realty space.

BSE-Sensex is trading lower by 227 points while NSE-Nifty is trading 73 points below the dotted line. BSE-Midcap index is trading lower by 0.8% while the BSE-Smallcap index is trading 0.5% below yesterday's closing. The rupee is trading at 46.03 to the US dollar.

As per a leading financial daily, commercial vehicle major Ashok Leyland is planning a capex of Rs 20 bn over the next two years. Of this investment, Rs 8 bn has been earmarked for investment in joint ventures. As per a company's spokesman, the company expects to see a 15% growth in commercial vehicles this year. This is on the back of positive macro-economic indicators and migration to superior emission norms. This would help the company increase its market share on an improved technology platform.

In fact the company has steadily been ramping production in anticipation of higher demand and has recently inaugurated its Pantnagar plant which will take up the company's installed capacity to 150,500 vehicles. The company plans to introduce 25 new models over the next 18 months. Moreover, the first batch of Light Commercial Vehicle product as part of the company's JV with Nissan Motor Company is expected to roll out in 2011. With these initiatives, it seems the company is looking to position itself to take advantage of the continuing growth trend.

Rural Electrification Corporation (REC) declared its 4QFY10 and FY10 results today. The company's interest income for the year grew by 38% YoY. This growth was aided by growth in advances to generation and T&D. While advances to generation grew by 67% YoY, advances to T&D grew by 26% YoY. The company's operating costs grew by 43% YoY as a result of increase in staff costs and other expenditure. Staff costs during the year increased by 34% YoY while other expenditure increased by 20% YoY. REC's bottom line expanded by 59% during the year. For the quarter, the company's top line grew by 34% YoY while net profits grew by 44% YoY.