Ashok Leyland rules out capex to expand capacity

Ashok Leyland, the Chennai-based commercial vehicle maker, has said that it does not foresee the need for capital expenditure “for the next couple of years” to increase capacity, notwithstanding the buoyancy in the industry which grew at 34% in the first half of the current fiscal.

“Our capacity is about 150,000 excluding LCV and you know I don’t see an issue on capacity immediately. Now are we going to incur a huge amount of capex on that, I believe not so I am not too concerned about capacity for the next couple of years at least,” said Gopal Mahadevan, the company’s CFO, during a earnings’ conference call earlier this month.

Instead, he said, the company will augment capacity by “running extra shifts and debottlenecking certain critical aspects of the (Pantnagar) plant.”

The company had registered a 63% growth in the April to September period this year in volume sales at 46,074 units in the MCHV segment. In value terms, the company’s revenues were up 54% y-o-y at Rs 8,781 crore, from INR 5,695 crore during April-September 2014.

“The average discount numbers, they continue to rein high, they have not actually come off, if you really look at it the discounts are in the range of about INR 2 to 2.25 lakhs, in some cases they have gone up.”

He said the company managed to offset the impact of discounts by increasing prices as a result of which net price realization increased during the second quarter as compared to the first quarter.

He stuck to the forecast made early during the year that the industry would grow by about 20% this financial year.

The Ashok Leyland stock closed at INR 94.75, down 1.35% from its Monday close on the Bombay Stock Exchange. In 52 weeks, the price has gone up from INR 49.2 on 25 November, 2014 to INR 94.75.

Ashok Leyland rules out capex to expand capacity

Source: http://transreporter.com/