Ashok Leyland to invest Rs.1,000 crore on operations

Speaking to reporters, CFO K.Sridharan said: "Our capex for this year will be between Rs.800 - Rs.1,000 crore. The investments will be equally spread between our own operations and in joint ventures."

He said the company would fund the expansion from internal resources as well as debt funds to the tune of Rs.500 crore.

"We are looking at various options for debt. It could be external commercial borrowings (ECB) or even perpetual bonds," Sridharan added after sharing of the financial results for the fiscal 2010-11.

Queried about the doubling of the company's financial expense to Rs.163 crore last fiscal, he said: "The interest cost of the company's investment in Pantnagar facility (in Uttarakhand) were capitalised during the construction period. Now the factory is functional and hence interest spend is shown in the accounts. Further the company borrowed Rs.460 crore last year which increased the finance cost."

Managing director Vinod K.Dasari said the company’s target for the current fiscal is 110,000 units. Last year Ashok Leyland sold 93,337 units.

He said the company’s strategy of derisking its business by focusing on other revenue streams like spares, defence and diesel gensets paid good dividend last year.
Ashok Leyland earned Rs. 712 crore last year from spares, Rs.363 crore from defence sales and Rs.331 crore from selling gensets.

Dasari replied in negative when queried about hiving of the company's defence business to a new company Ashok Leyland Defence Systems Ltd (ALDS) floated partnering with German company Krauss-Maffei Wegmann (KMW) GmbH.

He also said the company will roll out trucks fitted with its new Neptune engine this fiscal.
"We will roll out 500 trucks this year and ramp up the numbers next year. Currently customer trials are on," Dasari said.

He said the company closed last fiscal with a turnover and net profit of Rs.11,117.71 crore and Rs.631.30 crore up from Rs.7,244.71 crore and Rs.423.67 crore respectively posted during 2009-10.

Approving the accounts for 2010-11 the company's Board of Directors have recommended a divided of Rs.2 per share with a face value of Re.1.

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