Commercial vehicle maker Ashok Leyland has posted an 8 per cent drop (year on year) in the second quarter net profit at Rs 142 crore. Total income rose 6 per cent to Rs 3,296 crore.

The profit after tax was down due to higher interest costs and depreciation, said Vinod K. Dasari, Managing Director.

Demand drop

Ashok Leyland’s total expenses for the quarter rose to Rs 3,060 crore (Rs 2,869 crore). Depreciation was higher at Rs 98 crore (Rs 85 crore). Finance costs too rose steeply by 57 per cent to Rs 103.63 crore, due to higher working capital needs.

There has been an overall slump in volumes in the medium and commercial vehicle segment, including Ashok Leyland. From April to September, the segment has declined by 13 per cent.

Said Abdul Majeed, Auto Practice Leader, PricewaterhouseCoopers: “With interest rates being high, liquidity is an issue. The demand is not high; there is not much movement of goods, with trade holding back on cash,” said Majeed.

Said Dasari: “The market has been extremely volatile but we are hopeful there would be new initiatives in infrastructure development, mining and construction that will improve the macroeconomic outlook and buoy up sentiments. We are not holding back on investments in new products.”

Market share gain

“We have gained an overall market share of 3 per cent in the first half of this year, at 26 per cent,” Dasari said.

The light commercial vehicle Dost has done especially well for the company, with an all-India market share of 19 per cent. In the first half of this year, Ashok Leyland invested Rs 360 crore.

The company share price was down 2.82 per cent at Rs 24.10 on the BSE on Thursday.

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