Ashok Leyland to scale down capex plans

Ashok Leyland is looking to scale down its capital expenditure guidance from Rs 600 crore to Rs 450 crore due to the current market conditions. The overall slowdown has had a bearing on the commercial vehicle industry and Ashok Leyland may have to relook its investment and capex plans to “conserve cash”, said Mr K. Sridharan, CFO. He said the company is working out ways to restrict investments to Rs 450 crore, from Rs 600 crore planned earlier. The company’s profits dropped 22 per cent to Rs 67 crore in the first quarter of 2012-13, on the back of spiralling power costs and increased marketing spends. Ashok Leyland has a tepid outlook going forward. It expects the industry growth to be flat and estimates pressure on volumes. In a conference call, Ashok Leyland gave a ‘guidance’ for a 5-7 per cent year-on-year growth in the medium and heavy vehicle segment in 2012-13. The company said it has cut production guidance at Pantnagar plant to 30,000 units from 40,000 units due to demand slowdown. The plant, incidentally, had reached peak capacity of 40,000 units last year. The company hopes to sell 110,000 medium and heavy commercial vehicles and 30,000 Dost units this year.