The rating and analysis agency, CRISIL, has revised the outlook on Ashok Leyland’s long-term bank facilities to ‘negative’, from ‘stable’ earlier.
The revision in outlook is driven by the possibility that Ashok Leyland’s volumes “can de-grow much more than Crisil’s expectation”, Crisil has said. This, the agency says, is due to the “weak demand environment”. Ashok Leyland’s cash accruals could be lower than previous expectations, it says.
CRISIL believes that Ashok Leyland will maintain its operating profitability between 9 and 10 per cent over the medium-term, supported by its pricing flexibility, fiscal benefits from the Uttarakhand plant, and efficient operations.
Operating margin will be partially moderated by the trading revenues from sale of light commercial vehicle (LCV) Dost over the medium term; the Dost LCVs of the Nissan-Ashok Leyland JV are sold through Ashok Leyland’s dealerships outside Tamil Nadu.
Ashok Leyland has six manufacturing plants — the mother plant at Ennore (near Chennai [Tamil Nadu]), two plants at Hosur (Karnataka), a new plant at Uttarakhand, and assembly plants at Alwar (Rajasthan) and Bhandara (Maharashtra). The company commissioned the new 50,000-unit-per annum plant in Uttarakhand for Rs.12 billion in March 2010.
Ashok Leyland reported a profit after tax (PAT) of Rs 566 crore on an operating income of Rs 13,314 crore for 2011-12, as against a PAT of Rs 631 crore on an operating income of Rs 11,420 crore for 2010-11.
For the three months ended June 30, 2012, the company reported a net profit of Rs 66.93 crore (Rs 86.25 crore for the corresponding period of the previous year) on net sales of Rs 3,000 crore (Rs 2,512 crore).