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Ashok Leyland hosted a conference call on June 25, 2021. In the conference call the company was represented by Mr. Vipin Sondhi- Managing Director and Chief Executive Officer and Mr. Gopal Mahadevan- Director and Chief Financial Officer .
Key takeaways of the call
Company's vision is to be among top 10 global CV (commercial vehicle) players on the back of reliable and differentiated products.
MHCV (Medium and Heavy Commercial Vehicle) domestic truck industry volume started registering YOY volume growth from Q3FY21.
During Q4FY21, MHCV (Medium and Heavy Commercial Vehicle) truck volumes for the company grew at 111%. This growth was better than industry growth.
LCV (light commercial vehicle) domestic volumes for Ashok Leyland have grown by 4% to 46,671compared to 44,912 in FY20.
Management believes Q4FY21 performance was driven by successful AVTR range which is India's first modular truck platform launched in June 2020. The AVTR platform gives customers a choice to customize their truck as per their unique requirements.
The customization option given to the customers through AVTR platform reduce wastages which lead to greater efficiencies.
Impact of commodity inflation-has been partially offset through price increases and internal cost reduction initiatives.
Commodity prices are at all time high, steel and aluminum prices are expected to remain high.
Full year production for MHCV stands at 54,071compared to 71,189 in FY20.
Operating working capital was negative in Q4FY21.
Capex for FY21 was Rs 621 crore compared to Rs 1292 crore last year.
With the sudden onset of 2nd wave of covid 19, auto industry has faced a short term setback. However management believes with the help of government initiatives and healthy monsoon, recovery will be quicker.
Management expects both MHCV and LCV segment to report growth close to GDP growth in FY21.
Going forward emerging EV's and Customer solution business (CSB) will compliment core business.
Company has created a dedicated EV only entity called switch mobility headquatered in UK.
Going forward management believes, company will continue to increase penetration across all markets along with focusing on cost reduction strategies.
Despite the pandemic, power solutions business performed well in FY21.
Going forward defense segment presents good opportunity for growth, as company is planning new launches.
Capex for FY22 will be around Rs 750 crore. This will be spent on debottlenecking of plants.
Company is enhancing positioning of its products in Middle East. So subject to opening up of restrictions and trade route, middle east presents potential growth opportunity.
Government of India has allocated significant money for national hydrogen energy mission. Purpose is to use hydrogen as an energy source. Company is getting ready for it; however it may take few years for execution.
Inventory levels as at 31st march 2021 stands at 3400 vehicles compared to 1243 vehicles last year.
Company is witnessing improvements in collections from customers over last few months.
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