Chennai: Hit by poor sales, Hinduja Group flagship company Ashok Leyland has suspended the production of its first passenger vehicle - Stile, and has written down the investments made in the joint venture with Japanese auto maker Nissan Motor Company by Rs 214 crore, a top official said.
Ashok Leyland had inked a joint venture with Nissan Motor Company to produce light commercial vehicle and passenger vehicles. Under the joint venture the company rolled out 'DOST' light commercial vehicle and 'Stile' in the passenger goods segment.
Ashok Leyland, Managing Director, Vinod K Dasari said the company had suspended production of Stile few months back and had written down the investments by Rs 214 crore.
"The total investments was Rs 500 crore in the joint venture made by Ashok Leyland. But, we have written it down by Rs 214 crore", he told reporters here.
To a query he said, "it (the vehicle) did not sell and the company had suspended production of the product three-four months months back".
Elaborating, Ashok Leyland, Chief Financial Officer, Gopal Mahadevan said, "We are just evaluating our options. We have decided to write down the value by Rs 214 crore in the investments made by Ashok Leyland".
Talking about the company's performance for the financial year ending March 31, 2015, Mahadevan said, the company's total sales volume increased by 28 percent compared to the industry growth of 16 percent for the year ending March 31, 2015".
"We have gained market share of 28.5 percent in Medium and heavy commercial vehicle segment. Last (financial) year, our market share was 25.8 percent. So we have actually grown by nearly 2.7 percent in market share. That is huge growth.", he said.
On sales of its vehicles, Mahadevan said the company sold 66,442 vehicles under the medium and heavy commercial segment last financial year ending March 31, 2015 compared to 51,825 vehicles sold during same period of the previous year.
On exports front, he said the company witnessed a strong performance in overseas by registering 32 percent growth year-on-year.
"Volume for exports for full year (ending March 31, 2015) was 11,218 units as supposed to 8,517 units (sold during same period of previous year). It is very, very good performance on exports. 32 percent growth in exports. Major regions that contributed for the growth was Middle East, Sri Lanka and Bangladesh," he said.
According to him, the company had sold 2,200 units in Sri Lanka market while in Middle East it witnessed a 52 percent growth in sales to 3,500 units year-on-year, he said.
The company also began exports of its products to Kenya, Nigeria and was also working in Senegal and Congo region.
On the outlook for current financial year, Ashok Leyland Managing Director Vinod K Dasari said the company would look at setting up a bus assembly plant either in overseas or in domestic market.
"That may require small investments of about Rs 20 crore. We may go through a joint venture or we may set up on our own either in overseas or in domestic market.", he said.
He said the company generated surplus cash of around Rs 2,000 crore from the debt which was at Rs 4,680 crore at the beginning of last financial year (1 April 2015) to Rs 2,600 crore as of March 31, 2015.
"We have reached 0.6:1 level (debt equity ratio)", he said.
On capital expenditure plans for 2015-16, Dasari said it would be around Rs 100- Rs 150 crore this year.
"I hope to retain market share in 2015-16 too. On the back of excellent network we have created for the product, we are looking to grow 10-12 percent," he said.
