Ashok Leyland, the flagship of the Hinduja Group, has reported a 22% drop in net profit during the quarter ended June 30, 2012, at Rs 67 crore as against Rs 86 crore in the corresponding quarter last fiscal.
"Profits have taken a hit largely because of the robust brand-building and marketing initiatives we kicked off during the quarter including the signing on of Mahendra Singh Dhoni as our brand ambassador. In addition, we were also hit by spiraling power costs,” said Vinod K Dasari, managing director, Ashok Leyland.
The company has reported a 19.7% increase in turnover at Rs 3,007 crore for the quarter ended June 30, 2012 as against Rs 2,513 crore of the corresponding quarter of the previous fiscal.
Vehicles sales for the quarter stood at 27,487 units versus 19,277 units in the year-ago quarter, with domestic volume at 17,335 units (16,738 units), an increase of 3.6% over the previous corresponding quarter. International operations continued their good showing with 2,904 units, up 14.4%.
The overall improvement in the sales numbers were largely a result of the performance of ‘Dost’, the company’s light commercial vehicle (LCV), and the gradual improvement in the southern markets.
Employee costs were higher by 7.3% at Rs 268 crore, while depreciation was up 5.4% at Rs 89 crore. Other expenses rose to Rs 310 crore (Rs 207 crore) due to higher sales overheads.
“We ended 2011-12 strongly and we have been able to carry forward the momentum into the first quarter of this fiscal in sheer volume terms,” said Dasari. “Even while the total Industry Volume in India dipped by 12%, we were able to increase our market share by 3.8%. Our LCV, ‘Dost’, did very well, achieving 21% market share in the first 9 months of sales."