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Raghuvir Srinivasan

ASHOK Leyland's (ALL) performance in 2001-02 is a repeat of the now all-too-familiar story of a robust fourth quarter compensating for the dull report card in the earlier three. Indeed, from a loss of Rs. 9.40 crore in the first quarter of 2001-02 to an impressive (by its own standards) profit figure of Rs 69.63 crore in the fourth quarter, it has been a tremendous ramp-up in the company's performance.

The fourth quarter net profit accounts for 75 per cent of the total net profit of Rs 92.25 crore for fiscal 2001-02. Similarly, the fourth quarter income of Rs 881.20 crore is 33 per cent of the total yearly turnover of Rs 2,630.43 crore.

That should give one an idea of how ALL's performance for 2001-02 was shored up by the final quarter. Yet, the 2001-02 fourth quarter performance does not compare well with the same period in the last fiscal year. The net income and earnings in the January-March 2002 quarter are lower by 6 per cent and 9.6 per cent compared to the same period last year.

For the entire year, ALL's income and net earnings show an almost flat growth of just under one per cent.

The impact of the shrinkage in the southern commercial vehicle market, the mainstay of ALL, is clearly evident in the financial numbers. The numbers could have been bad but for the gains made by the company in the northern market, which grew in size during 2001-02.

There has, of course, been some generous contribution from "other income" which, at Rs 17.95 crore (half of which came in the last quarter), was up by a big 75 per cent during the year.

This consisted mainly of dividend income on cumulative preference shares of Ashok Leyland Finance apart from scrap sales and lease income on vehicles leased out to transport corporations.

But for the handsome support from "other income", ALL may have shown a drop in earnings growth during 2001-02.

The bottom line has been depressed by a big tax charge of Rs 39.95 crore - pre-tax profits actually show a 30 per cent growth.

ALL has also gained from a tight leash on operating and financial costs. Interest costs dropped by 16.34 per cent to Rs 74.32 crore during the year and this seems to be a function of both the low interest rate regime and the lower borrowings following healthy internal cash generation. Staff cost was up by a marginal 3 per cent while other expenditure was down by a similar level. The performance has been a concerted effort at controlling costs across-the-board even while concentrating on maximising volumes in those segments exhibiting growth. The outlook for the first quarter of this fiscal appears to be steady.

It may not be a repeat of the first quarter last year when ALL posted a loss but then, it may not be a tremendous growth performance either.

The company may gain from the CNG shift in Delhi - some private operators have already picked up a big chunk of its inventory of about 700 CNG vehicles as of March 31, 2002.

If the expected order from the Delhi Transport Corporation materialises (the decision is expected anytime now), then ALL may be in safe territory for the first quarter.

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