“As we move out of the current financial year, I would say that we would see Ashok Leyland to be a much stronger, resilient, efficient company,” Mahadeven said, attributing the cost saving works to K54 project, which helped the company save around Rs 550 crore in FY20.
The company’s capacity utilisation stood at 30-35 per cent and Mahadevan said he was confident of producing around 10,000 BS-VI units in Q2.
Products from the new platform, code named ‘Phoenix’, will be rolled out in the next 60-90 days. Ashok Leyland plans to invest around Rs 500-600 crore of capex in FY21.
“We expect Q3 and Q4 to be better than previous quarters as infrastructure projects are picking up and many of the markets have started opening up,” said Mahadevan. Truck fleet capacity utilisation is now at 50-55 per cent, and demand will rise only when infrastructure projects pick up, said Mahadevan.
Emkay Global Financial Services analysts expect a gradual revival by the end of FY21, led by a low base, replacement demand and pick-up in economic activity.
Analysts at Motilal Oswal said the Q1 performance was supported by non-vehicle revenue, leading to better mix. While MHCV recovery is expected only in H2FY21, expansion in LCVs should reduce the pain.