Commercial vehicle major Ashok Leyland
has invested Rs 500 crore to build a platform that allows customers to configure vehicles based on their financial and business needs.
Known as “modular” platform targeted for medium and heavy vehicles, the company expects that it will bring down its operational cost drastically and result in increase in profits.
The commercial vehicle industry is in the doldrums facing decreasing sales for more than one and half year. The situation is unlikely to improve soon as India’s economic activity is yet to pick up due to less business activity and consumer spending.
According to Ashok Leyland
Chief Operating Officer Anuj Kathuria, the new platform will remove complexities from operations of the company and will help offer cost-effective products for the customers.
“The modular range can be customised to customer’s needs — load, terrain, application, and operational requirements,” he said.
In comparison to rivals, Kathuria said, Ashok Leyland
would have to migrate all its platforms to BS-VI norms. “The value that we would provide our customers over a period of five to six years would be substantial,” he said.
Benefits of the modular platform for the M&HCV range, Kathuria said the new chassis would help customisation of the product, which in turn would deliver better operational economies to the customers.
In April-January period of the current financial year, sales of such vehicles declined by 36.4 per cent year on year to 198,736 units. Ashok Leyland’s wholesale despatches during the period declined by 39 percent over last year to 63,178 units.
Subdued volumes took a toll on the company’s financial health as revenue for the December quarter declined by more than a third year-on-year to Rs 4,016 crore, while profit after tax declined to a paltry Rs 28 crore from Rs 381 crore in the corresponding quarter.
Kathuria doesn’t expect the market situation to change soon. “I don’t see a revival happening till the second half of next fiscal. It will take some time for demand to revive and after that it should remain reasonably strong. However, it would be very difficult to predict a number currently,” he said.
The firm said it didn’t foresee the coronavirus outbreak affecting its plans for migration to BS-VI emission norms, although some of its component suppliers source parts from China.
“While we do not have any direct suppliers, some of our tier-1 suppliers will be kind of impacted...As of now whatever we have understood, if everything happens as per that plan and materials start moving out from China, it should not have a major impact,” Kathuria said.
He was responding to a query on whether the coronavirus outbreak in China would affect its supply chain, thereby impacting its plans for transition to BS-VI emission norms from April 1.