Hinduja group's flagship and commercial vehicle manufacturer Ashok Leyland has reported a decline in net profits for the first quarter ending of FY 2009-10 at Rs7.77 crore as compared to Rs50.57 crore same quarter last year.
The company's net sales declined by 52 per cent to Rs912.45 crore (Rs1,887.99 crore last year), following a 58 per cent decline in vehicle sales volume from 18,425 units to 7,693 units. The other income stood at Rs60.62 crore (compared to Rs7.41 crore last year).
Profits from operations stood at Rs121.7 million owing to controlled production levels, tighter control on material and operating costs, lower commodity prices, and reduced employee costs due to voluntary salary reductions.
After depreciation of Rs435 million, profit before financial expenses and exceptional items stood at Rs292.9 million.
Financial expenditure stood higher at Rs258 million (compared to Rs106.9 million last year), owing to interest on fresh loans for funding capital expenditure and the UTK project.
Taking into account reversal of deferred tax expense amounting to Rs53.2 million, profit after tax was at Rs77.7 million.
According to the company's MD, R Seshasayee, "This has been the worst quarter in a long time. However, market sentiments are improving and market demand derives further support from the bus orders under the JNNURM."
He further added that the company hoped to benefit from low commodity prices.