Ashok Leyland, the flagship of the Hinduja group, has earmarked a major part of its capital expenditure for 2021-22 for light commercial vehicles (LCV). The company has lined up a capital expenditure of Rs 750 crore for fiscal 2021-22 compared with Rs 670 crore last year.
“We will be doing some debottlenecking and tooling (of the LCV plants),” Vipin Sondhi, MD & CEO, Ashok Leyland Limited, said while talking to reporters on the recently declared results.
The company is betting big on its products Dost and Bada Dost in the LCV segment which will see some “long-term funding”. Medium and heavy commercial vehicles (MHCV) will get some residual funding.
For the company, domestic bus volumes have been down because of the pandemic as public transport has taken a hit. “The bus sector will revive when the lockdown situation completely eases,” said Sondhi.
Ashok Leyland is also betting on fleet replacement by various state governments planning to replenish their old vehicles. It commissioned its bus plant in Andhra Pradesh in March this year.
The company will focus on exports, defence, power solutions, LCVs and auto parts business even as it expands the product reach of its core medium and heavy commercial vehicles.
“We will intensify our efforts in Central Asia and African countries to strengthen our presence,” he added.
The focus on digital initiatives will help leverage the benefits of efficiency and cost. Customer requirements will be at the core of all the digital initiatives. Emerging businesses such as electric vehicles (EV) and customer solutions will assist in complementing the core business.
Ashok Leyland has created a dedicated EV-only entity called Switch Mobility based in the UK.
Sondhi said the economy will grow at 9.5 per cent, helping the auto industry to make a comeback. “The tipper has good demand, the demand for mutli-axle vehicle and long haul tonnage will have a come back. M&HCV will b extremely strong in six to 12 months,” said Sondhi.
To a question on whether rising commodity prices will lead to a price hike, Sondhi said: “We had increased prices in the third and fourth quarters. We are now internally monitoring the situation.”
The company is planning to add shifts and ramp up production in July as “the economy opens up more”.
The company also announced the formation of an Environmental, Social & Governance Committee headed by an independent director at the recently concluded board meeting. The role of this new ESG committee will be to provide appropriate oversight and guidance in the company’s journey on organisation-wide ESG initiatives, priorities, and leading ESG practices.