Ashok Leyland Finance improves performance
By Venkatachari Jagannathan Jagannathan | 08 May 2002
Fifty crore shares will be subscribed by its parent Ashok Leyland, and the balance by other investors. The funds infusion will improve the company's capital adequacy ratio to 14 per cent from the current level 13.15 per cent.
The company, in the last fiscal, posted a net profit of Rs 37.64 crore on an income of Rs 292.92 crore, as against Rs 16.18 crore for the nine months ended March 2001 on an income of Rs 187.92 crore. The other income stood at Rs 14.84 crore as against Rs 8.7 crore for the previous years nine months.
The improvement in the company's profitability for the period ended March 2002 was achieved through a change in the product mix and a lower borrowing cost achieved through proactive treasury management.
The company increased its disbursements to Rs 1,850 crore against the Rs 1,013 crore made during the previous year's nine months. As a result, the company's asset-base went up to Rs 3,000 crore-gross of securitisation deals.
During the year under review, Ashok Leyland Finance became the largest financier of commercial vehicles, with a disbursement of Rs 960 crore. The other segments to which the company has lent are: construction equipment (Rs 135 crore), LMV/LCV and multi-utility vehicles (Rs 360 crore), and the two-wheeler and personal product segment (Rs 380 crore). The performance should be viewed in the light of the sluggish automobile industry - barring the two-wheeler segment - and also the heightened competition from financial institutions, and foreign and domestic banks.
The volume of bills discounted stood at Rs 112 crore (Rs 133 crore during the nine months ended March 2001). The company installed and commissioned 19 wind turbine generators valued at Rs 15 crore during the year ended March 2002.
Provisions and write-offs amount to Rs 17.07 crore (Rs 15.49 crore during the nine months ended March 2001). Ashok Leyland Finance was able to contain non-performing assets to 0.85 per cent of the total assets as against 1.11 per cent last year (net of provision), which is among the lowest in the industry. The board, which has recommended a final dividend of 20 per cent for the year under review, had earlier declared an interim dividend of 30 per cent. Additional resources to the extent of Rs 1,205 crore (asset securitisation: Rs 575 crore; term-loans: Rs 435 crore; debenture: Rs 195 crore; public fixed deposits: Rs 240 crore) were raised during the year. The company had issued commercial paper worth Rs 835 crore during the year under review and the total amount outstanding at the end of the year was Rs 245 crore.
During the year, the company availed an FCNR(B) loan aggregating to Rs 474 crore (Rs 297 crore last year) from bankers at competitive rates. Ashok Leyland Finance managing director S Nagarajan says his company is working on new products to finance working capital needs of truck operators. The total amount the company hopes to disburse is around Rs 150 crore at an interest rate of 1.5 per cent per month as against 3 to 4 per cent charged by private financiers.
