Innovating to Overcome Recession

Innovating to Overcome Recession Hansavivek ASHOK LEYLAND commenced operations last year at its new plants at Bhandara and Alwar, The directors say that long term expansion goals of the company remain valid, but looking to the continued lag in overall economic growth, it has been decided to slow down the pace of imple- mentation of the expansion plan. Under the scheme of increasing utilisation of industrial capacity, Central government has fixed the company's capacity for manufacture of industrial|marine engines at 3,228 numbers per annum in place of 1,875 numbers,' The com- pany has recently entered into an agreement with a company owned by government of Sri Lanka for a joint venture in that coun- try for assembly and progressive manufacture of Ashok Leyland vehicles. The R and D wing has completed development of a new engine to give higher fuel economy. This engine is expected to be introduced in the market du ring the latter half of this year. The initial batch of Tusker Su- per' vehicles, incorporating syn- chromesh transmissions manufactured to the design of Zahn- radfabrik Friedrichshaften (ZF) of West Germany, has been well received in the market. Prototypes of a 36' long integral bus and of an articulated bus for city applications were displayed at the Engineering Trade Fair in Delhi in January last and evoked a lot of interest. The company is presently engaged in developing a tractor chassis for container applications. It spent Rs 2.08 crore on R and D activities. During 1982, the company earned a lo- wer gross profit of Rs 19.07 crore against Rs 21,94 crore of the previous year, although sales have been higher at Rs 276.09 crore against Rs 261.70 crore. Net profit is sharply down from Rs 15.05 crore to Rs 10.73 crore due to higher provision for depreciation. Dividend has been lowered by 2 points to 18 per cent and is covered 3.61 times by earnings as against 4.56 times previously. The company produced 16,363 vehicles against 15,031 vehicles in the previous year and in spite of adverse market conditions sold 15,028 vehicles against 15,014 ve- hicles. It exported 1,482 vehicles (including those for IBRD aided projects) against 433 vehicles. To augment financing facilities to road transport sector, particularly in northern and eastern parts of the country, dealers of the company have promoted formation of a hi re-purchasing company under the name 'Ashok Leasing and Hire Purchasing' in which the company would be investing to the extent of 26 per cent of the equity. The company made a non-convertible debenture issue of Rs 10 crore on a 'rights' basis to resident shareholders to augment working capital resources.