But will it be able to make it to the safe base before the deluge crushes it to pieces? Pawan Chabra analyses…
Imagine a skier who is already half way down a snow capped mountain and then suddenly he sees the bitter reality coming down on him in the form of an avalanche. Despite the freezing surroundings a drop of sweat trickles down his forehead and all he does is to push hard for his life while the monster continues to come closer to engulf him in one go!
There is no denying that the commercial vehicle segment (not only in India but also across the globe) has been suffering from a slowdown in demand for quite some time now, but it’s the sales team at the Ashok Leyland camp, the flagship company of the Hinduja Group, that seems to have been stuck by a similar predicament. And why not? After all the company has witnessed a pathetic fall of over 69% in terms of total vehicles sold during the month of April 2009 (from 5,705 units during the same period last year to just 1,750 units sold in April this year).
In fact, it’s not just April, the company struggled to make a mark in the market during the last fiscal as well. For the financial year 2009, Ashok Leyland reported a whopping 22.6% and 59.5% yoy decline in its topline and bottomline respectively as compared to the previous year. The company, however, managed to stay away from the red and was able to maintain its 60-year profitability record as it clocked a turnover of Rs.5,981 crore and a net profit of Rs.189 crore last fiscal as against Rs.7,742 crore and Rs.469 crore respectively in FY 2007-08. “When the economic tsunami hit, I think medium and heavy vehicle industry was right up at the beach and as such was the worst affected. In this backdrop of very turbulent year I think next year will be most challenging,” reasons R. Seshasayee, Managing Director, Ashok Leyland.
Even the industry experts fully agree with Seshasayee and opine that there has been a major hit on the commercial vehicle segment due to the slowdown. But then one cannot show its back to the fact that Ashok Leyland has been at the bottom in terms of sales when compared to its counterparts in the industry. The company sold just 54,431 vehicles last fiscal, against 83,307 units sold during the FY 2007-08. “The weaker brand in the commercial vehicle market always gets a beating under the slowdown blues,” avers auto expert Murad Ali Baig. No doubt, Ashok Leyland has been taking the beating from its arch rival Tata Motors for the last few months, both in terms of product portfolio as well as its geographical presence. Many experts even consider Ashok Leyland’s diminutive presence in the light commercial vehicle segment, where the demand has been robust in the past few months, as one of the biggest reasons for its bad performance during the last fiscal. But what has been hurting it the most is the low level of sales of heavy commercial vehicles coming in from the southern region of the country, from where Ashok Leyland gets a large chunk of its domestic business. “The company has lost a lot of ground when it comes to the domestic sales mostly because of the fall in demand for heavy commercial vehicles in the southern region. But the company still stands tall when it comes to the bus segment,” adds Baig. Noticeably, the company still is the market leader in the bus segment and holds a healthy 46% market share. But then the million dollar question is whether the company will be able to survive the zooming avalanche?
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Imagine a skier who is already half way down a snow capped mountain and then suddenly he sees the bitter reality coming down on him in the form of an avalanche. Despite the freezing surroundings a drop of sweat trickles down his forehead and all he does is to push hard for his life while the monster continues to come closer to engulf him in one go!
There is no denying that the commercial vehicle segment (not only in India but also across the globe) has been suffering from a slowdown in demand for quite some time now, but it’s the sales team at the Ashok Leyland camp, the flagship company of the Hinduja Group, that seems to have been stuck by a similar predicament. And why not? After all the company has witnessed a pathetic fall of over 69% in terms of total vehicles sold during the month of April 2009 (from 5,705 units during the same period last year to just 1,750 units sold in April this year).
In fact, it’s not just April, the company struggled to make a mark in the market during the last fiscal as well. For the financial year 2009, Ashok Leyland reported a whopping 22.6% and 59.5% yoy decline in its topline and bottomline respectively as compared to the previous year. The company, however, managed to stay away from the red and was able to maintain its 60-year profitability record as it clocked a turnover of Rs.5,981 crore and a net profit of Rs.189 crore last fiscal as against Rs.7,742 crore and Rs.469 crore respectively in FY 2007-08. “When the economic tsunami hit, I think medium and heavy vehicle industry was right up at the beach and as such was the worst affected. In this backdrop of very turbulent year I think next year will be most challenging,” reasons R. Seshasayee, Managing Director, Ashok Leyland.
Even the industry experts fully agree with Seshasayee and opine that there has been a major hit on the commercial vehicle segment due to the slowdown. But then one cannot show its back to the fact that Ashok Leyland has been at the bottom in terms of sales when compared to its counterparts in the industry. The company sold just 54,431 vehicles last fiscal, against 83,307 units sold during the FY 2007-08. “The weaker brand in the commercial vehicle market always gets a beating under the slowdown blues,” avers auto expert Murad Ali Baig. No doubt, Ashok Leyland has been taking the beating from its arch rival Tata Motors for the last few months, both in terms of product portfolio as well as its geographical presence. Many experts even consider Ashok Leyland’s diminutive presence in the light commercial vehicle segment, where the demand has been robust in the past few months, as one of the biggest reasons for its bad performance during the last fiscal. But what has been hurting it the most is the low level of sales of heavy commercial vehicles coming in from the southern region of the country, from where Ashok Leyland gets a large chunk of its domestic business. “The company has lost a lot of ground when it comes to the domestic sales mostly because of the fall in demand for heavy commercial vehicles in the southern region. But the company still stands tall when it comes to the bus segment,” adds Baig. Noticeably, the company still is the market leader in the bus segment and holds a healthy 46% market share. But then the million dollar question is whether the company will be able to survive the zooming avalanche?
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
2300 IIPM students get jobs
The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School
Detail of all IIPM branches
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM - Admission Procedure
IIPM, GURGAON
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