ashok leyland analysis
Post on 16-Nov-2015
Embed Size (px)
DESCRIPTIONAnalysis of Ashok Leyland report 13-14
Ashok Leyland Industries Annual Report 2013-2014
2United Breweries Annual Report 2013-2015
Ashok Leyland Industries Annual Report 2013-2014
Financial analysis of Ashok Leyland Part 1Rushin MehtaMMS - B - 128
Content1. Industry Overview2. Historical performance of the company (page 4) 3. Directors Report (page 5-6)4. Annexure A to Director Report (Page 7)5. Annexure B to directors report (Page 8-18)6. Annexure C to directors report (Page 19)7. Annexure D to directors report (Page 20-24)8. Annexure E to Directors report(Page 25)9. Annexure F to Directors report(Page 26)10. Independent Auditors Report (Page 27)11. Annexure to Independent Auditors Report (Page 28-29)
1. Industry OverviewIndia Commercial Vehicle Market Analysis: Two decades ago, under then PM P V Narasimha Rao and then Finance Minister Dr. Manmohan singh opened Indias doors for Multinational Automobile companies, allowing them to enter the market, thus bringing into picture modernization of Indian transportation system and making it beneficial for the end-users. Since then, several companies have started and established their production units in the country, offering a wide range of vehicles to vast Indias population. Since then the Indian commercial vehicle market has been growing by leaps and bounds due to economic liberalization, and the Indian economy which has gone strength to strength backed by strong finance facilities would lead to strong growth of Indian Automobile sector in the time to come.Medium & Heavy Commercial vehicle (MHCV) is the fastest growth in the automobile sector with growth around 20% expected this FY 2014-2015 with improvement in agricultural output, industrial activities and speedy infrastructure execution. Light Commercial Vehicles (LCV) sales is set to recover against the background of slowdown of in previous Financial year and it is poised for a growth of 7-9 % with increased in financial availability and improvement in consumption. Domestic commercial vehicle sales to decline by 13 per cent Y-o-Y in 2014-15 as light commercial vehicle (LCV) sales continue to falter. LCV sales are expected to decline, owing to a weakness in consumption spending (measured by GDPPFCE) and tightening of financing norms for SFOs (small fleet operators)/first time users (FTUs). Increased credit defaults had forced lenders to tighten advances to smaller players. In 201314, LCV sales had declined owing to the factors listed above.Industry interactions suggest that loans extended by captive financiers (who were the most aggressive over the past two years) have turned sour, with the outstanding (for over 90 days) is as high as 1015 per cent. Consequently, financiers to continue to focus on loan recollections rather than fresh disbursals during the year.On the other hand, sales of medium and heavy commercial vehicles are expected to rise in 2014-15, owing to an expected improvement in GDP and IIP growth. Resumption of stalled infrastructure projects, a recovery in mining activities, and improvement in EXIM trade and a pickup in replacement demand (especially from large transporters).In the Union Budget 2014-15, Rs 2.1 trillion was allocated for infrastructure projects, a sharp increase of 24 per cent over the allocation in the previous budget. In 201314, MHCV sales had declined as freight availability plummeted to a decadal low, as a result of sluggish industrial GDP growth (mere 0.4 per cent). Bus sales are expected to decline by 24 per cent yoy in 201415. Demand from the unorganized sector is expected to remain muted as corporate and intercity bus transport is expected to remain subdued. Growth will be driven by state transport undertaking (STUs), as 35004000 bus sales (of 6,5007,000 orders placed) under phase II of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme are likely to be booked in 201415.However, STUs are likely to postpone orders (that have been placed outside the JNNURM II scheme), thus moderating overall demand growth.In 201314, bus sales had declined as a slowdown in the services sector and a sharp hike in diesel prices and high interest rates pulled down demand. Demand from STUs too remained subdued owing to their weak financial position and concerns with regards to delayed payments to OEMs.MHCVs experienced a negative sales growth of 27%, while LCVs experienced a negative sales growth of 18.3%, whereas Bus experienced a negative sales growth of 14% in last financial year. This year Things are on a positive note.
2. Historical performance of the company (page 4) In this section of the annual report historical performance of Ashok Leyland is given over the past 10 years.
Sales of Vehicles in 2004-05 were 54,740 and in 2013-2014 were 89,337 thus increasing of 63% over the last decade.
The highest increase was in the year 06-07 from 05-06 which was 34% however the slump in sales of 34% happened in 08-09 when the world and India were going through tough economic slowdown.
Revenue in 2004-05 was INR 4810 cr and in 2013-2014 was INR10560 cr. thus increases of 120% over the last decade.
The highest increase in revenue was in the year 10-11 from 09-10 which was 55% however the highest decrease of revenue of 25% happened in 08-09 when the world and India were going through tough economic slowdown.
Profit after tax in 2004-05 was INR 271 cr and in 2013-2014 was INR 29.4 cr. thus decreases of 89 % over the last decade.
The highest increase in PAT was in the year 09-10 from 08-09 which was 122% however the highest decrease of PAT of 93% happened in 13-14 i.e the current financial year, one needs to carefully see this decrease of Profit into the company, drop of 93% Profit after tax is alarming and it is a wind of cautious.
Current Assets grew at 8.1% Y-o-Y during the last decade from 04-13.
Current Liabilities grew at 28% Y-o-Y during the last decade from 04-13.
Basic Earnings per Share has eroded 93% from 12-13 to 13-14.
Employees are also decreases in the FY 13-14 and thus seeing overall scenario we can say 13-14 was not a great year for the company and PAT falling as high as 93%, company needs to look at the operations.
3. Directors Report (page 5-6)Financial result:
The brief financial result is given compared to the previous year and the figures are not so encouraging one. Even the company has not declared any dividend.
The director explains the reason of slowdown and it is explained the slowdown was overall the industry and commercial vehicles decline at 20% over previous year whereas MHCV had a steeper decline of 25.3%. The market share of Ashok Leyland 26.1% is still maintained.
In LCV segment, a well know model of Ashok Leyland Dost suffered declined in sales due to discounts and financial schemes by Competitors. It also introduced couple of new models to strive hard and gain market share. Power Availability and financial availability affected the demand.MHCV export volumes didnt see any growth despite seeing a drop of export nos in Sri-lanka.
The company did not declare any dividend in the F.Y. 2013-2014.
Research and Development, technology absorption and energy conservation: Company is continuously working on R&D aspect and it is striving to improve Efficiency on various aspects of the automobile functions. They have developed various types of engines and cabin an achievement in R7D of its own sense.
Long Term BorrowingsSecured Non-Convertible Debentures:
During the F.Y. 13-14 company secured Non-Convertible Debentures of Rs 300 cr. They also redeemed 70cr in July 2013.
Rupee Term Loan:
The company took a secured loan of 500cr from financial institutions for tenure of 5 years.
Debentures/ Term loan were taken for general purpose, Capital Expenditure and loan repayment.
Part II Corporate MattersHuman Resource:
The company believes that Humans are the most important assets and view of this they have started Chairmans award and would be given to individual teams/ Teams who performed well. They have also started internal leadership programme. They have started various activities on shop floor. Improve is an initiative has made sure various cross-functional teams participate and it has led improvement of product/process/quality/cost thus contributing to profit. 15th edition of IMPROVE witnessed11,000 innovative ideas, with participation on of about 45% of employees, leading to bottom line impact of INR 264 lakhs in one time savings and INR 518 lakhs in recurring savings.
The company is fully compliant with the corporate governance guidelines.
Consolidated financial statement:
The company has disclosed the accounting policy it has followed to make the financial statements. Accounting standards have been followed and explained wherever necessary Accounting policies have been followed consistently so as to give fair and true picture of companys financial state. Sufficient care has been taken for the maintenance of adequate records and preventing any irregularities.
The subsidiaries company financial has not been included in the annual report and will only be available on request.
During the year two directors stepped down of the position. Director is eligible for reappointment. Notice for the same will be given Annual General Meeting.
Cost Auditors & Auditors:
The name of the auditors has been given who carry cost audits.
The director acknowledges work and corporation of all those who has helped in the financial year.
4. Annexure A to Director Report (Page 7)Conservation of energy:Manufacturing plants do efforts in saving energy. They have save