The commercial vehicle manufacturer has roped in cricket superstar Mahendra Singh Dhoni as its brand ambassador while it reports poor quarterly results
Ashok Leyland, the Hinduja group company and commercial vehicle major, has reported a weak March 2012 quarter, with its net profit declining over 13%, year-on-year to Rs258.73 crore, on the back of increased cost of materials which was dearer by 19% for the same time period. Net sales managed to increase only 11% to Rs4,235.82 crore. The company has reported a 16.13% increase in net sales for the year ended 31 March 2012, mostly aided by slightly higher sales realisations. It sold 1,02,009 vehicles during the same time period, an increase of 8.4%, which is less than the average increase of 10% over the last three years. However, its annual net profits were poor, which declined by over 10%, year-on-year, to Rs566.97 crore.
Despite the poor results, it has, for the first time, roped in a celebrity endorsement-none other than star cricketer MS Dhoni. The company hopes this move will give it a much-needed facelift and a boost in its sales, going forward. We do not know whether a celebrity endorser will work well for a segment such as commercial vehicles, since the buyer is usually a corporate and not an individual. Therefore, it remains to be seen whether corporates can identify with the MS Dhoni brand.
According to the company's press release, managing director Vinod K Dasari said, "Mahi's (MS Dhoni) choice was almost automatic for I cannot think of another person befitting the values of Brand Ashok Leyland so well. A true son-of-the-soil, a leader who is focused, straight-thinking, passionate and, most of all, humble, he will lead the numerous initiatives that are on the anvil." He further added, "We believe that all these efforts will help enhance customer profitability to a new level."
Much of its business remains cyclical, which means truckers buy in good times and remain passive during economic hardships. This means the company becomes vulnerable to economic cycles. Most of the trucks are financed by vehicle loans which are linked to interest rates. In a high interest rate regime, vehicle sales get affected and Ashok Leyland was no exception as its sales grew only 11% which was less that the pace of increase in expenses which grew 19%. Therefore it has been trying to target newer segments, such as defence and exports.
To tackle uneven economic cycles, Ashok Leyland has started a slew of initiatives and new product innovations to aggressively gain market share and become one of the strongest players in the commercial vehicle business.
The company unveiled DOST, which marked its entry into the robustly growing LCV (light commercial vehicle) market in joint venture with Nissan Motor Company. With a payload capacity of 1.25 tonnes, DOST enters the small commercial vehicle (SCV) market which is witnessing a perceptible upward shift in terms of features, performance and payload.
The defence segment, which has seen increased spend over the years, is another target segment for the company. For this, it has launched the Super Stallion, an 8x8 High Mobility Vehicle (HMV), and with that, the expansion of its range of logistics vehicles catered towards the defence sector. It is also aiming to export more vehicles abroad.
It hopes that its share of non-cyclical revenue will be 50% over the next few years.
Last year, it had announced bonus shares for its shareholders. Free shares were given to shareholders for each single one held, thus doubling its share capital to Rs26.607 crore.
Ashok Leyland, the Hinduja group company and commercial vehicle major, has reported a weak March 2012 quarter, with its net profit declining over 13%, year-on-year to Rs258.73 crore, on the back of increased cost of materials which was dearer by 19% for the same time period. Net sales managed to increase only 11% to Rs4,235.82 crore. The company has reported a 16.13% increase in net sales for the year ended 31 March 2012, mostly aided by slightly higher sales realisations. It sold 1,02,009 vehicles during the same time period, an increase of 8.4%, which is less than the average increase of 10% over the last three years. However, its annual net profits were poor, which declined by over 10%, year-on-year, to Rs566.97 crore.
Despite the poor results, it has, for the first time, roped in a celebrity endorsement-none other than star cricketer MS Dhoni. The company hopes this move will give it a much-needed facelift and a boost in its sales, going forward. We do not know whether a celebrity endorser will work well for a segment such as commercial vehicles, since the buyer is usually a corporate and not an individual. Therefore, it remains to be seen whether corporates can identify with the MS Dhoni brand.
According to the company's press release, managing director Vinod K Dasari said, "Mahi's (MS Dhoni) choice was almost automatic for I cannot think of another person befitting the values of Brand Ashok Leyland so well. A true son-of-the-soil, a leader who is focused, straight-thinking, passionate and, most of all, humble, he will lead the numerous initiatives that are on the anvil." He further added, "We believe that all these efforts will help enhance customer profitability to a new level."
Much of its business remains cyclical, which means truckers buy in good times and remain passive during economic hardships. This means the company becomes vulnerable to economic cycles. Most of the trucks are financed by vehicle loans which are linked to interest rates. In a high interest rate regime, vehicle sales get affected and Ashok Leyland was no exception as its sales grew only 11% which was less that the pace of increase in expenses which grew 19%. Therefore it has been trying to target newer segments, such as defence and exports.
To tackle uneven economic cycles, Ashok Leyland has started a slew of initiatives and new product innovations to aggressively gain market share and become one of the strongest players in the commercial vehicle business.
The company unveiled DOST, which marked its entry into the robustly growing LCV (light commercial vehicle) market in joint venture with Nissan Motor Company. With a payload capacity of 1.25 tonnes, DOST enters the small commercial vehicle (SCV) market which is witnessing a perceptible upward shift in terms of features, performance and payload.
The defence segment, which has seen increased spend over the years, is another target segment for the company. For this, it has launched the Super Stallion, an 8x8 High Mobility Vehicle (HMV), and with that, the expansion of its range of logistics vehicles catered towards the defence sector. It is also aiming to export more vehicles abroad.
It hopes that its share of non-cyclical revenue will be 50% over the next few years.
Last year, it had announced bonus shares for its shareholders. Free shares were given to shareholders for each single one held, thus doubling its share capital to Rs26.607 crore.
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