Auto manufacturer Ashok Leyland will issue a corporate guarantee cover of ₹870 crore to cover the lenders/banking facilities to its two UK-based subsidiaries- Optare Plc. UK and Switch Mobility Limited, UK. Ashok Leyland cleared that the promoters, promoter group, or group companies have no interest in this transaction which is conducted only for the purpose of covering the lenders/banking facilities.
“The impact of the transaction would be limited to the amount given by the Company,” Ashok Leyland said in a regulatory filing.
Ashok Leyland posted strong quarterly results and recently received approval from the board of directors to acquire shares in OHM India. Recently, it was also reported that the company bagged an ₹800 crore order from the defence sector.
Strong Q1 results
“The domestic medium and heavy commercial vehicle (M&HCV) witnessed a year-on-year growth of about 3% backed by a favorable macroeconomic environment and replacement demand. Healthy growth in the end-user industries like cement, steel, and infrastructure, as well as improvement in the general manufacturing activity and consumption trends, continue to stand in favor of demand from fleet operators. The growth trajectory is expected to improve going forward,” Dheeraj Hinduja, executive chairman, of Ashok Leyland said as the company reported a 747% year-on-year jump in its Q1 net profits.
“The progress of the monsoon and its impact on rural demand remains key for the light commercial vehicles (LCV) demand. Steel prices have moved northwards marginally, with the expectation that it will soften in the coming months. Ashok Leyland, even while maintaining its market share steady, is able to raise prices consistently,” he said.
Ashok Leyland has experienced a more rapid expansion in the volumes of their Medium and Heavy Commercial Vehicles (M&HCV) compared to the overall growth rate of the industry. During the June quarter, the volume of M&HCV trucks for Ashok Leyland increased by 7%, surpassing the industry’s growth rate of 3%. This superior growth in volume has led to an enhancement in Ashok Leyland’s market share within the industry.
