Ashok Leyland unveils a ₹2,000 crore cost-reduction plan over 18-24 months, while maintaining capital expenditure, as it reports record sales and ramps up electric mobility investments, signalling a strategic shift amid inflation pressures.
Ashok Leyland has launched a ₹2,000 crore cost-reduction drive to be carried out over the next 18 to 24 months, even as it keeps its planned capital expenditure at ₹1,000 crore for FY27. Chairman Dheeraj Hinduja said the programme will run across the business, with spending directed towards new products and technologies, including electric vehicles and the company’s battery plant. The group is not planning any capacity expansion at present, but it expects a mix of price rises, cost cuts and value engineering to help absorb commodity inflation and protect margins.
The commercial vehicle maker also said it has already taken two price increases this year, amounting to 2% to 2.25%, and is weighing further hikes or tighter discounting to lift realisations. Separate market reports have indicated that Ashok Leyland is trying to offset higher steel and diesel costs through pricing and a shift towards more profitable heavy-duty trucks.
The company delivered a robust first quarter, with consolidated net profit rising 2% year-on-year to ₹668 crore and revenue climbing 10% to ₹10,750 crore. On a standalone basis, net profit reached a record ₹609 crore, while revenue also hit an all-time high at ₹9,634 crore. EBITDA margin eased to 10% from 11% a year earlier as material costs increased, but the group ended the quarter with net cash of ₹2,252 crore, up sharply from a year ago.
Volumes were another bright spot, with Ashok Leyland reporting a record 48,763 commercial vehicles sold in the quarter. Export volumes, however, fell to 2,461 units from 3,011 a year earlier, largely because of disruption in West Asia. Hinduja said the Ras Al Khaimah plant in the United Arab Emirates was recovering gradually, while final approvals for a planned factory in Saudi Arabia are expected within six to eight weeks, with production likely to begin 18 to 24 months later.
The company said demand remained firm across key segments and that government programmes such as Parivartan should support fleet modernisation over time. It added that Switch Mobility, its electric mobility arm, continues to gain traction. Ashok Leyland also disclosed fresh investments of up to £25 million in UK-based Optare and up to ₹500 crore in Hinduja Housing Finance, while the wider Hinduja Group said its renewable energy business is looking at further opportunities in Tamil Nadu.
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