Conference call on full year results with Mr K Sridharan, Chief Financial Officer, on 9th May 2008 at 1200 hrs. Call leader : Ms Shilpa Gupta, ICICI Securities. Dial : Primary Access Number: 022-2781 3282, Standby number : 022-6776 3982. Singapore Toll Number : +65 6668 7512; Hong Kong Toll Free Number : 800 933 188; UK Toll Free Number : 0800 89 8246. Conference code for International dial in : 134930#.

- Net Profit at Rs 4.7 billion, up 6.4%
- Capacity to reach 184,000 by 2010

Ashok Leyland, the Hinduja Group flagship company in India, has registered a sales turnover of Rs 77,291.23 million during 2007-08 compared to Rs 71,681.76 million in the previous fiscal. With other income of Rs 739.99 million (Rs 708.03 million), total income is at Rs 78,031.22 million (Rs 72,389.79 million). Net profit rose by 6.4% to touch Rs 4,693.10 million (Rs 4,412.86 million).

Our performance this year can be summarized in two parts, said Mr R Seshasayee, Managing Director. In terms of top line, we compensated for the slow down in the truck market by significantly improving our share of the bus market which registered high growth; International Operations as also the engines and spares businesses contributed handsomely. Our bottom line was benefited by some aggressive value engineering, sourcing initiatives and higher productivity. Despite rising input costs, we improved our operating margin by 60 basis points, to 10.40%.

Despite higher financial expenses of Rs 497.40 million (Rs 53.32 million) on account of higher capex, the Company's profit from ordinary activities before tax grew 5.4%, to Rs 6,508.87 million (Rs 6,175.82 million). Income tax claimed Rs 1,661.69 million (Rs. 1,624.71 million) and fringe benefit tax at Rs. 70.00 million (Rs. 51.50 million), to give a net profit from ordinary activities after tax of Rs 4,777.18 million (Rs. 4,499.61 million). An expenditure of Rs 84.08 million (Rs 86.75 million) for VRS compensation amortized is an extra ordinary item.

Paid-up equity share capital was Rs 1,330.34 million (Rs 1,323.87 million) and earnings per share have risen 4.7%, to Rs 3.54 (Rs 3.38) for a one-rupee share.

During 2007-08, the Company's total sales volume reached an all-time high of 83,307 vehicles (83,094 vehicles), a marginal rise despite a shrinkage in the domestic market. The Company's sales volumes were shored up by its good performance in the bus segment which grew 35%. The Company regained its prime position in this segment with a volume growth of 51%.

Exports grew by 21% with sales of 7,285 vehicles (6,025 vehicles). Engines sales were up 37% with additional revenue coming from the newly commenced genset business. Sale of Spares jumped 45%, with revenues touching Rs 7,912 million (Rs. 5,468 million). In tune with market trends, the Fully Built Vehicles sales grew by 25%, to 9,040 numbers.

Mr Seshasayee said that the Company would more than double its current capacity of 84,000 vehicles per annum within three years. The Company has earmarked Rs 3,000 crores for capex over the next three years which will enable capacity addition of 100,000 vehicles per annum, by 2010.

As part of its product plans, the Company plans to get the Phase 1 version of the iBus on road this year, post concept validation at the Auto Expo. To address the growing tractor market, the Company is extending its range of tractors already the widest. In the current year, 4921 tractor and 3121 multi-axle vehicle are being taken up for full scale production and all-India marketing.

During the year, the Company had developed the country's first one-litre-per-cylinder 6 cylinder CNG engine for buses employing Multi Point Fuel Injection (MPFI) engineered to meet Euro IV emission standards, ahead of the mandate in India.

As a part of value-added services, the Company is in the process of developing a whole suite of GPS-based Telematics products under the brand name ALERT.

International operations will be boosted, with the chassis and bus assembly plant planned at RAKIA, slated to commence operations this year; capacity is being doubled to 2,000 vehicles per annum, in response to market demand from the Gulf region. The introduction of the NEWGEN cab and a range of specially developed truck models will help penetrate some of the current markets and enable entry into a few new ones.

Commenting on the prospects for the current year, said Mr Seshasayee: Although the economic fundamentals continue to remain strong, there are concerns about business sentiments, which impact capital investment. Today's papers carried the good news about slashing of steel prices but even so, margins continue to be under pressure. If the revival comes, capacity won't be a constraint for us.

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