“One of our recommendations to the government is to allocate a sizable sum from national infrastructure pipeline projects in rural India. That will get the industry into a virtuous cycle,” CEO Vipin Sondhi told ET. “We are seeing utilisation going up. How long would it take for things to revive, we will have to wait and watch. Things will improve quarter by quarter.”
To be sure, tractor sales for May have already matched the levels of May 2019 levels and bumper kharif crops have ensured stronger rural cash flows than in the cities. Foodgrains production is at a record high and urea sales have also been very strong, indicating traction in the rural economy.
Ashok Leyland said that there are no green shoots as yet, but there is some movement of construction equipment in the rural areas, indicating resumption in activities. Plus, the E-Commerce business presents a great opportunity in this ‘new normal’
Despite zero sales for almost 45-60 days, Ashok Leyland last week introduced its new-generation products based on a modular platform aimed at offering higher value to the consumers.
“The importance is to be there, with the right product at the right time, so that when the demand is triggered, we are right there,” added Sondhi.
The company has used this period of 75 days to engage with dealers and customers.
Ashok Leyland saw its medium and heavy truck sales almost halve to 71,421 units in FY-20, a decent show in the LCV, where the company posted a relatively modest decline of 15% in dispatches, cushioned the overall shock on numbers, which were down 37%.
The company did not carry any stocks of BS IV vehicles and very limited despatches of BS VI stock ensured the pressure on dealers was much less. The service centers have already started witnessing 40-45% of their monthly average load already ensuring some kind of cash flows for the dealers.
Ashok Leyland on its part has retained its permanent employees. Sondhi said, the company has paid to all the MSME vendors before time and has extended financial assistance to some dealers where needed.
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