Lanka Ashok Leyland ends FY18 with remarkable growth

Thursday, May 10th, 2018

Driven by the increased acceptance and demand for Lanka Ashok Leyland Vehicles, Lanka Ashok Leyland caps the fiscal year with turnover of Rs. 15.6 billion, a 36% increase over 2016. Gross profit rose 15% to Rs. 1.27 billion, a margin contraction driven by higher cost of sales associated with the launch of newer technologically superior BS3 compliant vehicles with ABS Brakes.

Against a decline in the gross profit margin, Lanka Ashok Leyland compensated with a 21% decline in operational costs to Rs. 418 million from Rs. 532 million in 2016 highlighting the success of the prudent fiscal management throughout the year. Despite relatively high interest rates prevailing and net borrowing increasing, Lanka Ashok Leyland was able to reduce net finance cost by 49% YoY to Rs. 46 million. These operational efficiencies boosted the company’s bottom line as profit after tax surged 112% to Rs. 504 million for the year 2017/18.

Commenting on the performance Lanka Ashok Leyland CEO Umesh Gautam added, “This year has been a milestone year for the company on many fronts. The company is in the midst of an ambitious and transformative journey all made possible by the tireless effort of our staff and the support extended to us by our stakeholders. The financial performance reflects this despite the economic uncertainty that has become the new normal for business in the country owing to political uncertainty, adverse weather and exchange rate volatility.”

The overwhelming majority of our turnover comes from our vehicle sales however we have made inroads in improving contributions from our other verticals like repair work, bodybuilding, generators and spare parts. We see great revenue potential in our leasing and hiring and are looking at including it under our top line in the near future. We remain cautiously optimistic for 2018/19.

Aside from the financial performance and handsomely rewarding the shareholders, Gautam is strongly of the view that CSR initiative of Lanka Ashok Leyland should be as ambitious in vision and impact as our business strategy. Identifying investments and initiatives in healthcare such as cancer diagnosis where the state is overburdened or underfunded can go a long way in sustainably improving the healthcare choices for Sri Lankans.

Gautam says, “I am proud of the progress made this year in transforming Lanka Ashok Leyland into an important stakeholder and partner to the communities we serve. This year, the staff and management together decided to make the health of our communities the crux of our corporate social responsibility and started mandatory medical check-ups for all our employees, their families and local communities we are based in. In addition we are in the early stages of looking to a major investment in a healthcare solution around cancer screening in Sri Lanka which will be a milestone CSR project for us.”