Company Review: Ashok Leyland

Review by Angel Broking.

Ashok Leyland (ALL) reported 50.2% yoy decline in volume to 3,397 units for October 2008, where domestic sales were down by 52.6% to 2,976 vehicles while, the Export Sales declined by 22.8% yoy to 421 vehicles for October 2008.

On the back of the demand slowdown witnessed by the company in the CV segment, Ashok Leyland has decided to cut the working of its plant to 3-day a week until next month.

This decision has also been partially influenced by problems encountered by the suppliers as a result of power shortage in some parts of the country.

The company took the decision to cut the number of work days according to the established practice in the company and its understanding with the workers’ union.

It is learnt that while the workmen will, at present, get their full salary for working for lesser number of days, the amount is proposed to be adjusted against future bonus payments, arrears and other payments, besides entitled leave.

According to company sources, workmen have been told that the specific modalities will be worked out at a later date. We maintain our NEUTRAL rating on the stock.

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