Ashok Leyland Ltd, the flagship commercial vehicles maker from the Hinduja Group, is planning to cut capital expenditure (capex) for 2013-14 massively besides downsizing the wage bill and selling non-core assets to improve the cash flow and bring down debts.
The company has set aside a capex of around Rs 450 crore (Rs 4.5 billion) for the current financial year, sharply down from the Rs 1,545 crore (Rs 15.45 billion) it spent in 2012-13.
Dheeraj G Hinduja, chairman of Ashok Leyland, said the company needed to optimise cash and delay implementing the capex till the market review.
He noted that the commercial vehicles sales were down 25 per cent this year.
“Fortunately, critical investments were made in the last four years. If critical investment are needed, we will not shy away,” Hinduja added.
The company has told analysts debt reduction is its major target in 2013-14.
Its debt increased to Rs 5,500 crore (RS 55 billion) as of June, from Rs 4,300 crore (Rs 43 billion) at the end of the March quarter, mainly because of higher working capital.
In a bid to reduce staff costs, the company has cut down the number of working days per week, effected a five per cent cut in salaries in May across the executive segment (resulting in Rs 10 crore or Rs 100 million saving in a quarter) and laid off about 1,300 temporary workers.
Ashok Leyland’s wage bill in 2012-13 stood at Rs 1,076 crore (Rs 10.76 billion), compared with Rs 1,020 crore (Rs 10.2 billion)