Saturday January 3, 01:30 AM

Source: Indian Express Finance

Ashok Leyland, Tata Motors to gain from aid to states

By Corporate Bureau
The second stimulus package providing assistance to states to purchase buses for urban transport systems will help Tata Motors (TATAMOTORS.BO : 575.65 +6.2) and Ashok Leyland (ASHOKLEY.NS : 51.25 +1.9) the country s largest commercial vehicle makers keep afloat as the segment has been registering a rapid decline in sales in the past few months. The package comes at a time when Tata Motors, which is India s largest commercial vehicle maker, registered a massive dip of 51% in the sale of commercial vehicles (domestic), selling only 14,056 units in December 2008. The medium and heavy commercial vehicle sale figures took the biggest decline at 4,811 units. Under the stimulus package, as a one-time measure, the states would be provided with assistance under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to purchase buses for urban transport systems. A scheme towards which would be announced shortly. The move is bound to have a positive impact but it wouldn t really be substantial. The move would only help the companies in recuperate from the staggering losses that they have been registering in the last couple of months. It would take at least six to eight months for the companies to start showing better results , said Vaishali Jaju of Angel Broking firm. Ashok Leyland Ltd reported a 60.22% fall in its sales in November this year, selling only 2,307 units in November, compared to 5,800 units in November 2007.Its domestic sales during the month were 1,788 units, a huge decline compared to the 5,366 units sold in November last year. The company s total vehicle sales in the domestic market, including medium and heavy commercial vehicles, was 1,772 units against 5,323 units for the corresponding period last year. The company recently put on hold its proposed Rs 700-800-crore investment at its facility in Pantnagar and its mother plant at Chennai owing to slowdown in the domestic market. Trucks and and buses sales have been taken the maximum blow this year. According to the Indian Foundation of Transport Research and Training, inventory pile-up of trucks with dealers during the pre-Diwali period was 19,000 vehicles, apart from the 6,000 trucks that were lying unsold with private banks and financiers owing to defaults by transporters.