Against a backdrop of uncertainty due to revisions in import duty structure, devaluation of Rupee and restriction on financing/ leasing, Lanka Ashok Leyland saw its sales improve 10% for 2015/16 to Rs 9.1bn compared to Rs 8.2bn in 2014/15 driven mainly by 12% growth in new vehicle sales.
The depreciation of the Lankan rupee and frequent changes in import duty structure negatively impacted the company, raising its import costs which eroded its gross profit margin down to 8% resulting in an 18% decline in gross profit to Rs 760.4mn against Rs 924.4mn in the last period.
Known for prudent fiscal management, the company was able to trim down its operating costs to help offset a fall in other income. Higher interest rates during the year resulted in finance expense increasing to Rs 54.8mn, an 89% increase year on year. Inventories accumulated over the year with a 13% increase to Rs 3.8bn cf. Rs 3.4bn a year earlier while interest bearing liabilities fell 12% for the same period to Rs 2bn. As a result net asset value increased to Rs 773.9 from Rs 754.5 recorded atMarch 31, 2015.
Profit after tax for 2015/16 fell to Rs 314mn owing to the external environment. Lanka Ashok Leyland maintained their payout ratio at 43.6% with a final dividend of Rs 25 to its shareholders. Umesh Gautam, CEO of Lanka Ashok Leyland commented on the year’s performance, “Another challenging year is behind us and I am convinced of the results we have been able to achieve. In an environment where we have to contend with variables beyond our control such as the exchange and interest rates, we have done our best to mitigate and manage our risks in a manner that hasn’t forced us to deviate or change our operating environment or curtail our expansion plans. Transport industry operates at the mercy of exchange rate volatility, and 2015/16 saw rapid decrease in the Rupee triggered by the devaluation in China in August 2015 increasing our import costs which could not be transferred to our customers who had to contend with rising interest rates and changes in vehicle financing regulations.
That said, looking at the metrics that are within our control, we feel that we have achieved a lot of what we planned for this year,
www.dailynews.lk
The depreciation of the Lankan rupee and frequent changes in import duty structure negatively impacted the company, raising its import costs which eroded its gross profit margin down to 8% resulting in an 18% decline in gross profit to Rs 760.4mn against Rs 924.4mn in the last period.
Known for prudent fiscal management, the company was able to trim down its operating costs to help offset a fall in other income. Higher interest rates during the year resulted in finance expense increasing to Rs 54.8mn, an 89% increase year on year. Inventories accumulated over the year with a 13% increase to Rs 3.8bn cf. Rs 3.4bn a year earlier while interest bearing liabilities fell 12% for the same period to Rs 2bn. As a result net asset value increased to Rs 773.9 from Rs 754.5 recorded atMarch 31, 2015.
Profit after tax for 2015/16 fell to Rs 314mn owing to the external environment. Lanka Ashok Leyland maintained their payout ratio at 43.6% with a final dividend of Rs 25 to its shareholders. Umesh Gautam, CEO of Lanka Ashok Leyland commented on the year’s performance, “Another challenging year is behind us and I am convinced of the results we have been able to achieve. In an environment where we have to contend with variables beyond our control such as the exchange and interest rates, we have done our best to mitigate and manage our risks in a manner that hasn’t forced us to deviate or change our operating environment or curtail our expansion plans. Transport industry operates at the mercy of exchange rate volatility, and 2015/16 saw rapid decrease in the Rupee triggered by the devaluation in China in August 2015 increasing our import costs which could not be transferred to our customers who had to contend with rising interest rates and changes in vehicle financing regulations.
That said, looking at the metrics that are within our control, we feel that we have achieved a lot of what we planned for this year,
www.dailynews.lk
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