Chennai: Commercial vehicles maker Ashok Leyland Ltd has set in motion the process of selling two of its overseas companies -Albonair GmbH and Avia - as a part of its decision to exit non-core areas, said a senior company official here Friday.
He said the company has halted production of its multi-purpose vehicle (MPV) Stile in order to liquidate the existing inventory.
"We have decided to sell Albonair and Avia. We are interested in selling them to the right buyer," Gopal Mahadevan, chief financial officer, told reporters.
Queried about the company`s plans to take out its investments in various joint ventures he said the first step would be to look at the product portfolio rejig and later decide accordingly without making any major capital infusion.
The German company Albonair is in vehicle emission control business while Avia is a bus making company based in the Czech Republic.
Ashok Leyland had decided to stop production at Avia`s plant in Prague last year.
Speaking of the investments in Albonair, Mahadevan said Ashok Leyland has invested around 46 million euros in the company.
He said the company had made the investments earlier in the hope of bringing the technology to India.
However, the markets and economic conditions changed later making Ashok Leyland rethink on these investments.
According to Mahadevan, had the industry witnessed growth then the company would have persisted with the investments made in these companies.
He said Ashok Leyland has imbibed the cabin technology from Avia and has launched trucks with such cabins.
Mahadevan said the purpose of selling off non-core assets is to bring in cash so as to reduce the debt levels.
Meanwhile the company has stopped production of MPV Stile as it was not doing well in the market place, he said.
He said the position of Stile in the company`s overall business is low, whereas the product portfolio of light commercial vehicle (LCV) Dost is being expanded.
According to him the company`s debt level came down to Rs 4,323 crore last month from Rs 4,700 crore in March 2014.
The company had used a major portion of the $110 million raised from qualified institutional placement (QIP) to cut the debt level.
According to him healthy sales, cutting down costs and debt have helped the company to gain market share and also return to profitability after five successive quarters.
For the first half of the current fiscal Ashok Leyland has posted a net profit of Rs 72.73 crore as against a loss of Rs 166.80 crore for the corresponding period of the previous year.
Revenues increased by 16 percent to Rs 5,695.48 crore as against Rs 4,913.43 crore for the corresponding period last year.
