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Ashok Leyland bets on rural infra to see demand for cargo carriers

New Delhi: Ashok Leyland, India's second-largest truck maker, is betting on rural infrastructure to help boost demand for cargo carriers, sales of which declined last year ahead of the adopting of new emission norms.  The lockdown further affected demand, causing shrinkage in the industry.

“One of our recommendations to the gove
ment is to allocate a significant amount of national infrastructure pipeline projects in rural India. Vipin Sondhi CEO told,” We are seeing utilisation going up. How long would it take for things to revive? We will have to wait and watch. Things will improve quarter by quarter.”

To be sure, tractor sales for May have already matched the levels of May 2019 levels, and bumper Kharif crops have secured stronger rural cash flows from cities. Foodgrains production reached a record high, and urea sales were very strong, indicating traction in the rural economy.

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Ashok Leyland said that there are no green shoots yet, but there is some movement of construction equipment in rural areas, indicating the resumption of activities. Plus, e-commerce business offers a great opportunity in this "new normal".

Although there were no sales for nearly 45-60 days, Ashok Leyland last week unveiled next-generation products based on a standard platform aimed at offering greater value to consumers.

"The importance is to be there, with the right product at the right time, so that when demand is triggered, we are there," added Sondhi.

The company used this 75-day period to deal with dealers and customers.

Ashok Leyland saw its medium and heavy trucks nearly half to 71,421 units in FY 20, a decent show in LCV, as the company posted a relatively modest 15% drop in dispatches, cushioned the overall effect on numbers, which fell by 37%

The company did not carry any stocks of BS-IV vehicles and very limited shipments of BS-VI stock ensured that the pressure on dealers was much lower. Service centers are already starting to watch 40-45% of their average monthly payload and already ensuring some form of cash flow for distributors.

Meanwhile, Ashok Leyland on its part has retained its permanent employees. Sondhi said that the company has paid all the MSMEs vendors before time and has extended financial assistance to some dealers where needed.

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