LAL drives to Indonesia

Mini assembly plant in Jaffna:

Shirajiv SIRIMANE

Lanka Ashok Leyland PLC (LAL) will set up a vehicle assembly plant in Indonesia early next year.

LAL Chief Executive Officer Umesh Gautham said they have obtained permission from their parent company in India for this overseas operation. He said the import duty in Indonesia for vehicles is very high and they encourage value addition to their country.

“This was the reason why we decided to invest in Indonesia,” he said. He said they have obtained the green light from Indonesian authorities and are on the lookout for a partner.

The value addition for the factory would be more than 40 percent. Gautham said they have a large workforce in Sri Lanka and most of them would be employed in Indonesia for this operation.

The CEO also outlined plans to set up a mini assembly plant in Jaffna by the end of the year. “The company will be investing Rs 250 million,” he disclosed.

Lanka Ashok Leyland has already obtained a 10 acre land in Nivatkuli on a eight year lease to construct this assembly plant.

He said the company went through a very bad patch in the last two decades and with the ending of the war business has picked up.

“Two years ago we were waiting for customers to come and by around 10 am all our marketing agents are engaged,” he said.

He said this is also evident in the stock market with one of their shares trading which was trading at Rs 10 now being traded at Rs 4,000.

Lanka Ashok Leyland’s net profit before tax this year of Rs 1.12 billion, a 440.0 percent increase on a net profit before tax of Rs 207.4 million a year earlier.

Such an improvement in the bottom line is credited to our improved vehicle sales which increased by 240 percent to Rs 11.52 billion compared to just over Rs 3.4 billion a year ago. Gross profit margins fell marginally from approximately 15.7 percent a year ago to approximately 14.5 percent.

The operating profit margin improved from 8.9 percent last year to 10.2 percent, the net profit margin improved significantly from 2.6 percent a year earlier to 5.6 percent.

“Our customer base in the private sector continues to strengthen while maintaining a very strong rapport with our existing customers and Government institutions to be a lot of interest and inquiry for our products from these areas as they will become growth markets for Lanka Ashok Leyland over the next few years,” Gautham said.

He said they would be introducing the airconditioned luxury bus which will have wheelchair access to the bus soon.