Ashok Leyland Ltd has launched a ₹2,000 crore cost-reduction programme over the next 18-24 months while maintaining its capex plan of ₹1,000 crore for FY27. The cost-cutting exercise will be across the board, its chairman Dheeraj Hinduja told newspersons on Friday.
The capex will be directed towards new products and technologies, said Hinduja, including EVs and the company’s battery plant. Currently, there are no capacity expansion plans. Ashok Leyland expects a combination of price increases, cost reduction, and value engineering to help offset commodity inflation and help sustain margins, he said.
The company has already taken two price increases this year, totalling 2-2.25 per cent, MD and CEO Shenu Agarwal said, adding that Ashok Leyland is also evaluating further price hikes or discount optimisation to improve realisation.
On the Ras Al Khaimah (RAK) plant in the UAE affected due to the West Asia crisis, Hinduja said there was a gradual recovery. He added that final approvals were expected for the plant in Saudi Arabia within six to eight weeks, with production likely to start 18-24 months after that.
International commercial volume for the company stood at 2,461 vehicles in Q1 FY27 compared with 3,011 vehicles in the same period last year. The decline was primarily due to the impact of the West Asia crisis. At the same time, there were encouraging developments in other markets. Strong growth in SARC and Africa helped offset the Middle East decline to some extent. There is a stronger momentum from June, said KM Balaji, Chief Financial Officer.
(Left to right) Shenu Agarwal, Managing Director and CEO, Ashok Leyland; Dheeraj Hinduja, Chairman; and KM Balaji, CFO, during a post-earnings virtual press conference on Friday
The commercial vehicle manufacturer reported a 2 per cent increase in its consolidated net profit for the first quarter ended June. The bottom line came in at ₹668 crore as against the ₹658 crore it reported in the corresponding quarter last year. Consolidated revenue was up 10 per cent to ₹10,750 crore. The performance was good due to growth across all segments, said Hinduja.
On a standalone basis, the auto major reported its highest-ever net profit of ₹609 crore as against ₹594 crore in the same quarter previous year. Revenue was also the highest-ever at ₹9,634 crore (₹8,725 crore). However, owing to rising material costs, EBITDA dipped to 10 per cent for Q1 FY27 as against 11 per cent in the year-ago period.
The company strengthened its cash position with net cash of ₹2,252 crore at the end of Q1 FY27, a positive swing of ₹1,432 crore on a year-on-year basis.
The company reported a record Q1 with highest-ever commercial vehicles volume of 48,763 units compared to 44,238 units in the same period last year, said a release. The exports volume in Q1 was at 2,461 units.
The company has delivered another strong quarter, underpinned by disciplined execution and effective cost management, said Hinduja. Demand across key segments remains robust, and future prospects continue to be encouraging. Government initiatives such as Parivartan, he believes, will further accelerate fleet modernisation and support the long-term growth of the commercial-vehicle industry.
The company’s electric mobility subsidiary, Switch Mobility, also continues to gain traction.
While rising material costs remain a concern, Ashok Leyland is taking several initiatives towards better price realisation, rigorous cost-saving efforts, product and business mix improvement, and opportunity-based inventory build-up, said Agarwal.
Meanwhile, the MoU that the Hinduja Group signed with the Tamil Nadu government on Thursday, Hinduja said, will be looking at opportunities in renewable energy in the southern state. The group’s renewable-energy vertical currently has 1,500 MW implemented and another 1,500 MW under construction. There are also plans to add capacity in Tamil Nadu through land procurement and subsequent investment, he said.
The company announced investments of up to £25 million (approximately ₹325 crore) in Optare Plc. UK, subsidiary, as equity in one or more tranches.
It also announced investments of up to ₹500 crore in equity shares of Hinduja Housing Finance Ltd, a step-down subsidiary, by way of secondary purchase of shares from Hinduja Leyland Finance Ltd, a material subsidiary, in one or more tranches.
Published on August 14, 2026
