Synopsis
We have been raising net prices over the last three quarters. We have done that in the month of January as well and we will keep doing that astutely so it is not a question of growth versus profitability, I think the term to be used as growth and profitability, I think both will coexist that is the whole purpose.

So overall you are seeing a growth in the segment and that is expected to continue.

"As far as margin outlooks are concerned, I believe that we will grow further in the fourth quarter, that is, the expectation, I cannot give an outlook immediately," says Gopal Mahadevan, Ashok Leyland.

The tax rate if you look at it, it was high, approximately at around 36% for the third consecutive quarter. Could you tell me what is the trend going forward and also can you share the outlook that you have on the margins and if adding to that if you could tell us what will be the factors that will be at play going ahead?

There is no outlook that we can give on the effective tax rate. It is the normal corporate tax rate so that is what it is. As far as margin outlooks are concerned, I believe that we will grow further in the fourth quarter, that is, the expectation, I cannot give an outlook immediately. But it looks like there will be growth in the fourth quarter and we would see that with the help of possibly better realisations, material costs being stable at the levels that they are or maybe softening a bit further and operating leverage kicking in. All of this should help in margin enhancement in the fourth quarter.

Is there any headroom for the company now to go ahead and take any price hike, also if you could tell us what is the situation with regards to discounts, I am sure all of them out there listening to you would want to know about it?

We have been raising prices, but what we have also been doing if you notice is that we have been gaining market share. So, we have been doing it rather astutely because all said and done the industry has moved from BS-IV to BS-VI. So vehicles are more expensive and it is necessary for us to keep ensuring that we are able to augment some more revenues to help offset the cost increase that has happened from BS-IV to BS-VI. So we have been raising net prices over the last three quarters. We have done that in the month of January as well and we will keep doing that astutely so it is not a question of growth versus profitability, I think the term to be used as growth and profitability, I think both will coexist that is the whole purpose.

For the industry, there seems to be a hit on the CNG sales. How are you coping with that then?

CNG is one part of the portfolio. So what is happening is that all that CNG sale were taking place because there was an arbitrage between diesel and CNG. This has kind of come off very sharply, we will have to see how the future differences are because sometimes in the international markets you suddenly see wild oscillations in diesel and CNG prices. There are fleet operators who want to keep a certain small segment of their fleet in CNG for other strategic purposes. So it is not that CNG sales have become zero, but they have certainly reduced. But what you must remember is if the vehicles are not sold in CNG, then they are sold in diesel. So overall you are seeing a growth in the segment and that is expected to continue.

Courtesy: ET