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Shares of SML Isuzu were locked in 20 per cent at Rs 810.50 on the BSE on Monday after the company’s passenger vehicle sales more than doubled to 570 units in the month of December 2022. The commercial vehicles company had sold 218 units during the same month last year.
The company’s total sales increased by 37 per cent year-on-year (YoY) at 959 units in December 2022, as against 218 units in December 2021. However, cargo vehicles sales declined 19 per cent YoY to 389 units from 483 units in the year-ago month.
On a cumulative basis, for the first nine months (April-December) of financial year 2022-23 (9MFY23), the company reported 82 per cent YoY jump in total sales at 8,549 units, while passenger vehicles sales zoomed 372 per cent YoY at 5,417 units.
SML Isuzu is primarily engaged in the business of manufacturing of commercial vehicles and related components.
The company’s business activities were significantly impacted during the year ended March 2022 as a result of Covid-19 pandemic, resulting in loss in the previous year.
Management expects that the company should be able to continue as a going concern for a foreseeable future in view of its strong net worth, established technical excellence and operational systems as well as identified future course of actions which are considered to be realistic and feasible such as to protect revenues, cut costs, manage working capital balances, manage liquidity by deferring dividends, manage non compulsory capital expenditures etc.
“Despite various uncertainties, in view of its management and the Board of Directors, the company will be able to meet its financial obligations to the foreseeable future based on the above actions, continued support from various stakeholders including its promoter group and through availability of financing from lenders as may be required to sustain its operations on a going concern basis and will be able to discharge its liabilities and realise the carrying amount of its assets as on September 30, 2022. Accordingly, the accompanying financial results have been prepared on a going concern basis,” the company had said in Q2 result note.
Meanwhile, during Q1FY23, M&HCVs truck segment had witnessed significant recovery with revival of demand from the steel, cement and mining sectors and pickup in economic activity. LCVs truck segment started recovering earlier than M&HCVs segment supported by healthy demand from the agricultural and the allied sectors along with upswing in the e-commerce sector. Bus segment also witnessed sequential growth in volumes backed by demand from the educational institutions and increased spending by the Government.
“The goods segment is expected to lead the recovery over the near term supported by construction & mining activities, Government spending on infrastructure and deferred replacement demand. Further, Scrappage Policy and the upswing in the e-commerce sector are expected to add volumes. With opening of educational institutions and offices, the bus segment volumes are likely to revive sequentially, although it would take some time to reach at pre-Covid levels,” the company had said in its FY22 annual report.
The Industry expects the CV sales volume to grow by 12-15 per cent in FY23 driven by improving freight demand, economic recovery and Government’s thrust on infrastructure spending. M&HCVs truck volumes to grow by 15-20 per cent and LCVs truck volumes to grow by 8-10 per cent in FY23. And the bus segment is expected to grow by 30-35 per cent.
However, rising fuel prices especially CNG and its consequential impact on the fleet operators, volatility in the commodity prices along with supply chain disruptions, hike in interest rates, chip shortages and geopolitical issues, will remain a concern for the Industry, the company said.
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