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COMPANY PROFILE

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HISTORY
Ashok Motors was founded by Raghunandan Saran for assembling Austin A40 and A70 cars in collaboration with Austin Motor Co. Ltd., England.

OVERVIEW
For over six decades, we have been moving people and goods, touching you and millions across 50 countries worldwide. Today, we are the flagship of the Hinduja Group, one of the largest commercial vehicle manufacturers in India with a turnover of US $ 2.5 billion in 2010-11 having consistently delivered profits to our stake-holders since inception. Our buses safely carry 70 million passengers to their destinations every day. Close to 700,000 of our vehicles keep the wheels of economies turning and, as the largest supplier of logistics vehicles to the Indian Army, we play a critical role in keeping our borders safe. For our customers, we are committed to provide transport solutions that offer the best operating economics while for users of our vehicles, comfort and safety. This has driven us to pioneer concepts that have become industry norms fueled both by our robust inherent R&D capabilities and the strength of strategic alliances forged with global technology leaders. Headquartered in Chennai, India, our manufacturing footprint is pan-India with two facilities in Prague (Czech Republic) and Ras Al Khaimah (UAE).

ABOUT HINDUJA GROUP

The Hinduja Group is a multi-billion dollar, transnational conglomerate. The Group was founded by Shri P.D. Hinduja in 1914 whose credo was "My duty is to work so that I can give."

The Group's activities span across three core areas: Investment Banking, International Trading and Global Investments. It also supports charitable and philanthropic activities across the world through the Hinduja Foundation. As part of its Global investments, the Group owns businesses in Automotive, Information Technology, Media, Entertainment & Communications, Banking & Finance, Infrastructure Project Development, Chemicals &Agri business, Energy, Real Estate, Trading and Healthcare. 2

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With operations across 40 countries, the Group employs over 40,000 people worldwide.

JOINT VENTURES
To offer you more from our stable of offerings, we have inked 50:50 Joint Ventures (JV) with Nissan Motor Company (Japan) for Light Commercial Vehicles and John Deere (USA) for construction equipment. Our JV with Continental AG (Germany) is for developing automotive Infotronics while the one with the Alteams Group is for producing high press die casting extruded aluminum components for both the automotive and telecommunication sectors.

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INTERNATIONAL OPERATIONS
Our growing international footprint is thanks to our success in producing vehicles ideally suited for varying foreign conditions and terrains. Exporting to over 30 countries worldwide, we are leaders in the bus markets of Sri Lanka, Bangladesh and Mauritius and have significant presence in the Middle East and Africa too. We are proud participants in the Bus Rapid Transport (BRT) system in Lagos, Nigeria, that is going a long way in providing better and comfortable city travel. We are now seeking to make inroads into CIS and Latin America. AVIA Ashok Leyland Motors, headquartered in Prague, the Czech Republic, represents our European presence. The famous D- Series trucks are popular on the roads of Hungary, UK, Ireland, Slovakia, Spain, Czech Republic and soon in the Middle East. With the Ras Al Khaimah Investment Authority, we have set up a state-of-the-art facility at Ras Al Khaimah, UAE, with an initial annual capacity to manufacture 2,000 vehicles of international quality.

The 75.1% stake in Optareplc., a leading bus maker in the UK, gives impetus to our global bus strategy to accelerate technology adoption, develop new products and address new markets.

ASSOCIATE COMPANIES
Albonair GmbH Ashok Leyland Project Services Ltd. Automotive Components and Coaches Ltd. (ACCL) Defiance Technologies Hinduja Foundries Ltd. (HFL) Hinduja Leyland Finance Lanka Ashok Leyland (LAL) TVS IRIZAR

PRODUCTS
Buses Trucks 4

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Light Vehicles Defence Power Solutions

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DIVIDEND CONCEPTS

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DIVIDENDS
The word "dividend" comes from the Latin word "dividendum" ("thing to be divided"). Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be distributed to shareholders. There are two ways to distribute cash to shareholders: share repurchases or dividends. Many corporations retain a portion of their earnings and pay the remainder as a dividend.

For a joint stock company, a dividend is allocated as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. For the joint stock company, paying dividends is not an expense; rather, it is the division of after tax profits among shareholders. Retained earnings (profits that have not been distributed as dividends) are shown in the shareholder equity section in the company's balance sheet - the same as its issued share capital. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from the fixed schedule dividends.

Cooperatives, on the other hand, allocate dividends according to members' activity, so their dividends are often considered to be a pre-tax expense.

Dividends are usually paid in the form of cash, store credits (common among retail consumers' cooperatives) and shares in the company (either newly created shares or existing shares bought in the market.) Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to purchase additional shares for the shareholder.

FORMS OF PAYMENT
Cash dividends (most common) are those paid out in currency, usually via electronic funds transfer or a printed paper check. Such dividends are a form of investment income and are

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usually taxable to the recipient in the year they are paid. This is the most common method of sharing corporate profits with the shareholders of the company.

(1) Regular Dividend By dividend we mean regular dividend paid annually, proposed by the board of directors and approved by the shareholders in general meeting. It is also known as final dividend because it is usually paid after the finalization of accounts. It sis generally paid in cash as a percentage of paid up capital, say 10 % or 15 % of the capital. Sometimes, it is paid per share. No dividend is paid on calls in advance or calls in arrears. The company is, however, authorised to make provisions in the Articles prohibiting the payment of dividend on shares having calls in arrears.

(2) Interim Dividend If Articles so permit, the directors may decide to pay dividend at any time between the two Annual General Meeting before finalizing the accounts. It is generally declared and paid when company has earned heavy profits or abnormal profits during the year and directors which to pay the profits to shareholders. Such payment of dividend in between the two Annual General meetings before finalizing the accounts is called Interim Dividend. No Interim Dividend can be declared or paid unless depreciation for the full year (not proportionately) has been provided for. It is, thus,, an extra dividend paid during the year requiring no need of approval of the Annual General Meeting. It is paid in cash.

(3)Stock-Dividend Companies, not having good cash position, generally pay dividend in the form of shares by capitalizing the profits of current year and of past years. Such shares are issued instead of paying dividend in cash and called 'Bonus Shares'. Basically there is no change in the equity of shareholders. Certain guidelines have been used by the company Law Board in respect of Bonus Shares.

(4)Scrip Dividend Scrip dividends are used when earnings justify a dividend, but the cash position of the company is temporarily weak. So, shareholders are issued shares and debentures of other 8

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companies. Such payment of dividend is called Scrip Dividend. Shareholders generally do not like such dividend because the shares or debentures, so paid are worthless for the shareholders as directors would use only such investment is which were not . Such dividend was allowed before passing of the Companies (Amendment) Act 1960, but thereafter this unhealthy practice was stopped.

(5)Bond Dividends In rare instances, dividends are paid in the form of debentures or bounds or notes for a long-term period. The effect of such dividend is the same as that of paying dividend in scrips. The shareholders become the secured creditors is the bonds has a lien on assets.

(6)Property Dividend Sometimes, dividend is paid in the form of asset instead of payment of dividend in cash. The distribution of dividend is made whenever the asset is no longer required in the business such as investment or stock of finished goods.

But, it is, however, important to note that in India, distribution of dividend is permissible in the form of cash or bonus shares only. Distribution of dividend in any other form is not allowed.

RELIABILITY OF DIVIDENDS
There are two metrics which are commonly used to gauge the sustainability of a firm's dividend policy.

Payout ratio is calculated by dividing the company's dividend by the earnings per share. A payout ratio greater than 1 means the company is paying out more in dividends for the year than it earned.

Dividend cover is calculated by dividing the company's cash flow from operations by the dividend. This ratio is apparently popular with analysts of income trusts in Canada.

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DIVIDEND TAXATION
In many countries, such as the U.S.A. and Canada, income from dividends is taxed, albeit at a lower rate than ordinary income.

In India, companies declaring or distributing dividend, are required to pay a Corporate Dividend Tax in addition to the tax levied on their income. Dividend received is exempt in the hands of the shareholder's, in respect of which Corporate Dividend Tax has been paid by the company.

FORMS OF DIVIDENDS
Bonus Share A bonus share is a free share of stock given to current shareholders in a company, based upon the number of shares that the shareholder already owns. While the issue of bonus shares increases the total number of shares issued and owned, it does not change the value of the company. Although the total number of issued shares increases, the ratio of number of shares held by each shareholder remains constant.

Stock Split A stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur. Options and warrants are included.

Share Repurchase(Stock Buy Back) Stock repurchase (or share buyback) is the reacquisition by a company of its own stock. In some countries, including the U.S. and the UK, a corporation can repurchase its

own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity; that is, cash is exchanged for a reduction in the number of shares outstanding. The company either retires the repurchased shares or keeps them as treasury stock, available for re-issuance.

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Purpose Companies making profits typically have two uses for those profits. Firstly, some part of profits can be distributed to shareholders in the form of dividends or stock repurchases. The remainder, termed stockholder's equity, are kept inside the company and used for investing in the future of the company. If companies can reinvest most of their retained earnings profitably, then they may do so. However, sometimes companies may find that some or all of their retained earnings cannot be reinvested to produce acceptable returns.

Share repurchases are an alternative to dividends. When a company repurchases its own shares, it reduces the number of shares held by the public. The reduction of the float, [4] or publicly traded shares, means that even if profits remain the same, the earnings per share increase. Repurchasing shares when a company's share price is undervalued benefits nonselling shareholders (frequently insiders) and extracts value from shareholders who sell. There is strong evidence that companies are able to profitably repurchase shares when the company is widely held by retail investors who are unsophisticated and more likely to sell their shares to the company when those shares are undervalued.

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DIVIDEND POLICY

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FM Year 2006-07 2007-08 2008-09 2009-10 2010-11 Dividend 1985.81 1,997.71 1,330.34 1,995.51 2,660.68 No. of share 1324 1330 1330 1330 1330 DPS=Dividend/No. PAT of shares 44,129 1.499856 1.502038 1.000256 1.500383 2.000511
46,931 19,000 42,367 63,130

ASHOK LEYLAND EPS=PAT/No. of Shares

3.38 3.53 1.43 3.18 4.75

Payout Ratio=DPS/EPS
0.443787 0.424929 0.699301 0.471698 0.421053

DIVIDEND
Year Dividend

2006-07 2007-08 2008-09 2009-10 2010-11

1985.81 1,997.71 1,330.34 1,995.51 2,660.68

3000 2500 Dividend 2000 1500 1000 500 0 2006-07

DIVIDEND(Rs.)

2007-08

2008-09

2009-10

2010-11

Interpretation:13

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In the initial two years 2006-07 and 2007-08 there is a negligible change in the dividend. But in the year 2008-09 there is a drastic fall in the dividend amount because of the decrease in the profit itself so the company was not able to pay the sufficient dividend to the shareholders. Again in the coming years company has paid a considerable amount of dividend. And in the year 2010-11 the company has paid the highest amount of dividend to its shareholders among all the five years duration. DPS
Year DPS

2006-07 2007-08 2008-09 2009-10 2010-11

1.499856 1.502038 1.000256 1.500383 2.000511

DPS
2.5 2 1.5 DPS 1 0.5 0 2006-07 2007-08 2008-09 2009-10 2010-11

Interpretation:As in the year 2006-07 and 2007-08 the dividend paid is almost same the dividend per share also remains same. As there is no change in the number of equity shares over a period of time of five years so the dividend per share shows the same trend as dividend amount.

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DIVIDEND PAYOUT RATIO

Year Dividend Payout Ratio
0.443787 0.424929 0.699301 0.471698 0.421053

2006-07 2007-08 2008-09 2009-10 2010-11

DIVIDEND PAYOUT RATIO

0.8 0.7 0.6 0.5 RATIO 0.4 0.3 0.2 0.1 0 2006-07 2007-08 2008-09 2009-10 2010-11

Interpretation:The dividend payout ratio shows the fluctuating trend over the period of last five years. The payout ratio provides an idea of how well earnings support the dividend payments. In the year 2008-09 the company has the lower profits in spite of this the company has paid the dividend to its shareholders. But as the earnings per share declines in this year even lower dividend per share has shown increase in the trend.

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