Headline

Ashok Leyland Ltd

Published On

Nov 15, 2013

Abstract

Key Issues
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Ashok Leyland Ltd

Business profile
Ashok Leyland Ltd (ALL) was incorporated in 1948 in collaboration with Austin Motor as Ashok Motors. The company is currently the third-largest domestic commercial vehicle (CV) manufacturer, with a market share of 13 per cent. Hinduja Automotive purchased an additional 26 million shares of ALL from Lotus Global Investments Ltd through the open market, for about Rs. 410 million. Hinduja Automotive currently holds a 39.6 per cent stake in the company. ALL is dominant in the medium and heavy CV segment, wherein it has a 22.5 per cent market share. It is the fourth-largest bus-maker in the world. Other than CVs, the company also manufactures spare parts and offers power solutions. The company has four joint ventures (JVs): with Nissan for light commercial vehicles (LCVs); with John Deere for construction equipment; with Continental AG for infotronics products and services; and with Alteams Group for producing HPDC aluminum components for the telecommunications and automotive sectors. ALL acquired Czech Republic-based truck manufacturer, Avia, in 2006, to give it a foothold in the European truck market, renaming it to Avia Ashok Leyland Motors s.r.o. The company also increased its stake in UK-based bus manufacturer, Optare, to 75 per cent in 2011, and plans to enter the Australian bus market through this subsidiary. The company also holds a 26 per cent stake in Ashok Leyland Defence Systems (ALDS). ALDS designs and develops defence logistics, tactical vehicles, defence communication, etc. ALL is the largest supplier of logistic vehicles to the Indian Army.

Segment-wise sales

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Financial performance

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Quarterly financial performance

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Key developments
In 2012-13, the company ramped up its annual CV capacity at its Pantnagar plant to 40,000 vehicles, with plans to add capacity to manufacture a further 10,000 vehicles annually. However, the company had cut down its capital expenditure to Rs. 5 billion from Rs. 16 billion during the year, due to adverse market conditions, which could affect its expansion plans. ALL launched a 7-seater multi-purpose vehicle (MPV) Stile on October 7, 2013. The diesel engine of the MPV has been developed by Nissan Ashok Leyland Technologies Ltd, a JV between ALL and Nissan Motors. The company plans to also launch a CNG variant of Stile . In October 2013, the company launched its intermediate commercial vehicle (ICV), Boss , which is an adaptation of the Avia range of trucks. It has also scheduled the launches of its Neptune engine, N-Truck , and the CNG and passenger variants of Dost , Partner , and a new range of ICVs in 2013-14. The company has received orders of 2,610 buses from the Institute of Road Transport, Tamil Nadu in 2013-14. In June 2012, the company had received a $6.5 million order from Bangladesh Road Transport Corporation for 88 AC buses. It also supplied 100 Falcon buses to Ghana worth $7.6 million for inter- and intra-city transportation in 2012. The company intends to enter the Australian bus market through its subsidiary, Optare. In 2012-13, its new LCV, Dost , captured 19 per cent of the segment's market share in its first year of operations. The company also launched a truck, 3718il (10x2). The company's CV exports fell in 2012-13, mainly due to the political changes and changes in the duty structure in its primary export market, Sri Lanka. This was also accompanied by the global slowdown in demand. Its exports to Sri Lanka fell by two-thirds. However, its exports to other regions grew, notably to the Middle East by 15 per cent. It also began exporting Dost to other SAARC (South Asian Association for Regional Cooperation) countries.

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