Ashok Leyland Ltd

Last modified by Asif Farooqui on 2021/03/17 09:49

Contents

Overview
- Manufacturing Facilities
Commercial Vehicle Market
Business Segments
Financial Highlights
Recent developments
References

Overview

Ashok Leyland (NSE:ASHOKLEY), flagship of the Hinduja group, is the 2nd largest manufacturer of commercial vehicles in India, the 3rd largest manufacturer of buses in the world, and the 10th largest manufacturers of trucks. Headquartered in Chennai, 9 manufacturing plants gives an international footprint - 7 in India, a bus manufacturing facility in Ras Al Khaimah (UAE), one at Leeds, United Kingdom and a joint venture with the Alteams Group for the manufacture of high-press die-casting extruded aluminum components for the automotive and telecommunications sectors, Ashok Leyland has a well-diversified portfolio across the automobile industry. Ashok Leyland has recently been ranked as 34th best brand in India.¹

A US $ 2.30 billion company, and a footprint that extends across 50 countries, Ashok Leyland is one of the most fully-integrated manufacturing companies this side of the globe. Ashok Leyland has a product range from 1T GVW (Gross Vehicle Weight) to 55T GTW (Gross Trailer Weight) in trucks, 9 to 80 seater buses, vehicles for defence and special applications, and diesel engines for industrial, genset and marine applications. Ashok Leyland launched India’s first electric bus and Euro 6 compliant truck in 2016.Over 70 million passengers use Ashok Leyland buses to get to their destinations every day and its trucks keep the wheels of the economy moving. With the largest fleet of logistics vehicles deployed in the Indian Army and significant partnerships with armed forces across the globe, Ashok Leyland helps keep borders secure.

Pioneers in the Commercial Vehicle (CV) space, many product concepts have become industry benchmarks and norms. Ashok Leyland has ISO/TS 16949 Corporate Certification and is also the first CV manufacturer in India to receive the OBD-II (on board diagnostic) certification for BS IV-compliant commercial vehicle engines, SCR (selective catalytic reduction), iEGR (intelligent exhaust gas recirculation) and CNG technologies. Ashok Leyland is the first truck and bus manufacturer outside of Japan to win the Deming prize for its Pantnagar plant in 2016 and the Hosur Unit II being awarded the Deming Prize in 2017. Driven by innovative products suitable for a wide range of applications and an excellent understanding of the customers and local market conditions, Ashok Leyland has been at the fore-front of the commercial vehicle industry for decades.

The Company’s wide-spread customer base is served through an all-India sales and service network, supplemented by close to 3000 touch points. A global network of over 550 touch points that facilitate on-road service for millions of vehicles. With technology-enabled customer engagement processes and knowledge on the specific applications of the product range, Ashok Leyland sales team are well equipped to fulfil customer’s needs. Ashok Leyland manages driver training institutes across India and has trained over 8,00,000 drivers since inception. On-site service training for technicians are provided by Ashok Leyland’s service training institutes located in 9 locations across India.

Manufacturing Facilities

Since the very first day its ‘Mother Plant’ at Ennore was established, up to the setting up of its ninth facility in Pantnagar, in 2010, this is a responsibility the company fulfill diligently and without compromise.²

The Ennore 'Mother Plant', Tamilnadu - Est. 1948
Hosur Plant 1, Tamil Nadu - Est. 1980
Bhandara Plant, Maharashtra – Est. 1982
Alwar Plant, Rajasthan – Est. 1982
Hosur Plant 2, Tamil Nadu, Est. 1994
CPPS Plant, Tamilnadu, Est. 2001
Ras Al Khaimah Plant, UAE, Est. 2009
Optare Plant, United Kingdom –Acq. 2010
Pantnagar Plant, Uttarakhand, Est. 2010

Commercial Vehicle Market

The Commercial vehicle market in India posted a drop of 29% YoY in Total Industry Volumes (“TIV”), which was led by 20% drop in LCV and 42% drop in M&HCV segments.³

Demand for MHCV trucks in Q1 FY 2019-20 started on a weak note due to the uncertainty around Lok Sabha elections and continued impact of axle load norms. In Q2 demand continued to take hit with GDP slowing down, heavy monsoon affecting construction activity and the ambiguity around GST rate cut for the automotive sector. In Q3/Q4 the demand suffered due to lack of BS VI pre buy, aggressive competition to bring down BS IV inventory, further tightening of funds by NBFCs and the nationwide lockdown enforced to slow the spread of COVID-19 pandemic.

M&HCV Bus segment registered a modest gain of 2% over the previous year with both STU and MDV-Private segments growing at 6% and 15.6% respectively. Most STUs are adopting the PPP (Public Private Partnership) model of business for new tenders.

The LCV Trucks (0-7.5T Segment) dropped by 21% while the LCV Bus segment degrew by 13%. CV exports dropped by 39% over last year primarily driven by 63% fall in M&HCV Trucks. Other segments also declined by double digits except for M&HCV Buses which bucked the trend by growing 12%.

Business Segments

The company sold 71,368 M&HCVs in the domestic market (18,141 M&HCV Buses and 53,227 M&HCV Trucks including Defence vehicles), registering a de-growth of 45.9% over the previous year. LCV with sales of 46,646 vehicles de-grew by 14.4% over the previous year. The company was able to achieve market share of 31.8% in M&HCV Bus and Truck Segment combined when total industry volume degrew by 42%. The company was able to clear complete stock of BS IV vehicle at Company and dealerships.

M&HCV Truck segment

In the continually declining market, the company was able to attain a market share of 28.9% in the domestic M&HCV Trucks Segment. The company sold 53,028 M&HCV trucks (excluding Defence) in domestic market in the current financial year. The 54% drop in volumes is directly attributable to the steep drop in total industry volume. The company conducted BS VI vehicle launches to showcase its wide product portfolio with i Gen6 technology, to reinforce its brand promise of "Aapki Jeet Hamari Jeet". With new products, especially Modular Business Program (“MBP”) range, the company is poised for a confident and smooth take off for BS VI. There were many noteworthy product launches in M&HCVs which were well received during the year, namely model CT3718 10x4 helped the company regain some of the lost market share in the Tipper segment.

M&HCV Bus segment

The company bagged Global 3rd position in volume sales. In the domestic M&HCV Bus segment, the company continues to maintain overall leadership, with a MS of 45.1% which is 3.9% more than the market share in FY 2018-19. The company regained the leadership in STU segment with strong order wins from Tamil Nadu, Gujarat, Maharashtra STUs, thereby registering a growth of 6% over the previous year. The company launched new products such as Sunshine LX for ICV School segment, 12m 225 i EGR Bus for intercity segment and 11m FESLF CNG NAC for intracity segment.

International Operations

In pursuit of new vision, the company focused on expanding its global footprint across retail markets in Africa, ASEAN and CIS countries. The company strengthened its presence in Bangladesh and GCC countries with its LCV portfolio and attained market leadership in MDV bus segment. The company has extensively worked on developing globally benchmarked new products in FY 2019-20 in Trucks, Buses and LCV range in RHD and LHD versions to cater to global markets.

LCV segment

In FY 2019-20, the company gained market share through all its LCV brands in sub-7.5T GVW segment with focus on institutional sales, despite 18% drop in TIV in the segments the company operate. The company is now BSVI ready and completed development of New Generation LCV, which will be launched in first half of FY 2020-21 for both domestic and international markets, offering superior customer value proposition. The company continues to deliver best-in-industry SSI/ CSI, lowest defect, best-in-class low warranty and high service retention through its expanding network of 570 outlets, thereby achieving service market share of 64%.

Power Solutions Business

The company set new records in FY 2019-20 with all time high volumes of agricultural engines, and secured breakthrough businesses with prospect equipment manufacturers in industrial and agricultural applications for ensuing BS CEV IV emissions. The company aggressively sold 20,359 engines in FY 2019-20 despite the deferment of infrastructure projects and improved grid power which restrained the industrial equipment and powergen genset demand respectively.

Aftermarket

Aftermarket business of the company has been delivering profitable growth over last few years. Spare Parts business of the company delivered healthy margins backed by interventions that resulted in substantial reduction in operating costs in areas of logistics and inventory control. Spare Parts channel saw record participations from independent garages and ended the year with highest ever number of exclusive retail parts store. Availability of spare parts at Channel partners also reached a record high of 97%. The Digital initiative - LeyKart continues to fulfill the promise of ondemand availability of Spares with listings of more than 15,000 SKUs and saw record participation of users.

Service function achieved its highest Service market share and continues to improve penetration in service products. Digitalisation of internal operations enabled the service organisation to become more agile to changing market dynamics. The company continued to focus on superior customer service throughout the product lifecycle. Dealer partners of the company, expanded their capacity and reach for aftermarket service, including break-down assistance and accident repairs.

Defence

In FY 2019-20, the company supplied 359 units of completely built up units (CBUs) including bullet proof vehicles and 888 kits. The defence business of the company expanded its portfolio by foraying into tracked vehicles business for supplying aggregates and components for T-72 and T-90 battle tanks. It is also working on enhancing exports volumes for its products.

Foundry Division

The Indian foundry industry manufactures castings for applications in Auto, Tractor, Railways, Machine tools, Defence, Earth Moving / Textile / Cement / Electrical / Power machinery, Pumps / Valves etc. The Foundry Division of the company is mainly catering to the automotive industry in the country and having product segments of Cylinder Block, Head and Tractor Housings. For the FY 2019-20 the Foundry division achieved the production of 61,152 MT (decrease of 42% over last year) and sales of 59,334 MT (decrease of 39% over last year).

Financial Highlights

The Commercial Vehicle (“CV”) market in India posted a double digit drop of 29% YoY in Total Industry Volumes (“TIV”), which was led by 20% drop in Light Commercial Vehicle (“LCV”) and 42% drop in Medium and Heavy Commercial Vehicle (“M&HCV”) segments. CV exports dropped by 39% over last year primarily driven by 63% fall in M&HCV Trucks. Other segments also declined by double digits except for M&HCV Buses which bucked the trend by growing 12%. The company sold 71,368 M&HCVs in the domestic market (18,141 M&HCV Buses and 53,227 M&HCV Trucks including Defence vehicles), registering a de-growth of 45.9% over the previous year. LCV with sales of 46,646 vehicles de-grew by 14.4% over the previous year. The company was able to achieve market share of 31.8% in M&HCV Bus and Truck Segment combined when total industry volume degrew by 42%. The company was able to clear complete stock of BS IV vehicle at Company and dealerships. The company conducted BS VI vehicle launches to showcase its wide product portfolio with i Gen6 technology, to reinforce brand promise of "Aapki Jeet Hamari Jeet". There were many noteworthy product launches in M&HCVs which were well received during the year, namely CT3718 10x4 Tipper, Sunshine LX for ICV School segment, 12m 225 i EGR Bus for intercity segment and 11m FESLF CNG NAC for intracity segment.

The company aggressively sold 20,359 engines in FY 2019-20 despite the deferment of infrastructure projects and improved grid power which restrained the industrial equipment and powergen genset demand respectively. Spare Parts business of the company delivered healthy margins backed by interventions that resulted in substantial reduction in operating costs in areas of logistics and inventory control. Service function achieved its highest Service market share and continues to improve penetration in service products.

Ashok Leyland reports Rs 389 crore net loss for June quarter⁴

Ashok Leyland on Wednesday reported a consolidated net loss of Rs 388.82 crore for the first quarter ended June 30, owing to the coronavirus pandemic.

The commercial vehicle maker had posted a net profit of Rs 274.96 crore for the April-June 2019 quarter.

Revenue from operations in April-June 2020 significantly declined to Rs 1,486.04 crore as compared with Rs 6,588.23 crore in the year-ago period, Ashok Leyland said in a regulatory filing.

"With the pandemic hitting it, this has been one of the most challenging quarters for the industry," Ashok Leyland MD and CEO Vipin Sondhi said.

The company saw a significant decline in volumes, affecting the financial performance adversely, he added.

Despite challenging times, the company went ahead and launched the modular business platform that gives customers the flexibility to choose vehicles as per their requirements, Sondhi said.

"This will be a game changer in the industry, and Ashok Leyland has already rolled out over 2,000 of these vehicles till date this year and together with its LCV (light commercial vehicle) range, Ashok Leyland has already rolled out 10,000 BS-VI vehicles. This is an encouraging sign for the quarters to follow," he added.

Ashok Leyland Chief Financial Officer Gopal Mahadevan said this is an exceptional quarter not just for the industry but also for the entire economy. "Ashok Leyland has used this time to drive disruptive cost efficiencies and productivity measures."

The focus is also on maintaining liquidity, not just of the company but also of dealers and vendors, he noted.

"There have been tremendous learnings for it in doing business efficiently without dropping the ball on growth initiatives. The company will come out of this much stronger," Mahadevan said.

Recent developments

Oct 01, 2020; Ashok Leyland NSE -2.81 % reported 5 per cent decline in total commercial vehicle sales at 8,344 units in September.⁵

The company had sold 8,780 units in the same month last year, Ashok Leyland said in a regulatory filing.

Domestic sales declined marginally at 7,847 units as against 7,851 units in September 2019, it added.

Total heavy and medium commercial vehicle sales were down 23 per cent at 3,642 units as compared to 4,744 units in the year-ago month, the company said.

Light commercial vehicles sales were, however, up by 17 per cent at 4,702 units as compared to 4,036 units in September last year, the filing added.

Sep 17, 2020; Ashok Leyland bags orders for 1,400 ICVs from logistics start-up Procure Box⁶

Ashok Leyland on Thursday said it has bagged orders for 1,400 intermediate commercial vehicles (ICVs) from a logistics start-up company, Procure Box.

The ICVs will be utilised by Procure Box for its fuel distribution business across 750 districts in the country. The order encompasses Ashok Leyland''s most successful product - the Ecomet - and will be executed in the next five-six months, the company said in a regulatory filing.

The company, however, did not disclose the value of the order.

Ashok Leyland Chief Operating Officer Anuj Kathuria said, "With this order, its orderbook for ICVs has enhanced significantly...,” adding that over the last few years, Ashok Leyland has made significant efforts to increase its market share in the ICV segment and the efforts have given rich dividends.

Procure Box Founder and Chief Executive Officer Raman Kandhari said, "This order is a testimony of its commitment to offer the best services and thus create value for its customers”.

With the addition of 1,400 new Ashok Leyland ICVs, the logistics start-up and its associates will become the top fuel bowsing and gas cylinder logistics company in the industry, the filing added.

Ashok Leyland to buy Nissan's stake in Hinduja Tech for Rs 70.20 crore ⁷

February 25, 2021; Hinduja Group flagship firm Ashok Leyland on Thursday said it has entered an agreement with Nissan International Holding BV to acquire 38 percent stake in Hinduja Tech for Rs 70.20 crore.

"The company has entered into a share purchase agreement with Nissan International Holding BV to acquire 58,500,000 shares for a total consideration of Rs 70.20 crore constituting 38 percent in the paid-up share capital of Hinduja Tech Ltd. Consequent to the aforesaid acquisition, HTL will become a wholly owned subsidiary of the company," Ashok Leyland said in a regulatory filing.

In November 2014, Ashok Leyland had sold 38 percent stake in Hinduja Tech (HTL) to Nissan International Holdings BV, investment arm of the Japan-based Nissan Group, for an undisclosed sum.

The Chennai-based commercial vehicle did not share the reasons for buying back stake.

At the time of the stake sale, Ashok Leyland in a regulatory filing had said: "To unlock value, HTL has roped in a strategic investor to subscribe to the equity share capital of the company. Consequent to the allotment of equity shares to the strategic investor, the holding of Ashok Leyland now stands at 62 percent".

Prior to the stake sale, Hinduja Tech Ltd was wholly-owned unlisted subsidiary of Ashok Leyland.

Hinduja Tech Ltd is engaged in the business of IT and ITeS industry and reported consolidated revenue as on March 31, 2020 of Rs 226 crore.