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Presentation

on
“Ashok Leyland”

PRESENTED BY –Piyush Gupta


ROLL –AF 28
Course – PGDM (Finance)
Introduction
 Ashok Leyland is a commercial vehicle manufacturing company based in Chennai,
India.
 It is the second largest commercial vehicle company in India in M&HCV , with
passenger transportation options ranging from 18 seaters to 52 seaters.
 Ashok Leyland is a market leader in the bus segment.
 Eight out of ten metro state transport buses in India are from Ashok Leyland.
 The company was established in 1948 as Ashok Motors, with an aim to assemble
Austin cars.
 Manufacturing of commercial vehicles was started in 1955 with equity contribution
from the British company, Leyland Motors
Major Milestone
 1966 Introduced full air brakes
 1967 Launched double-decker bus
 1968 Offered power steering in commercial vehicles
 1979 Introduced multi-axle trucks
 1980 Introduced the international concept of integral bus with air suspension
 1982 Introduced vestibule bus
 1992 Won self-certification status for defence supplies
 1992 Launched vestibule buses
 1993 Received ISO 9002
 1997 India's first CNG powered bus joined the BEST fleet
 2001 Received ISO 14001 certification for all manufacturing units
 2002 Launched hybrid electric vehicle

Current status
Ashok Leyland is a technology leader in the commercial
vehicles sector of India.
Its annual turnover exceeded to 77 billion (Rs) in 2007-08.
Ashok Leyland is India's largest exporter of medium and heavy
duty trucks out of India.
It is also one of the largest Private Sector Employers in India -
with about 12,000 employees working in 6 factories and
offices spread over the length and breadth of India.


Cont….
Ashok Leyland is looking to expand its production
operations overseas to make it a more global company
Also as part of this global strategy, the company acquired
Czech Republic-based Avia's truck business.
The company has a joint venture with Japanese auto giant
Nissan (Renault Nissan Group) which will share a
common manufacturing facility in Chennai, India.
Financial Performance of Ashok Leyland
Q1FY09 Results – Key highlights

 Strong Realization pushes the revenue- Net sales grew by 16.2% y-o-y
to Rs 1,884 crore against Rs 1,621 crore in Q1FY08 driven by 1.4% y-
o-y growth in volume and realization grew by 14% y-o-y.
 Operating margins declined 430 bps- EBITDA margin drastically fell by
430 bps y-o-y and 530 bps q-o-q to 6.2% due to rise in input prices.
Operating profit excluding other income fell by 31.4% y-o-y and 60.1%
sequentially to Rs 117.2 crore against Rs 170.8 crore in Q1FY08.
 Forex losses impacted PAT- Net Profit for the quarter stood at Rs 52.7
declining by 40.2% y-o-y. Net profit margin for the quarter was 2.8%,
down by 260 bps y-o-y. EPS for the quarter was Rs 0.39. However, if
we adjust the profit for the forex loss, Adjusted PAT would be Rs 84.5
crore, which lead to adjusted EPS of Rs 0.63 implying negative growth
of 4.7% y-o-y.
Strategies
Ashok Leyland cuts capex by Rs.13 bn, floats finance arm

 Ashok Leyland has adopted a multi-pronged strategy, including cutting


capital expenditure (capex), focusing on non-vehicle segment
sales and floating a finance arm , to weather the tough market
conditions.
 The company has also started an austerity drive that includes pay cuts
aimed at saving Rs.500 million.
 The company is also planning to bring down inventory levels from the
current 9,000 units by cutting production so as to save on working
capital.


Cont…

Ashok Leyland ties knot with BOB for ‘Finance Support’

This tie-up enables Ashok Leyland to utilize Bank of Baroda’s


comprehensive network and reach to service the value chain,
from wholesale to retail.
“Cost effective funding is what is crucial at these times. And the
solutions offered by Public Sector Banks would help our
customers and dealers on this front”,

Cont…
Employees helped Ashok Leyland save Rs 1.67Cr


The company had implemented 'GEMBA,' a programme to
encourage employees to come out with new innovations,
at its Ennore plant in October 2008.
It enable the company to save money and reduce the
inventory level to Rs 90 corer (Rs 900 million) from Rs
120 corers (Rs 1.2 billion) a year ago at this plant.

MARKETING
 The company has been offering world class products to millions of
customers to 40 countries across the world.
 Its main product line includes Trucks, Buses, Defense & Special
Vehicles and Engines for Indian and overseas market.
 Ashok Leyland – is the market leader in Indian bus market, offering
CNG, Double Decker and Vestibule bus variants.
 Ashok Leyland – is the market leader and pioneer for multi axle trucks
and tractor-trailers

Cont…
Ashok Leyland – enjoys market supremacy in Diesel
engines for Industrial, Gen-set and Marine applications.
Ashok Leyland - is the largest supplier of logistic vehicles
to the Indian army.
Ashok Leyland – offers 'Total Maintenance Solutions'
through maintenance contracts for its products, relieving
the customers of all maintenance worries.

Its Various Product Ranges
Strategies & Plans of Ashok Leyland

 New Product Launches: The Company is expected to launch a slew of new


products in the markets which is expected to propel the demand for its
products.
 Joint Venture with John Deere

ü Ashok Leyland, the flagship of the Hinduja Group in India, has signed an
agreement for a joint venture with John Deere, for manufacturing and
marketing of construction equipment.
ü The 50:50 JV will bring together Ashok Leyland’s expertise in the automotive
sector, their marketing and distribution strength and John Deere’s technical
know-how and vast experience in the business of construction equipment.
Cont….
De-risking Strategy: The Company has put in place
a strong de-risking strategy in terms of pushing the
growth of Non Cyclical business.
Cont…
 Increasing Global Footprint: The Company is now targeting new
strategic markets with increased thrust on the Asian & African
countries.
 The company expects to double its export volumes in the next 3 years
due to increased penetration in these new markets.
 Plans to meet the growing needs of the marketThe Company is
constantly reviewing their strategies. They are moving into higher
value-added jobs because it becomes very important to engage
workmen fully, and also their efficient utilization.
Cont..
 Ashok Leyland to set up its NBFC for offering finance options

To enable quick and easy financing of their vehicles in their
bid to accelerate the sales in face of difficult credit
situation.
 Ashok Leyland, Nissan to Form Partnership for LCV
 Ashok Leyland and Nissan Motor Co., Ltd., signed a
Heads of Agreement (HoA) for the formation of three joint
venture companies supporting the Light Commercial
Vehicle (LCV) business which covers following areas:-
Cont…
 Vehicle Manufacturing Company - a company with exclusive rights to
manufacture LCV products in India for both the partners.
 Powertrain Manufacturing Company - Responsible for the manufacture and
assembly of engines and other drivetrain components to be fitted in the LCV
products and for exports.
 Technology Development Company - Responsible for the development of
LCV products and related powertrains, destined for the Indian and identified
emerging markets.
 In addition, the two partners are also studying cooperation in the area of sales
and distribution.
HUMAN RESOURCE

 “We consider our employees as our most valuable


asset and are committed to provide full
encouragement and support to them, to enhance their
potential and contribution to the Company's business"
- From Ashok Leyland's value statement.

Qualification Analysis – Executive
Ashok Leyland Philosophy on Corporate Governance

The Board of Directors and the Management of Ashok Leyland


commit themselves to:
• strive towards enhancement of shareholder value through

- Sound business decisions

- Prudent financial management, and

- High standards of ethics throughout the organisation

• ensure transparency and professionalism in all decisions and

transactions of the Company


• achieve excellence in Corporate Governance by:

- Conforming to, and exceeding wherever possible, the prevalent

mandatory guidelines on Corporate Governance


- Regularly reviewing the Board processes and the Management

systems for further improvement



Strategies to sustain in Global Meltdown

Ø Ashok Leyland among others that employ people in excess of


1,000 revealed their attempts to cut costs in every possible way
other than reducing workforce, including those who were
recruited just ahead of the .global meltdown.
Ø The initiatives include a near total ban on travel, with a complete
no-no for air-travel.
Ø Cutting down on production days as also the number of shifts in
line with lower demands.
Ø Foregoing air-conditioned comforts in office, switching off an extra
light during day-time, voluntary salary cuts, a freeze of fresh
recruitment, including those for replacement, and even re-visiting
the canteen menu.

Cont…
Ashok Leyland opted to reduce the number of working
days and employees also agreed for salary adjustments.
Besides reducing travel to the minimum, employees
voluntarily opted to stay at lower options, including
accommodating themselves at friends or relatives place,
than what they were normally eligible.
Focused on re-engineering through small groups on a war
footing to reduce wastage of material and energy,”
Cont..
Ashok Leyland has utilized the period to motivate its employees
to come up with ideas for improving productivity and efficiency
resulting in significant savings in cost.
Employees form groups and quality circles that work on projects
and processes which identify wastage and reduce it, increase
productivity and enhance savings.
Ashok Leyland has also implemented Gemba, an initiative
improve productivity and efficiency in the shop floor
OPERATIONS

Ashok Leyland is trying to improve efficiency and production


quality, reduce costs and increase customer satisfaction.
Among the means company is adopting just-in-time inventories
system.
Strategic Sourcing... Strategic sourcing recognizes that people,

including innovative suppliers, are a valuable part of an


organization and focuses on reducing waste or non-value-
added costs.
Cont…
 Technology Upgradation:The Company has a strong focus on
technology upgradation in order to meet the growing demand for
newer & better models.
ü The technology upgradation initiative the Company expects to produce
more fuel efficient vehicles with robust designs which are globally
best in their class.
 World-class Technology To offer world-class technology that is
relevant and affordable to the Indian customer is the philosophy that
drives R&D at Ashok Leyland


Cont….
Value to the Customer
The immediate R&D priorities are to pro-actively address safety and
environmental issues, harness and adopt technologies that provide value to
the customer in an atmosphere enabling creativity and innovation.
Test Tracks
But company R&D is not confined within walls. It extends to the test tracks
as well. Rigorous tests are carried out under stringent simulated conditions
that replicate the most treacherous landscapes.
Innovations
Ashok Leyland product development successes have come from a keen
sense of anticipation and attentiveness. The company initiated research into
alternative fuels well before legislative debate had even begun in the
country.
Cont….
Best practices
The new lines, apart from being state-of-the-art in terms of
machines and tools, also incorporate many global industry
best practices. The automated coolant management system
significantly reduces coolant consumption.
The Manufacturing Execution System (MES) allows for online
monitoring of all operational parameters such as breakdowns,
tool change and power consumption - both current status and
history.
Automation

New benchmarks have been set in automation to minimize


activities that cause human fatigue or pose hazards and
achieve speed. Gantry Systems are used for axle-beam,
axlearm, camshafts and crankshafts lines. Robots are used
for ‘handling’ hot axle arms and axle beams.
Cont..
 Compact and versatile
A significant addition to capacities, the new lines are
extremely versatile.
“Transformation training becomes crucial in such
movement of men from accustomed work situations
to a whole new set-up”

Conclusion
 At last I conclude that recession has badly effected on the
sales and profit of the company. But in spite of all this
company is running successfully. And to over come with
recession company is adopting various strategies such
cost cutting, freezing recruitment , financing to NBFC
company , upgrading its technology , adopting de risking
strategies and so on. Which help the company to survive
easily in this global meltdown.
THANK YOU