PROJECT BY: BHANUCHAND |

ASHO CAPITA WOR

K L KING
LEYLA STRUCT CAPIT
ND’S
URE AL
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Project – Ashok Leyland ltd.

Contents Page No.

1.COMPANY BACKGROUND.......................3
2.FINANCE FUNCTION OF COMPANY........3
3.MEMORANDUM OF ASSOCIATION..........4
4.CAPITAL STRUCTURE..............................5
5.DIVIDEND DECISION.................................5
6.GROWTH OF THE COMPANY...................6
7.INVESTMENT DECISION...........................7
8.WORKING CAPITAL...................................9
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Company Background:
Ashok Leyland is a commercial vehicle manufacturing
company based in Chennai, India. It is the second largest
commercial vehicle company in India in the medium and
heavy commercial vehicle (M&HCV) segment with a market
share of 28% (2007-08).Ashok Leyland is a market leader in
the bus segment. 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. Today the Company is the flagship of the Hinduja
Group, a British-based and Indian originated transnational
conglomerate. Ashok Leyland is a technology leader in the
commercial vehicles sector of India. Its annual turnover
exceeded USD 2 billion in 2007-08. Selling close to around
83,000 medium and heavy vehicles 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
FINANCE FUNCTION OF COMPANY:
Finance function is the life board of any company so the
management puts special attention towards it. A firm
performs finance function efficiently so that the business goes
on smoothly and interruption and the company remains not
only able to grow on its own resources generated through
surpluses. Finance function call for skill planning control and
execution of s firm’s activities. Following are the three major
decisions as function of finance1.The Investment decision. 2.
The Financing decision.3.The Dividend policy decision
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MEMORANDUM OF ASSOCIATION
OF
ASHOK LEYLAND LIMITED
? Name of the Company is “Ashok Leyland Limited”.

? The Registered Office of the Company will be situated in the

State of Tamil Nadu

? The Objects for which the Company is established are:-

• To carry on the Business of manufacturers, assemblers of, dealers

in, hirers, repairers ,cleaners, storers, ware housers, pf motor cars,
motor cycles, cycle-cars, motors, scooters, motor-buses and lorries,
trucks, tractors ,cycles, bicycles, and carriages, launches, boats and
ships, vans aeroplanes, hydroplanes, and other vehicles and
conveyances of all descriptions for carrying passengers or other
personnel, goods, commodities, produce, cargoes and other things
on land or sea or by air whether propelled or assisted by means of
petrol, spirit, steam, gas, electrical, animal or other powers, and all
engines, chassis, bodies, turbines, tanks, tools, implements,
accessories and other things, materials and products used for, in or
in connection with motors and other things.

• To carry on the business of mechanical engineers, machinists,

fitters, mill-wrights, pounders, galvanisers, enamellers,
electroplaters, painters and packing case-makers.

• To develop, design, programme, conduct feasibility studies, act as

advisor, retainers, consultants and/or agents to all projects and to
engage in project survey, implementation, progress monitoring and
turnkey installation.
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Capital Structure (Ashok Leyland) (Rs Crs)

Authorized Issued -PAIDUP-

Period Instrument Capital Capital
From To Shares (nos) Face Capital
Value
Equity Share 200 133.05 1330338317 1 133.05
2009 2010
2008 2009 Equity Share 150 133.05 1330338317 1 133.05
2007 2008 Equity Share 150 133.05 1330338317 1 133.05
2006 2007 Equity Share 150 132.41 1323870317 1 132.41

Equity Share capital

200

180

160

140

120

100 Authorized Capital in Rs crs

Issued Capital in Rs crs
80

60

40

20

0
2006-07 2007-08 2008-09 2009-10

DIVIDEND DECISION:
Dividend decision is the third major financial decision. The
financial manager must decide whether the firm should
distribute all profits, or retain them, or distribute a portion &
retain the balance. The optimum dividend policy is one that
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maximizes the market value of the firm’s shares. Dividends

are paid to the share holders of the company.
It is of 2 types
1. In-terim Dividend
It is distributed before the company’s annual earnings.
2. Final Dividend.
It is declared at the company’s Annual general meeting for
any given year.

DIVIDENDS GIVEN:

1. For the Year 2006-07 the directors recommend the Final

dividend of 75% i.e. Rs.7.50/- per equity share of Rs.1/-
2. For the year 2007-08 the company has given Interim
dividend of 150% i.e. Rs.1.50/- per equity share of Rs.1/-
3. For the Year 2008-09 the company has given a dividend
of 100% (Re.1 for equity share of Re.1

GROWTH OF THE COMPANY:

ORGANIC GROWTH:
The Company is growing on its own i.e. Step – by – Step. The
Company’s annual turnover is increasing year by year by
increasing the capacity of the vehicles by 105,000 per annum.

INORGANIC GROWTH:
It is done with Mergers and Acquisitions.
It has acquired Avia Truck Business Unit on Oct 17 2006.
It acquired truck business unit of Czech capital, with an
annual production capacity of 20,000 vehicles on July 19
2006. It is having a multi million plant in Iran for CNG
Trucks and Buses. It has partnership with Nissan both are
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agreed with Japan based Nissan Motor Co for manufacturing

and sale of light vehicles and power trains on July 19 2006

INVESTMENT DECISION:
The investment decision relates to the selection of assets in
which funds will be invested by a firm > the assets that can be
acquired fall into two broad groups
I. Long term or Fixed assets
II. Short term or Current assets
The financial manager has to carefully allocate the available
funds to recover not only the cost of the fund but also must
earned sufficient return on the investment. Two important
aspects of the investment decision are:
a) The evolution of the prospective return of new investment
b) The measurement of cut off rate against that prospective
return of new investment could be compared. Investment
proposal should be evaluated in term of both expected and
risk.
Investment is of 2 types:
Long-term Investment
Short-term Investment
LONG - TERM INVESTMENT :
It means that doing the payment now and getting benefit after
3,5,8 years later. Ex: Plant & Machinery.

Fixed Assets of Ashok Leyland ltd.

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Fixed Assets
50000
45000
40000
35000
30000
Amount in Millions
25000
20000
15000
10000
5000
0
2005-06 2006-07 2007-08 2008-09

Short-term Investment:It mainly deals with Current

Assets and Current Liabilities. The Current Asset for the year
2001-02 is Rs.15634 million and Current Liability is
Rs.5411.15 million. For the year 2008-09 Current Asset is
Rs.31656.157 million and current liability is Rs.21369.458
million.
35000

30000

25000

20000
Current Assets
15000 Current Liabilites

10000

5000
Current Liabilites
0
2001-02 Current Assets
2008-09
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Working Capital: Working Capital decisions are done

according to the demand in the market.
For 2008-09
Working capital=Current assets – current
liabilities=31,656.157-21,369.458=10,286.699 million.
For 2007-08
Working capital=Current assets – current
liabilities=28,752.581-22,719.393=6033.1 million.
For 2006-07
Working capital= Current assets – Current liabilities
=26,977.14 – 17,558.55=9,148.59 million.

35,000.00

30,000.00

25,000.00

20,000.00
Current assets
Current liabilities
15,000.00
Working capital
10,000.00

5,000.00 Working capital

0.00 Current liabilities

2008-09 Current assets
2007-08
2006-07

-THE END-