Ashok Leyland and how they sustained during global meltdown

Ashraf Menal Raj Section D,33 Enrollment no.-A0101911084 9899414047 Ashraf21raj@yahoo.in Co-Author Shahbaz Kauser Designation- Product Executive Hinduja Leyland Finance s.kauser@hindujaleyland 09836155241

Introduction

Ashok Leyland is a commercial vehicle manufacturing company based in Chennai, India. It was founted by Mr Raghunandan Saran,an industrialist,when persuaded by Pt.Jawahar Lal
Nehru ,the prime minister at that time.

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
Today the company is the flagship of the Hinduja Group, a British based and Indian originated .Ashok Leyland is the second technology leader in the commercial vehicles sector of India The history of the company has been punctuated by a number of technological innovations, which have since become industry norms. It was the first to introduce multi-axled trucks, full air brakes and a host of innovations like the rear engine and articulated buses in India. In 1997, the company launched the countrys first CNG bus and in 2002, developed the first Hybrid Electric Vehicle. The company has also maintained its profitable track record for 60 years. The annual turnover of the company was USD 1.4 billion in 2008-09. Selling 54,431 medium and heavy vehicles in 2008-09, Ashok Leyland is India's largest exporter of medium and heavy duty trucks. 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. The company has increased its rated capacity to 105,000 vehicles per annum. Also further investment plans including putting up two new plants - one in Uttarakhand in North India and a bus body building unit in middle-east Asia are fast afoot. It already has a sizable presence in African countries like Nigeria, Ghana, Egypt and South Africa. Ashok Leyland has also entered into some significant partnerships, seizing growth opportunities offered by diversification and globalization with Continental Corporation for automotive infotronics; with Alteams in Finland for high pressure die casting and recently, with John Deere for construction equipment. As part of this global strategy, the company acquired Czech Republic-based Avia's truck business. The newly acquired company has been named Avia Ashok Leyland Motors s.r.o. This gives Ashok Leyland a foothold in the highly competitive European truck market. In 2010 Ashok Leyland acquired a 26% stake in the British bus manufacturer Optare, a company based on the premises of a former British Leyland subsidiary C.H.Roe. The Hinduja Group also bought out IVECO's indirect stake in Ashok Leyland in 2007. The promoter shareholding now stands at 51%.

Achievements
Ashok Leyland buses carry 60 million passengers a day, more people than the entire Indian rail network Ashok Leyland has a near 85% market share in the Marine Diesel engines markets in India In 2002, all the vehicle-manufacturing units of Ashok Leyland were ISO 14001 certified for their Environmental Management System, making it the first Indian commercial vehicle manufacture to do so. In 2005, received the BS7799 Certification for its Information Security Management System, making it the first auto manufacturer in India to do so. In 2006, received the ISO/TS 16949 Corporate Certification, making it the first auto manufacturer in India to do so. It is one of the leading suppliers of defence vehicles in the world and also the leading supplier of logistics vehicles to the Indian Army. It is the largest manufacturer of CNG buses in the world.

Products

Luxura Viking BS-I - city bus Viking BS-II - city bus Viking BS-III -city bus Cheetah BS-I Cheetah BS-II Panther 12M bus Stag Mini Stag CNG 222 CNG Lynx Double Decker Vestibule bus Airport Tarmac Coach

GOODS SEGMENT

Comet 1611 1612 H 1613 H 1613 H/2 (12m Goods) 4/51 GS 1613 Taurus 2516/2 (6x4) Tipper CT 1613 H/1 & H/2 Bison Tipper 1613 ST (4x2) Taurus HD 2516MT/1 (6x4)

Various products manufactured by Ashok Leyland

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 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.

Strategy
Ashok Leyland cuts capex by Rs.13 bn, floats finance arm
Ashok Leyland has adopted a multi-pronged strategy, including cutting capital expenditure 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.

Ashok Leyland ties knot with BOB for Finance Support

This tie-up enables Ashok Leyland to utilize Bank of Barodas 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,

Competition
Name Tata Motors Last Price 764.90 Market Cap.
(Rs. cr.)

Sales Turnover 47,807.42

Net Profit 1,811.82

Total Assets 35,912.05

48,554.91

Ashok Leyland
Eicher Motors Tata Motors (D) SML Isuzu

26.40
1,431.85 448.45 388.25

7,024.19
3,861.21 2,877.96 561.86

11,117.71
442.67 893.01

631.30
75.44 36.56

6,621.14
474.14

297.79

Balance Sheet
Ashok Leyland Mar '11 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 133.03 133.03 0.00 0.00 2,523.65 1,306.28 3,962.96 1,272.22 1,385.97 2,658.19 6,621.15 Ashok Leyland Mar '11 Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors 6,691.89 2,058.10 4,633.79 387.82 1,230.00 2,208.90 1,185.21

------------------- in Rs. Cr. ------------------Tata Motors Mar '11 Eicher Motors Dec '10 Force Motors Mar '10

634.65 634.65 3.06 0.00 19,375.59 0.00 20,013.30 7,766.05 8,132.70 15,898.75 35,912.05 Tata Motors Mar '11

26.94 26.94 0.00 0.00 429.73 0.00 456.67 14.36 3.11 17.47 474.14 Eicher Motors Dec '10

13.18 13.18 0.00 0.00 270.14 0.00 283.32 62.00 85.83 147.83 431.15 Force Motors Mar '10

21,883.32 8,466.25 13,417.07 4,058.56 22,624.21 3,891.39 2,602.88

159.27 87.52 71.75 3.06 463.98 28.23 3.64

937.73 653.42 284.31 12.23 56.74 193.73 150.23

Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

179.53 3,573.64 787.17 0.00 4,360.81 0.00 3,505.26 490.33 3,995.59 365.22 4.31 6,621.14 881.77 19.97

2,428.92 8,923.19 5,167.42 0.00 14,090.61 0.00 15,055.69 3,222.71 18,278.40 -4,187.79 0.00 35,912.05 4,798.83 315.31

3.63 35.50 57.65 7.47 100.62 0.00 124.19 41.08 165.27 -64.65 0.00 474.14 86.22 169.53

25.71 369.67 64.78 0.00 434.45 0.00 312.59 43.99 356.58 77.87 0.00 431.15 54.54 215.02

Future plans of the company: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 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. The 50:50 JV will bring together Ashok Leylands expertise in the automotive sector, their marketing and distribution strength and John Deeres technical know-how and vast experience in the business of construction equipment. De-risking Strategy: The Company has put in place a strong de-risking strategy in terms of pushing the growth of Non Cyclical business. 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 market the 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. 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 the folloeing area: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

Executive summary :How they sustained during global meltdown

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. The initiatives include a near total ban on travel, with a complete no-no for air-travel. Cutting down on production days as also the number of shifts in line with lower demands. 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 revisiting the canteen menu. 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, 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 .

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 has helped the company to survive easily in this global meltdown

Thank You