RATIO ANALYSIS OF ASHOK LEYLAND

Final Project Report

Submitted To
Institute Of Management Technology

In partial fulfillment of the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION
Under Supervision:

Submitted By:

Mr. Manoj Kalra

Nikhil Ahuja
Roll No.: 1321000151

Institute Of Management Technology

Centre for Distance Learning,
Ghaziabad
2015

RATIO ANALYSIS
OF
ASHOK LEYLAND

Under Supervision of

Mr. MANOJ KALRA

Submitted By

Name

NIKHIL AHUJA

Enrollment No.

1321000151

Area of Specialization

Finance

Title of the Project

Ratio Analysis of Ashok Leyland

Email

Nikhil.ahuja1111@ gmail.com

Contact No.

9582353905

ACKNOWLEDGEMENT

A Project usually falls short of its expectations unless guided by the right person at the right time. The
success of the Project is an outcome of the sincere efforts channeled in the right direction, efficient
supervision and most valuable technical assistance. I would like to take this opportunity to gratefully
acknowledge the very kind and patient guidance and encouragement I have received from my project
guide MR. Manoj Kalra without his critical evaluation and suggestion at every stage of the Project, this
report could never have reached its present form. He not only guided me throughout the Project but also
for the informal discussion, which helped me gain a broad perspective.

NIKHIL AHUJA

Table of Contents
S.N
o
1.

Title
Chapter 1: Introduction
About the industry

Page No.
1

Vision
Mission
History
2.

Products
Chapter 2 : Company Strategy , Methodology

3.

Chapter 3 : Corporate Governance

26
30-40

Importance of Corporate Governance

Changing Ownership Structure
Importance of Social Responsibility:
Growing Number of Scams:
Indifference on the part of Shareholders:
Analysis & Interpritation
Takeovers and Mergers:
SEBI

4.

41-47
Chapter 4 : Corporate Social Responsibilities

5.

Chapter 5 : Profit Loss & Loss Account

Balance Sheet

48-52

6.

Chapter 6 : Recommendations & Conclusion

53-54

Recommendations
Conclusion

7.

Bibliography

55

COMPANY PROFILE

SUBMITTED BY:

NIKHIL AHUJA

Company Overview
Ashok Leyland Limited (hereinafter referred to as the Company or Ashok Leyland) was
founded and incorporated by late Mr. Raghunandan Saran on 07th September 1948with set up
in collaboration with Austin Motor Company, England for the assembly of Austin Cars. The
Company was named as Ashok Motors. After the collaboration taking place with equity
participation from Leyland Motors, Ltd the name of the Company was changed to the present
name, which was named after Raghunandans son, Ashok.
In 2007, the Companys stakes were bought by Hinduja Group indirectly through Industrial
Vehicles Corporation (IVECO), now the promoter shareholding stands at 53.89%. Today the
Company is under the flagship ofHinduja group of companies (hereinafter referred to as the
group). The group was started in the year 1914 by Late MrParmanandDeepchandHinduja.
Ashok Leylands shares are currently listed on the Bombay Stock Exchange(Script No.
500477). Ashok Leylands shares are also currently listed on the National Stock Exchange of
India (Script Name. ASHOKLEY) .
Ashok Leyland is an Indian automobile manufacturing Company based in Chennai, India. It is
the 2nd largest commercial vehicle manufacturer in India, 4th largest manufacturer of buses in
the world and 16th largest manufacturer of trucks globally. Operating six plants, Ashok Leyland
also makes spare parts and engines for industrial and marine applications. It sells about 60,000
vehicles and about 7,000 engines annually. 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% (200708). With passenger transportation options ranging from 19 seaters to 80
seaters, Ashok Leyland is a market leader in the bus segment. The Company claims to carry
more than 60 million passengers a day, more people than the entire Indian rail network. In the
trucks segment Ashok Leyland primarily concentrates on the 16 ton to 25 ton range of trucks.
However Ashok Leyland has presence in the entire truck range starting from 7.5 tons to 49 tons.
With a joint venture with Nissan Motors of Japan the Company made its presence in the Light
Commercial Vehicle (LCV) segment (<7.5 tons).

VISION:
Achieving leadership in the medium/heavy duty segments of the domestic commercial vehicle
market and a significant presence in the world market through transport solution that best
anticipate customer needs, with the highest value-to-cost ratio.

MISSION:
Identifying with the customer being the lowest cost manufacturer Global benchmarking our
products, processes and people satisfaction.

Green Mission

2.4 History

Raghunandan Saran, Founder of Ashok Leyland

Ashok Motors

Ashok Leyland was founded in 1948 by Raghunandan Saran, a freedom fighter from Punjab. [3]
After Independence he was persuaded by Indias first Prime Minister Nehru, to invest in modern
industrial venture. Thus Ashok Motors was incorporated in 1948 as a company to assemble and
manufacture Austin cars from England, and the company was named after the founders only son
Ashok Saran . The company had its headquarters in Rajaji Saalai, Chennai (then Madras) with
the plant in Ennore, a small fishing hamlet in the North of Chennai. The Company was engaged
in assembly and distribution of Austin A40 passenger cars in India.
Under Leyland

Sometime later, the founder Raghunandan Saran passed away in an air crash, prior to that he had
been negotiating with Leyland of Britain for assembly of commercial vehicles as he envisioned
commercial vehicle were more in need at that time than were passenger cars. The company later
under Madras State Government and other shareholders finalised for an investment and
technology partner and thus the British-based Leyland Motors joined in 1954 with equity
participation by Leyland Motors, changing the name of the company to Ashok Leyland. Ashok
Leyland then started manufacturing commercial vehicles. Under Leyland's management with
British expatriate and Indian executives the company grew in strength to become one of India's
foremost commercial vehicle manufacturers.

The collaboration ended sometime in 1975 but the holding of British Leyland, now a major
British Auto Conglomerate as a result of several mergers agreed to assist in technology which
continued until the 1980s. Post 1975, changes in management structures saw the company launch
various advanced vehicles and pioneering innovations in the Indian market, with many of these
models continuing to this day with numerous upgrades over the years.
Under Iveco and Hinduja partnership

In 1987, the overseas holding by Land Rover Leyland International Holdings Limited (LRLIH)
was taken over by a joint venture between the Hinduja Group, the Non-Resident Indian
transnational group and IVECO, part of the Fiat Group. Ashok Leylands long-term plan to
become a global player by benchmarking global standards of technology and quality was soon
firmed up. Access to international technology and a US$200 million investment programme
created a state-of-the-art manufacturing base to roll out international class products.
Hinduja Group
In 2007, the Hinduja Group also bought out IVECO's indirect stake in Ashok Leyland.
The promoter shareholding now stands at 51%. Today the company is the flagship of
the

Hinduja

Group,

British-based

and

Indian

originated

trans-national

conglomerate after Hindujas bought Ivecos remaining ownership stakes.

The Company generates revenue from Sale of Products and Rendering Services.
Sale of Product Includes: Commercial Vehicles :
The Company Manufactures as well as Re-Sale/Trade the Commercial Vehicles. Major
type of vehicles includes Buses, Trucks, Light Vehicles and Defense Vehicles.
Engines and Gensets
Spare Parts and Others
Head office and registered office of the Company is located at Chennai, Tamil Nadu, India. The
Company has its manufacturing facility located at Pantnagar, Uttarakhand,Alwar, Rajasthan,

Bhandara, Maharastra, Hosur and Ennore, Tamil Nadu, Ras al-Khaimah(UAE), Letnany, Czech
Republic and Elmet, United Kingdom.
The Company proposes to take following actions in the near future:

Introduction of new variants in CAPTAIN, a product type Heavy Truck. Platform

including Tractors and Haulage.

Introduction of new variants in BOSS, Intermediate Commercial Vehicle (ICV)

Platform for export applications.

Introduction based on Neptune Engine.

The Company has the following Subsidiaries:

Albonair GmbH, Germany
It was established with a vision of being a complete solution provider for reducing
automotive emissions and has, in the short period since inception, developed the
complete solution for Selective Catalytic Reduction (SCR) and Urea Dosing System
(UDS) conforming to Euro 4, 5 and 6 emission standards for commercial as well as
passenger vehicles
Hinduja Leyland Finance Limited
Incorporated in November 2008, Hinduja Leyland Finance (HLF), jointly promoted by
Ashok Leyland and the Hinduja Group, was formed to provide finance for the purchase
of vehicles or equipment. HLF received the NBFC License in March 2010 and have
started operations with an equity of Rs. 225 crores. The strength of the Company lies in
its core competence in fund-based lending for a diversified portfolio of Commercial
Vehicles, Cars, Construction Equipment, Tractors and Used Vehicles and its network that
covers 19 states with over 275 locations.
Hinduja Tech
Hinduja Tech is a Hinduja Group Company incorporated in 2009, with a focus to provide
Engineering, Manufacturing, Information Technology and Enterprise Services and
Solutions for Automotive, Aerospace, Defence, Industrial and General Manufacturing
industries.

Hinduja Tech serves top global companies including 18 of the Fortune Global 500
companies. It is led by a management team with global experience in delivering high-end
solutions in Engineering, ERP and IT services space. As a business solution focused
Company, Hinduja Tech has established Centers of Excellence (CoE) to develop
solutions to address key customer business imperatives in the Engineering,
Manufacturing and Enterprise domains.
Headquartered at Chennai, India, Hinduja Tech has world class development centres at
Chennai, Bangalore and Pune (India) as well as in Walldorf (Germany). Hinduja Tech
Technologies has its subsidiaries in the US, namely, Hinduja Tech Inc., and in Germany,
Hinduja Tech GmbH, respectively. Hinduja Tech also has branch offices in UK, Dubai
and South Africa.
Ashok Leyland Nissan Vehicle Limited
Ashok Leyland holds 51% of the stakes inAshok Leyland Nissan Vehicle Limited as per
the Joint Venture with Japanese auto giant Nissan (Renault Nissan Group).
Avia Ashok Leyland Motors s.r.o
The Company carried out following Research and Development (R&D) in FY 2014:

Engines & Aggregates

Development of CPCB-II and Euro IV compliant Neptune Series of Engines.
Development of cost effective SCR after-treatment system to meet BS-IV emission

norms.
Development of mid-range Euro V CNG engine.
Development of a 3-Cylinder CNG engine for LCV application.
Indigenization on of 9 Speed Gearbox for M&HCV Vehicles.
Development of Automated Manual Transmission for ICV range of vehicles.

Vehicle Models

Launch of CAPTAIN series of Tipper vehicles in M&HCV Segment.

Launch of two variants of BOSS vehicles in ICV Segment.

Launch of CNG and other variants of DOST
Product on readiness for the JanBus
Development of several U-Truck tractor andtripper models and variants for

specialized applications.
Launch of vehicles with OBD-II systems

The Company has received following Awards and Recognition in FY 2014:

Alwar Plant has bagged Golden Peacock Award for Environment Management from
Honable Minister of Petroleum & Natural Gas Mr. Veerappa Moily.

Alwar & Bhandara Plants got the Aspirant merit Certificate for Green Manufacturing
Excellence Award from Frost & Sullivan.

Hosur 2 won merit award from Ministry of Power, India conducted by BEE (National
Energy Conservation Awards 2013).

Hosur 2 also secured Gold in the Environment Award 2013 conducted by Greentech
Foundation.

Products
Early Vehicles

India's first Semi -Trailer Ashok Leyland Comet (Cab) on a Mahindra Owen Semi Trailer 10-12 Ton
Capacity built in 1959.
Comet

Early products included the Leyland Comet bus which was a passenger body built on a truck
chassis sold in large numbers to many operators in India. By 1963, the Comet was operated by
every State Transport Undertaking in India, and over 8,000 were in service. It was soon joined in
production by a version of the Leyland Tiger.

Titan

In 1968, production of the Leyland Titan ceased in Britain, but was restarted by Ashok Leyland
in India. The Titan PD3 chassis was modified, and a five speed heavy duty constant-mesh
gearbox was used together with the Ashok Leyland version of the O.680 engine. The Ashok
Leyland Titan was very successful and continued in production for many years.
Hino Engine

An Ashok Leyland BEST bus in Mumbai. This bus has the Hino Engine.

During early 80's Ashok Leyland entered into a collaboration with Japanese company Hino
Motors from whom technology for the H-series engines was sourced. Many indigenous versions
of H-series engine were developed with 4 and 6 cylinders and also conforming to BS2 and BS3
emission standards in India. These engines proved to be extremely popular with the customers
primarily for their excellent fuel efficiency. Most current models of Ashok Leyland come with Hseries engines.
Iveco Partnership

In late 1980s Iveco investment and partnership resulted in Ashok Leyland launching the 'Cargo'
range of trucks based on European Ford Cargo trucks. The Cargo entered production in 1994, at
Ashok Leyland's new plant in Hosur, southeast of Bangalore. These vehicles used Iveco engines
and for the first time had factory-fitted cabs. Though the Cargo trucks are no longer in
production and the use of Iveco engine was discontinued, the cab continues to be used on the
Ecomet range of trucks as well as for several of Ashok Leyland's military vehicles.
The Cargo was originally introduced in 7 and 9 long tons (7,100 and 9,100 kg) versions; later on
heavier-duty models from 15 to 26 long tons (15,200 to 26,400 kg) were progressively
introduced.

Current Range
U-Truck

Ashok Leyland's Modern Truck with factory built G-90 New Gen Cab

Ashok Leyland, announced sale of vehicles on the new U-Truck platform from November, 2010
with the rolling out of the first set of 10 models of tippers and tractor trailers in the 16 49-tonne
segment. Further, another 15 models are set to enter the market in the next 12 months.
Dost

Ashok Leyland's entry into Light Commercial Vehicle segment with Dost

The Dost is a 1.25 ton light commercial vehicle (LCV) that is the first product to be launched by
the Indian-Japanese commercial vehicle joint venture Ashok Leyland Nissan Vehicles. Dost is
powered by a 58 hp high-torque, 3-cylinder, turbo-charged Common Rail Diesel engine and has
a payload capacity of 1.25 Tonnes. It is available in both BS3 and BS4 versions. The bodywork
and some of the underpinnings relate to Nissan's C22 Vanette of the 1980s; this is most visible in
the door design. The LCV is being produced in Ashok Leyland's Hosur plant in Tamilnadu. The
LCV is available in three versions with the top-end version featuring air-conditioning, power
steering, dual-colour of a beige-gray trim and fabric seats. With the launch of Dost Ashok
Leyland has now entered the Light Commercial Vehicle segment in India

Boss

Boss is an Intermediate Commercial Vehicle launched by Ashok Leyland. This is available in the
range of 8T to 14T. This is available with two engine options 120IL (LE) and 130CRS(LX)
engines and both are first time such an engines are offered in this range of trucks. The LX variant
is available with Air condition and Leymatic AMT which are again the industry first.

Subsidiary ventures
Construction Equipment

Furthermore, in June 2009 the company expanded into the fastest growing construction
equipment segment, with a 50:50 joint venture with John Deere. Floated as separate entity under
the name of Leyland Deere Limited.
Nissan Ashok Leyland

In 2007, the company announced a joint venture with Japanese auto giant Nissan (Renault
Nissan Group) which will share a common manufacturing facility in Chennai, India. The
shareholding structures of the three joint venture companies are:

Ashok Leyland Nissan Vehicles Pvt. Ltd., the vehicle manufacturing company will be
owned 51% by Ashok Leyland and 49% by Nissan

Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain manufacturing company will
be owned 51% by Nissan and 49% by Ashok Leyland

Nissan Ashok Leyland Technologies Pvt. Ltd., the technology development company will
be owned 50:50 by the two partners.

Dr. V. Sumantran, Executive Vice Chairman of Hinduja Automotive Limited and a Director on
the Board of Ashok Leyland is the Chairman of the Powertrain company and he is on the Boards
of the other two JV companies. The venture, once it takes off, will be one of the largest
investments made in automotive field in the country

Ashok Leyland Defence Systems

An Ashok Leyland Stallion 4x4 Army Truck in Himalayas

An Indian road-mobile launcher with a ballistic missile

Ashok Leyland's Stallion Kavach 4X4 Mine Protection Armoured Vehicle

Ashok Leyland Defence Systems (ALDS) is a newly floated company by the Hinduja Group.
Ashok Leyland, the flagship company of Hinduja group, holds 26 percent in the newly formed
Ashok Leyland Defence Systems (ALDS). The newly floated company has a mandate to design
and develop defence logistics and tactical vehicles, defence communication and other systems.
Ashok Leyland is the largest supplier of logistics vehicles to the Indian Army. It has supplied
over 60,000 of its Stallion vehicles which form the Army's logistics backbone.

Ashok Leyland foreign operations

Lanka Ashok Leyland
A Lanka Ashok Leyland bus in Sri Lanka in 2013

Lanka Ashok Leyland buses

Lanka Ashok Leyland (LAL) in Sri Lanka was formed in 1982 and started its operations in 1983
as a Joint venture between Lanka Leyland Ltd (a wholly owned company of Government of Sri
Lanka) and Ashok Leyland Ltd India. LAL imports commercial vehicles in both knock down kits
or fully built and carries out assembly operations, repair and service, body building on chassis.
Avia

In October 2006, Ashok Leyland bought a large stake in the Czech-based- Avia, later renaming
as Avia Ashok Leyland Motors s.r.o., to gain entry into the competitive European market. But
prolonged recession in Europe forced to shut down the Czech operations in 2013.
Optare

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. In December 2011
Ashok Leyland increased its stake in Optare to 75.1%.

Technology

Ashok Leyland Railbus manufactured by Sri Lankan Railway engineers

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.

A Rural Mobile health clinic built on Ashok Leyland's e-comet truck

Ashok Leyland was already producing low-emission vehicles. Back in 1980s and 90s, Ashok
Leyland with various Tamil Nadu Transport Corporatiopn, notably Cholan Roadways
Corporation based in Trichripally experimented with low pollutant emission based on the CNG
technology. In 2002 it developed the first hybrid electric vehicle. Ashok Leyland has also
launched a mobile emission clinic that operates on highways and at entry points to New Delhi.
The clinic checks vehicles for emission levels, recommends remedies and offers tips on
maintenance and care. This work will help generate valuable data and garner insight that will
guide further development.
Analysis & Interpretation

Ashok Leyland has also developed Hythane engines in association with the Australian company
Eden Energy. Ashok Leyland successfully developed a 6-cylinder, 6-litre (370 cu in) 92 kW
(123 hp) BS-4 engine which uses Hythane (H-CNG,) which is a blend of natural gas and around
20% of hydrogen. Hydrogen helps improve the efficiency of the engine but the CNG aspect
makes sure that emissions are at a controlled level. A 4-cylinder 4-litre (240 cu in) 63 kW (84 hp)
engine is also being developed for H-CNG blend in a joint R&D program with MNRE (Ministry
of New and Renewable Energy) and Indian Oil Corporation.
CNG Engines

The CNG concept is now in full swing, with more than 5,500 of the technologys vehicles
running around Delhi. The company is also already discussing the wide-scale use of Hythane
engines with the Indian government. Hythane engines may be expected in the near future.

Nissan partnership

Ashok Leylands partnership with Nissan is also focusing on vehicle, powertrain, and technology
development listed under three joint ventures. With impressive investment, the joint ventures will
focus on producing trucks with diesel engines that meet Euro 3 and Euro 4 emission standards.
Hybrid Technology

The buses and trucks are set to feature a new electronic shift-by-wire transmission technology as
well as electronic-controlled engine management for greater fuel efficiency. Ashok Leyland
focuses on improving fuel efficiency without affecting automotive power, and the vehicles will
have a 5% improvement on fuel efficiency. Ashok Leyland is also developing electric batteries
and bio-fuel modes.
iBUS

Ashok Leyland's i-Bus on display at Auto-Expo

Ashok Leyland announced iBUS in the beginning of 2008, as part of the future for the country's
increasingly traffic-clogged major cities. Its Rs 60-lakh, iBus, a feature-filled, low-floor concept
bus for the metros revealed during the Auto Expo 2008 in India this low-floored iBus will have
the first of its kind features, including anti-lock braking system, electronic engine management
and passenger infotainment. The executive class has an airline like ambience with wide LCD
screens, reading lights, audio speakers and, for the first time, Internet on the move. A GPS

system enables vehicle tracking and display of dynamic route information on LCD screens,
which can also support infotainment packages including live data and news. The bus will
probably be equipped with an engine from the new Neptune family, which Ashok Leyland also
introduced at this exhibition, which are ready for the BS4/Euro 4 emission regulations and can be
upgraded to Euro 5. The ibus of Ashok leyland have hybrid technology
Quality

In the journey towards global standards of quality, Ashok Leyland reached a major milestone in
1993 when it became the first in India's automobile history to obtain the ISO 9002 certification.
The more comprehensive ISO 9001 certification came in 1994, QS 9000 in 1998 and ISO 14001
certification for all vehicle manufacturing units in 2002. In 2006, Ashok Leyland became the first
automobile company in India to receive the TS16949 Corporate Certification.

Truck/Lorry/Buses

COMPANY STRATEGIES
Ashok Leyland to boost defense portfolio
Company to expand its product lines and integration of global weapon systems with its
mobility platforms
Automotive manufacturer Ashok Leyland has announced a two-pronged strategy for its defence
business.
The strategy aims at expanding product lines and the integration of global weapon systems with
its mobility platforms, according to the Company.
In the last three years, the Company diversified its product platform with the launch of 2.5 tonne
truck; a new variant of its Super Stallion platform and a mine protected vehicle (MPV) to its
fleet.
The Garuda 4x4, equipped with a fuel efficient engine (BS4-ready), is capable of carrying
payloads up to 2.5 tonne and offers enough mobility to the paramilitary forces and security
agencies both in India and abroad. The modern cabin here offers good ergonomics and comfort
with HVAC option.
With the Super-Stallion 6x6 and 8x8 vehicles performing well in the trails conducted by Indian
Army in various terrains, including deserts and high-altitude areas, it has come up with the
Super-Stallion 10x10 vehicle capable of carrying higher payloads and greater mobility.
With these new products, Ashok Leyland has established a presence in 4x4, 6x6, 8x8 and 10x10
configurations.
The Company made its foray into the armoured vehicles with the launch of MPV.
The unique design of MPV offers the ability to withstand a 14 kg TNT blast under the hull and
21 kg TNT blast under the wheel. This apart, the vehicle comes with an unprecedented side blast
protection of 11 kg TNT and an extremely lethal nitrate-based emulsion blast of 50 kg, said the
Company.

Ashok Leyland-Nissan JV eyes turnaround in 3 years

The JV Company reported loss of Rs 174.51 crore in 2013-14
Ashok Leyand is expecting its joint venture with Nissan for light commercial vehicle (LCV) to
turn profitable in the next three years. The Company said it would introduce more variants and
products, which would push the volume, and in turn make the venture profitable.
AL chief financial officer Gopal Mahadevan said, We expect in two-three years it (the JV) will
be profitable.
According to ALs 2013-14 annual report, Ashok Leyland Nissan Vehicle Ltd reported a loss of
Rs 174.51 crore on a turnover of Rs 1,052.15 crore.
Foraying into the LCV segment was important to the Company, said Mahadevan, adding 10-12
years ago the whole trucking industry predominantly was large commercial vehicles, at best 9-12
tonne vehicles. But then the whole country went into a hub-and-spoke arrangement with longhaulage, medium haulage and then local.
While other players got into LCV, it was important for Ashok Leyland also to get into the
segment and so we invested with Nissan, said Mahadevan.
Most of Companys joint ventures are two-three years old and would require time to start making
money for which volumes has to increase, according to him.
Dost (the first LCV rolled out by Ashok Leyland) has been a good success. After three years of
launch, the market share of Dost is around 15 per cent. We want to improve by around 300 basis
point, which we hope we can before the end of this year, he said. A major chunk of the capex
was over and now the Company should start getting benefits.

Methodology
In September 2008, four months after forming the JV, the partners had signed anMoU with the
Tamil Nadu government to set up a greenfield facility at Pillaipakkam, 40 km off Chennai, with
an investment of around Rs 4,000 crore.
We have done a good job of not investing further in Pillaipakkam. When we saw that there was
capacity available in Hosur, we decided we will only acquire land and not invest in
manufacturing capacity, said Mahadevan.
The Hosur facility has a capacity to manufacture 55,000-60,000 LCVs in three shifts. This can
can go up to 72,000 units.We have sufficient capacity to cater to our demand, he said.

Scheme of Amalgamation with Ashley Services Limited

The Company had invested in certain associate companies, i.e. Ashley Investments Limited
(AIL) and Ashley HoldingsLimited(AHL) (both engaged in holding Strategic investments
primarily in Auto and Auto Component Segment), AshokLeyland Project Services Limited
(ALPS) (engaged in consultancy services for promoting projects in thermal power,windenergy
etc.) and Ashley Services Limited (ASL) (engaged in trading in commodities, providingtechnical
and managementsupport). Under a scheme of amalgamation sanctioned by the Honourable High
Court of Madras vide its order dated July31, 2013, AHL, AIL and ALPS merged with ASL,
effective April 1, 2013. Consequent thereto, ASL became a wholly ownedsubsidiary of the
Company as on the Appointed date of April 1, 2013.
In a subsequent development, on March 21, 2014, the Honourable High Court of Madras
approved the scheme foramalgamation of ASL (amalgamating company) with Ashok Leyland
from the Appointed Date of July 1, 2013. The said Scheme became effective on March 27, 2014
on filing with the Registrar of Companies.The said Scheme of Amalgamation was alsoapproved
by all the three Stock Exchanges in India with which the Companys shares have been listed,
namely, Madras StockExchange, Bombay Stock Exchange and National Stock Exchange vide
their approvals dated December 19, 2013, January 23,2014, and January 22, 2014 respectively.

CORPORATE GOVERNANCE
Corporate governance broadly refers to the mechanisms, processes and relations by which
corporations are controlled and directed. Governance structures identify the distribution of rights
and responsibilities among different participants in the corporation (such as the board of
directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and
include the rules and procedures for making decisions in corporate affairs. Corporate governance
includes the processes through which corporations' objectives are set and pursued in the context
of the social, regulatory and market environment. Governance mechanisms include monitoring
the actions, policies and decisions of corporations and their agents. Corporate governance
practices are affected by attempts to align the interests of stakeholders. Interest in the corporate
governance practices of modern corporations, particularly in relation to accountability, increased
following the high-profile collapses of a number of large corporations during 20012002, most
of which involved accounting fraud; and then again after the recent financial crisis in 2008.
Corporate scandals of various forms have maintained public and political interest in the
regulation of corporate governance.

The Securities and Exchange Board of India Committee on Corporate Governance defines
corporate governance as the "acceptance by management of the inalienable rights of shareholders
as the true owners of the corporation and of their own role as trustees on behalf of the
shareholders. It is about commitment to values, about ethical business conduct and about making
a distinction between personal & corporate funds in the management of a Company."
Corporate governance has also been more narrowly defined as "a system of law and sound
approaches by which corporations are directed and controlled focusing on the internal and
external corporate structures with the intention of monitoring the actions of management and
directors and thereby, mitigating agency risks which may stem from the misdeeds of corporate
officers.
Importance of Corporate Governance:The need, significance or importance of corporate governance is listed below.

Changing Ownership Structure:

In recent years, the ownership structure of companies has changed a lot. Public financial
Institutions, mutual funds, etc. are the single largest shareholder in most of the large
companies. So, they have effective control on the management of the companies. They
force the management to use corporate governance. That is, they put pressure on the
management to become more efficient, transparent, accountable, etc. The also ask the
management to make consumer-friendly policies, to protect all social groups and to
protect the environment. So, the changing ownership structure has resulted in corporate
governance.
Importance of Social Responsibility:
Today, social responsibility is given a lot of importance. The Board of Directors have to
protect the rights of the customers, employees, shareholders, suppliers, local
communities, etc. This is possible only if they use corporate governance.

Growing Number of Scams:

In recent years, many scams, frauds and corrupt practices have taken place. Misuse and
misappropriation of public money are happening everyday in India and worldwide. It is
happening in the stock market, banks, financial institutions, companies and government
offices. In order to avoid these scams and financial irregularities, many companies have
started corporate governance.

Indifference on the part of Shareholders:

In general, shareholders are inactive in the management of their companies. They only
attend the Annual general meeting. Postal ballot is still absent in India. Proxies are not
allowed to speak in the meetings. Shareholders associations are not strong. Therefore,
directors misuse their power for their own benefits. So, there is a need for corporate
governance to protect all the stakeholders of the Company.

Globalisation:
Today most big companies are selling their goods in the global market. So, they have to
attract foreign investor and foreign customers. They also have to follow foreign rules and

regulations. All this requires corporate governance. Without Corporate governance, it is

impossible to enter, survive and succeed the global market.

Takeovers and Mergers:

Today, there are many takeovers and mergers in the business world. Corporate
governance is required to protect the interest of all the parties during takeovers and
mergers.

SEBI:
SEBI has made corporate governance compulsory for certain companies. This is done to
protect the interest of the investors and other stakeholders.

Trend of Corporate Governance in India:

The Indian corporate scenario was more or less stagnanttill the early 90s.
The position and goals of of the Indian corporate sector haschanged a lot after the

liberalisation of 90s.
Indias economic reform programme made a steadyprogress in 1994.
India with its 20 million shareholders is one of the largestemerging markets in terms of

the market capitalisation.

In 1996, Confederation of Indian Industry (CII), took aspecial initiative on Corporate

Governance.
The objective was to develop and promote a code for corporate governance to be adopted
and followed by Indian companies, be these in the Private Sector, the Public Sector,
Banks or Financial Institutions, all of which arecorporate entities.

This initiative by CII flowed from public concerns regarding the protection of investor
interest, especially the small investor, the promotion of transparency withinbusiness and

industry
A National Task Force was set up. The Task Force presented the draft guidelines and the
code of Corporate Governance (Desirable Corporate Governance Code) in April 1997 (at

the National Conference and Annual Sessions of CII.

Since 1974, CII has tried to chart new path in terms of the role of an Industry Association
such as itself. It has gone beyond dealing with the traditional work of interacting with

Government of policies andprocedures, which impact on industry.

CII has taken initiative in Quality, Environment, Energy, Trade Fairs, Social
Development, International Partnership Building etc. as part of its process of
development and expanding contribution to issues ofrelevance and concern to industry.

Securities and Exchange Board of India

The Government of India's securities watchdog, the Securities Board of India, announced

strict corporate governance norms for publicly listed companies in India.

The Indian Economy was liberalized in 1991. In order to achieve the full potential of
liberalization and enable the Indian Stock Market to attract huge investments from
foreign institutional investors (FIIs), it was necessary to introduce a series of stock

market reforms.
SEBI, established in 1988 and became a fully autonomous body by the year 1992 with

defined responsibilities to cover both development and regulation of the market.

On April 12, 1988, the Securities and Exchange Board of India (SEBI) was established
with a dual objective of protecting the rights of small investors and regulating and

developing the stock markets in India.

In 1992, the Bombay Stock Exchange (BSE), the leading stock exchange in India,

witnessed the first major scam masterminded by Harshad Mehta.

Analysts unanimously felt that if more powers had been given to SEBI, the scam would

not have happened.

As a result the Government of India (GoI) brought in a separate legislation by the name

of SEBI Act 1992 and conferred statutory powers to it.

Since then, SEBI had introduced several stock market reforms. These reforms
significantly transformed the face of Indian Stock Markets.

SEBI and Clause 49

SEBI asked Indian firms above a certain size to implement Clause 49, a regulation that

strengthens the role of independent directors serving on corporate boards.

On August 26, 2003, SEBI announced an amended Clause 49 of the listing agreement
which every public Company listed on an Indian stock exchange is required to sign. The
amended clauses come into immediate effect for companies seeking a new listing.

Clause 49

Clause 49, which has recently been revised by the SEBI, of the listing agreement between
listed companies and the stock exchanges is all set to enhance the corporate governance
(CG) requirements, primarily through increasing the responsibilities of the Board,
consolidating the role of the Audit Committee and making management more

accountable
These changes are aimed at moving Indian companies rapidly up the evolutionary path
towards business processes and management oversight techniques.

The Major Changes to Clause 49

Independent Directors
1/3 to depending whether the chairman of the board is a non-executive or executive

position.
Non-Executive Directors
The total term of office of non executive directors is now limited to three terms of three

years each.
Board of Directors
The board is required to frame a code of conduct for all board members and senior
management and each of them have to annually affirm compliance with the code.

Audit Committee
Financial statements and the draft audit report/ reports of management discussion and
analysis of financial condition and result of operations/ reports of compliance with laws
and risk management/ management letters and letters of weaknesses in internal controls
issued by statutory and internal auditors /appointment, removal and terms of

remuneration of the chief internal auditor.

Whistleblower Policy
This policy has to be communicated to all employees and whistleblowers should be

protected from unfair treatment and termination.

Subsidiary Companies
50% non-executive directors & 1/3 & independent directors depending on whether the

chairman is non executive or executive.

Disclosures
Contingent liabilities./Basis of related party transactions./Risk management/ . Proceeds

from initial public offering/ Remuneration of directors.

Certifications
Reviewed the necessary financial statements and directors report; established and
maintained internal controls, disclosed to the auditors and informed the auditors and audit
committee of any significant changes in internal control and/or of accounting policies
during the year.

Clause 49 amended
The Clause 49 of the Listing agreement of SEBI Act is the outcome of Narayana Murthy
Committee, which has come into effect January 1st 2006.

Amended Clause 49 of the Listing Agreement.

Aid to Corporate Governance
1. Control Environment
2. Risk Assessment and Management

Corporate Governance of Ashok Leyland towards Shareholders, Employees, Customers

and Society
The Board of Directors and the Management of Ashok Leyland are committed to the
enhancement of shareholder value,

Through sound business decisions, prudent financial management and high standards of

ethics throughout the organization

By ensuring transparency and professionalism in all decisions and transactions
Achieving excellence in Corporate Governance by conforming to, and exceeding
wherever possible, the prevalent mandatory guidelines on Corporate Governance and by
regularly reviewing the Board processes and the Management systems for further
improvement

The Company has adopted a Code of Conduct for the members of the Board and senior
management, who have all affirmed in writing their adherence to this Code.
Ombudsman
Another significant step has been the appointment of an Ombudsman to deal with any references,
complaints or grievances about the Company, its employees or its dealings.
If the suppliers, employees or customers have any suggestions on governance issues or
grievances or complaints on Ashok Leyland's practices - inclusive of its executives in various
functions - which they feel ought to be raised with the Ombudsman and not with the usual
channels of business, they may do so.
It is advised that the regular business dealings should be through the usual business functional
channels. The Ombudsman will not deal with them under normal circumstances.
The Ombudsman is Mr. ShekarArora, a former Executive Director of the Company, with an
excellent understanding of Ashok Leyland as an organization and its functioning, having been
with the Company for nearly 30 years.

Code of Conduct for Board members and the Senior Management

Members of the Board and the Senior Management, shall

Always act in good faith and in the best interests of the Company, its employees, the

shareholders, the community and for the protection of the environment.

Adopt the highest standards of personal ethics, integrity, confidentiality and discipline in

dealing with all matters relating to the Company.

Apply themselves diligently and objectively in discharging their responsibilities and
contribute to the conduct of the business and the progress of the Company, and not be
associated simultaneously with competing organizations either as a Director or in any

managerial or advisory capacity, without the prior approval of the Board.

Always adhere and conform to the various statutory and

mandatory

regulations/guidelines applicable to the operations of the Company avoiding violations or

non-conformities.
Not derive personal benefit or undue advantages (financial or otherwise) by virtue of
their position or relationship with the Company, and for this purpose
i) shall adopt total transparency in their dealings with the Company.
ii) shall disclose full details of any direct or indirect personal interests in
dealings/transactions with the Company.
iii) shall not be party to transactions or decisions involving conflict between their
personal interest and the Companys interest.
iv) shall not assign his/her office and any assignment so made shall be void.

Conduct themselves and their activities outside the Company in such manner as not to

adversely affect the image or reputation of the Company.

Inform the Company immediately if there is any personal development (relating to
his/her business/professional activities) which could be incompatible with the level and

stature of his/her position and responsibility with the Company.

Bring to the attention of the Board, Chairman or the Managing Director as appropriate,
any information or development either within the Company (relating to its employees or
other stakeholders) or external, which could impact the Company operations and which
in the normal course, may not have come to the knowledge of the Board/Chairman or
Managing Director.

Always abide by the above Code of Conduct, and shall be accountable to the Board for
their actions/violations/defaults.

In addition to the above, an Independent Director on the Board of the Company shall:
1. Exercise his/her responsibilities in a bona fide manner in the interest of the Company;
2. Devote sufficient time and attention to his/her professional obligations for informed and
balanced decision making;
3. Not allow any extraneous considerations that will vitiate his/her exercise of objective
independent judgment in the paramount interest of the Company as a whole, while
concurring in or dissenting from the collective judgment of the Board in its decision
making;
4. Not abuse his/her position to the detriment of the Company or its shareholders or for the
purpose of gaining direct or indirect personal advantage or advantage for any associated
person;
5. Refrain from any action that would lead to loss of his/her independence;
6. Where circumstances arise which make an independent director lose his/her
independence, the independent director must immediately inform the Board accordingly.
7. Assist the Company in implementing the best corporate governance practices.

CORPORATE SOCIAL RESPONSIBILITY

Being a socially responsible and sensitive corporate citizen has always been part of business at
Ashok Leyland. The effort hasbeen to produce vehicles that are eco-friendly, pioneer the research
and development of alternative fuels, providecomprehensive on- and off-road training to drivers,
address the health concerns of the trucking community and reach out tothe community through a
number of small initiatives that have had far-reaching benefits for the Companys stake
holders.Ashok Leylands CSR initiatives revolve around the welfare of employees and their
families, the driver community and theimmediate community around the units. In all CSR
efforts, the Company partners with other individuals and institutions,including government
agencies, local communities, not-for-profit and social organizations, and academic institutions
which,while complementing the Companys strengths, helps it to leverage their expertise, reach
and resources.

Employee Outreach
Volunteerism
Ashok Leyland encourages employee volunteerism toprovide employees an opportunity to look
beyond thecall of routine work, to enable them be part of theCompanys social initiatives and to
open up an avenuefor their social spirit. The key movers of all outreachprogrammes in the Units,
the volunteers, are involvedin several CSR initiatives of the Company.
Ashok Leyland also has payroll contribution to a worthycause. Under this initiative, the
Company channelsemployee contribution from their pay every month tohelp their desired cause
one of the five social organisationsworking for the marginalised and the vulnerable- identified
by the Company.

Reaching Out to Employee Families

Ashok Leyland encourages employee volunteerism toprovide employees an opportunity to look
beyond thecall of routine work, to enable them be part of theCompanys social initiatives and to
open up an avenuefor their social spirit. The key movers of all outreachprogrammes in the Units,
the volunteers, are involvedin several CSR initiatives of the Company.
Ashok Leyland also has payroll contribution to aworthy cause. Under this initiative, the
Companychannels employee contribution from their pay everymonth to help their desired cause
one of the fivesocial organisations working for the marginalised andthe vulnerable - identified
by the Company.in severalCSR initiatives of the Company.
Ashok Leyland also has payroll contribution to aworthy cause. Under this initiative, the
Companychannels employee contribution from their pay everymonth to help their desired cause
one of the fivesocial organisations working for the marginalised andthe vulnerable - identified
by the Company

Disaster and Crisis Management

The first of its kind in the corporate world, AshokLeyland has provided training in
internationallyvalidateddisaster and emergency management modulesto over 100 of its
volunteers from its manufacturingunits. The volunteers are trained to manage disastersarising
from geological disturbances such asearthquakes; natural calamities such as floods; firehazards,
industrial and road accidents; and man-madehazards such as pollution. This core group, which is
totrain others in their respective units and also people inthe adjoining community, are now
certified and empanelledby the Red Cross to be sent out for help duringnational emergencies and
calamities.

Community Outreach
Ashok Leyland is involved in a number of developmentinitiatives such as construction and repair
of publicbuildings, drilling public bore wells, erecting busshelters and putting up streetlights
around its manufacturingfacilities. These development initiatives aresupported by a Community
Development Schemecontributed and managed by representatives from theManagement and the
Union. The manufacturing unitshave conducted over 100 medical, blood donation andHIV
awareness camps benefiting thousands of peoplein the immediate community. Career guidance
for highschool students, skill development for unemployedyouth and vocational training for
women of Self HelpGroups around the manufacturing units have beenorganised with help from
specialists

in

the

respectivefields.

Computer

training

is

being

provided

to

economicallymarginalised students in Hosur at Ashok Leylands

Management Development Centre by the Companysresource people. The students, identified
and selectedby Ashok Leyland, are put through a carefully-designed4-module session and
certified on successful completionof the course.A batch of 25 students is trained every month and
theprogramme aims at covering 200 students every year.Ashok Leylands FunBus for free use
by differentlyabledchildren and children of orphanages, corporationprimary schools and other
underprivileged groupsbased in Chennai continued its successful run last yeartoo.

Driver Outreach
With a view to addressing the wide-ranging needs ofthe driver community, Ashok Leyland trains
driverscomprehensively on- and off-the-road in its driver trainingschools in Namakkal (Tamil
Nadu) and Burari (Delhi).Ashok Leyland has also signed anMoU with theHaryana Government
to set up a driver training schoolin the State.
CSR is a way of life at the driver training centres. Forexample, Ashok Leyland has rented a small
two-roomspace for the Alcoholics Anonymous group to conductalcohol rehabilitation
programme for truck drivers andtheir families - a gap identified by Ashok Leyland to
completethe comprehensiveness of driver outreach in Namakkal.

Awareness programme on HIV prevention and managementis being conducted for convoy
drivers at the manufacturingunits on a continuing basis.A holistic health outreach programme for
truck drivers,Arogya, was rolled out this year. Implemented along witha dealer in Andhra
Pradesh,

the

CSR

initiative

began

itsfirst

component

of Arogya

by

conducting

comprehensivehealth outreach camps for drivers in four major truckingcentres in Andhra

Pradesh. While the first componentwould continue, the second component of Arogya setting up
a permanent health outreach centre withinthe dealer service centre is in an advanced stage
offormulation.

FunBus
Fun Bus is our gift exclusively for free use by children of orphanages, Corporation primary
schools and physically/mentally challenged children for a days picnic. FunBus brings cheer to
children who would otherwise have been confined within four walls. The seating layout reckons
the requirements of physically challenged children and the bus is equipped with a hydraulic lift
for the convenience of wheelchair-bound children.
FunBus spreads cheer in Chennai and New Delhi.

Green Mission
Products
First to meet emission standards:
Over the decades, the Companyfocus has been to address the twin concerns of fuel-efficiency
and emissions. When legislation came in 1987, limiting vehicular emission, Companys vehicles
were ready to meet them. In 1992 when more stringent norms for gaseous emissions were
introduced, the Company was already offering eco-friendly engine technology thanks to the
timely technology tie-ups. In 1996, when the permissible levels of gaseous exhaust emissions
were tightened, the Company again met the norms with ease.

Indias first CNG-powered Bus was introduced in 1997 in Mumbai. Today, over 6,500 CNG
buses ply on the roads of Delhi, Ahmedabad, Vijayawada and Mumbai.
Indias first Hybrid Electric Vehicle was showcased in 2002 marking the introduction of
another alternative vehicle technology.
Indias first CNG Hybrid Plug-in Bus: which uses a combination of CNG and electricity was
launched in 2010 and was in service during the Commonwealth Games in New Delhi.
The countrys first Hythane engine was developed in 2009. 20% of Hydrogen is added to CNG
to make the engine more fuel efficient and to emit less than normal CNG engines.
The Company was also the first in India to develop a common rail engine for commercial
vehicles.
Beyond Products
To get the best out of the Companys eco-friendly engine technology through reduced emissions,
round-the-year awareness and action programmes are held at operator meets and service
campaigns.
While Companys comprehensive all-India network of service and genuine parts outlets ensure
scientific vehicle maintenance, regular training is also imparted to Companys dealers and
customer service personnel at Companys service training centers and mobile training vans.

Driver Training
The Company was one of the first auto companies to acknowledge the crucial need for welltrained commercial vehicle drivers. More than 3.5 lakh drivers have been trained at Companys
Driver Training Institutes in Namakkal (Tamil Nadu) and Burari (near Delhi). More such
institutes are being planned at Khaital (Haryana), Chindwara (MP), Rajasmand (Rajasthan),
Chatia (near Bhubaneswar, Orissa) and Bangalore.

Processes:
Serious about protecting the environment Company strives beyond compliance with the law to
incorporate sound environmental practices into Companys business decisions and processes. A
constant review of the processes has been resulting in modifications and replacements with ecofriendly ones.
Indias first commercial vehicle manufacturer to win the ISO 14001 certification reflects
Companys commitment towards ecology espoused in the Environmental Management System
followed at all Companys manufacturing units.
First to achieve Zero Water Balance: through various water conservation methodologies
including rainwater harvesting, recycling and effluent treatment.
Waste Treatment: Treating waste to produce usable by-products and safe disposal of unused
waste are the twin goals of effluent treatment plants, set up in all our Units including Ennore
where 1.28 million litres of water is redeemed from sewage every day.
Some more examples of process changes keeping the environment in mind:

Shot-blasting to sand-blasting to steel-shots: for surface cleaning treatment of rough

materials and heat treatment scaling at Ennore that eliminates the possibility of silicosis.
The blasting dust from the machines is collected by heavy duty dust collectors and go

into the making of fire-crackers.

Containment of paint particles: At the modern paint shop at Hosur II, the paint particles
in the paint booth are collected immediately by scrubbers to avoid exposure and adverse

reactions.
Direct Induction Hardening was introduced at Ennore to eliminate the copper plating of

camshafts before the carburising operation.

Increasing the green belt: More than 250,000 trees have been planted and there are over
162,000 meters of grasslands across the Companys various plants.

Wind Energy
The Company ventured into the development of wind energy as early as 1995, with 11 wind
mills (2.55 MW). Today, through continuous build-up of additional capacities, the combined
wind energy capacity stands at 63.175 MW with 240 wind mills of different capacities ranging
from 225 KW to 1250 KW wind electric generators, supplied by different wind turbine
manufacturers. The wind farms are situated in Tamil Nadu.
100 million units of wind energy is generated every year and the entire energy is used for captive
consumption Hinduja Foundries and the Company. More than 60% of our power requirement is
met through wind energy.
A separate Company in the name of Ashok Leyland Wind Energy Ltd has been formed to unlock
the value in the wind energy business. This Company focuses on development, operation and
maintenance of wind farms with dedicated and experienced workforce to its credit.

Profit & Loss account of Ashok Leyland

------------------- in Rs. Cr. ------------------Mar '14

12 mths

Mar '13
12 mths

Mar '12
12 mths

Mar '11
12 mths

Mar '10
12 mths

9,943.43 12,481.20
0.00
0.00
9,943.43 12,481.20
572.18
351.91
-423.87
-271.98
10,091.74 12,561.13

14,134.08
824.49
13,309.59
41.68
175.03
13,526.30

12,393.36
986.21
11,407.15
40.60
175.54
11,623.29

8,071.74
635.56
7,436.18
89.34
251.85
7,777.37

Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income

Expenditure
Raw Materials

7,228.97

8,925.14

9,702.20

8,406.17

5,534.24

61.04

86.00

76.75

65.19

44.47

999.67

1,075.51

1,039.07

974.60

671.61

Other Manufacturing Expenses

0.00

0.00

99.67

86.04

45.51

Selling and Admin Expenses

0.00

0.00

1,001.27

857.00

645.89

1,063.31

1,246.10

334.40

0.19

0.16

0.00

0.00

-25.09

-24.06

-15.25

9,352.99 11,332.75

12,228.27

10,365.13

6,926.63

Power & Fuel Cost

Employee Cost

Miscellaneous Expenses
Preoperative Exp Capitalised
Total Expenses

Mar '14
12 mths

Mar '13
12 mths

Mar '12
12 mths

Mar '11
12 mths

Mar '10
12 mths

Operating Profit

166.57

876.47

1,256.35

1,217.56

761.40

PBDIT

738.75

1,228.38

1,298.03

1,258.16

850.74

Interest

452.92

376.89

255.25

188.92

101.85

PBDT

285.83

851.49

1,042.78

1,069.24

748.89

Depreciation

377.04

380.78

352.81

267.43

204.11

Other Written Off

0.00

0.00

0.00

0.00

0.00

Profit Before Tax

-91.21

470.71

689.97

801.81

544.78

0.00

0.00

0.00

0.00

0.00

-91.21

470.71

689.97

801.81

544.78

-120.60

37.00

124.00

170.50

121.10

29.38

433.71

565.98

631.30

423.67

Total Value Addition

2,124.02

2,407.62

2,526.05

1,958.96

1,392.39

Preference Dividend

0.00

0.00

0.00

0.00

0.00

Equity Dividend

0.00

159.64

266.07

266.07

199.55

Corporate Dividend Tax

0.00

27.13

43.16

43.16

33.14

26,606.77

13,303.38

13,303.38

Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit

Per share data (annualized)

Shares in issue (lakhs)

26,606.77 26,606.77

Earnings Per Share (Rs)

0.11

1.63

2.13

4.75

3.18

Equity Dividend (%)

0.00

60.00

100.00

200.00

150.00

16.72

16.74

10.89

19.97

17.46

Book Value (Rs)

Balance Sheet of Ashok Leyland

------------------- in Rs. Cr. -------------------

Mar '14
12 mths

Mar '13
12 mths

Mar '12
12 mths

Mar '11
12 mths

Mar '10
12 mths

266.07
266.07
0.00
0.00

266.07
266.07
0.00
0.00

266.07
266.07
0.00
0.00

133.03
133.03
0.00
0.00

133.03
133.03
0.00
0.00

Sources Of Funds
Total Share Capital
Equity Share Capital
Share Application Money
Preference Share Capital

Reserves
Networth
Secured Loans
Unsecured Loans
Total Debt
Total Liabilities

4,181.82
4,447.89
1,937.30
1,946.61
3,883.91
8,331.80

4,189.04
4,455.11
1,903.46
1,601.36
3,504.82
7,959.93

2,632.34
2,898.41
960.43
1,435.10
2,395.53
5,293.94

2,523.65
2,656.68
1,272.22
1,385.97
2,658.19
5,314.87

2,190.10
2,323.13
788.12
1,492.33
2,280.45
4,603.58

Mar '14
12 mths

Mar '13
12 mths

Mar '12
12 mths

Mar '11
12 mths

Mar '10
12 mths

8,327.87

7,715.37

7,174.30

6,691.89

6,018.63

Less: Revaluation Reserves

0.00

0.00

1,313.36

1,306.28

1,333.17

Less: Accum. Depreciation

2,668.00

2,433.49

2,147.77

2,058.10

1,769.07

Net Block

5,659.87

5,281.88

3,713.17

3,327.51

2,916.39

181.53

688.93

577.31

387.82

619.71

Investments

2,789.69

2,337.63

1,534.48

1,230.00

326.15

Inventories

1,188.70

1,896.02

2,230.63

2,208.90

1,638.24

Sundry Debtors

1,299.01

1,419.41

1,230.37

1,185.21

1,022.06

11.69

13.94

32.56

179.53

188.92

2,499.40

3,329.37

3,493.56

3,573.64

2,849.22

Application Of Funds
Gross Block

Capital Work in Progress

Cash and Bank Balance

Total Current Assets

Loans and Advances

Fixed Deposits
Total CA, Loans & Advances
Deferred Credit
Current Liabilities
Provisions
Total CL & Provisions
Net Current Assets
Miscellaneous Expenses
Total Assets
Contingent Liabilities
Book Value (Rs)

1,677.51

1,458.89

1,302.48

787.17

928.31

0.00

0.00

0.00

0.00

330.01

4,176.91

4,788.26

4,796.04

4,360.81

4,107.54

0.00

0.00

0.00

0.00

0.00

4,320.21

4,749.58

4,837.41

3,505.26

3,002.68

155.99

387.20

496.94

490.33

368.69

4,476.20

5,136.78

5,334.35

3,995.59

3,371.37

-299.29

-348.52

-538.31

365.22

736.17

0.00

0.00

7.31

4.31

5.17

8,331.80

7,959.92

5,293.96

5,314.86

4,603.59

374.65

320.70

985.92

881.77

445.03

16.72

16.74

10.89

19.97

17.46

CONCLUSION
A key takeaway from Ashok Leylands conference call with Anandrathi Team is
managementsoptimistic outlook on the Companys growth prospects, in contrast toits view on
the industry, driven by its stronghold in south Indianmarkets. The Company plans to invest
~`40bn till FY15, partly onGreenfield capacity of 190,000 LCVs.

Industry outlook bleak but Company upbeat on growth prospects.

Management estimates ~4% industry growth in FY13, but expects theCompany to
outperform with 14% growth in M&HCVs reporting salesto 107,000 units (93,000 in
domestic and 14,000 in exports). It expectsDost volumes to grow to 32,000 units in
FY13.

Growth to go north due to markets down south.

M&HCV growth,according to management, will be driven by southern markets.
WhileM&HCV volumes declined ~5% YTD vs industrys -14%, revival isexpected in

3Q, with early signs showing up. The haulage segmentvolumes in the country fell ~11%
y-o-y, whereas the South grew 9% y-o-y.Bus volumes are likely to be boosted by
government incentives likeJNNURM in Tamil Nadu. The ICV segment grew 8% YTD
higher thanthe country (flat y-o-y). Political stability in Tamil Nadu, the lifting of
themining ban from 14-15 iron ore mines and any clarity on AndhraPradeshs elections
should help demand.

Aggressive capex plans.

Ashok Leyland signed an MOU with TamilNadu to invest ~`40bn till FY15. The
Company spent `9.5bn on MHCVstill Mar12, `3bn will be spent in FY13e and ~`7.5bn
in FY14 and FY15each. It has spent `2bn till Mar12 on LCVs. An additional `8bn is to
befunded by debt, `5bn from the Nissan JV and `5bn by itself; all for aGreenfield plant
of 190,000 units capacity. The Company seeks anenabling resolution for fund raising
through debt or equity (last option).

Valuation
The stock trades at 10.5x FY13e. We retain a Sell. Risks.Strong economic growth, rise in
freight rates, greater LCV profitability.

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