INDUSTRIAL EXPOSURE PROJECT

ON
A STUDY OF
AUTOMOBILE INDUSTRY

“ASHOK LEYLAND”
Submitted in Partial Fulfillment of the requirements for the
Award of Degree of Bachelor of Business Administration (BBA)

2016-2019

Submitted by: MEGHA MEHRA

Under the guidance of: MR. Shakti Sharma

BHARATI VIDYAPEETHUNIVERSITY
SCHOOL OF DISTANCE EDUCATION,
Academic Study Center – BVIMR, New Delhi

(A Constituent Unit of Bharati Vidyapeeth University

,Pune)AnISO9001:2000CertifiedInstitute

1
 NAAC Re-Accreditation Grade “A” University

ACKNOWLEDGEMENT

This project is a result of dedicated effort. It gives us immense pleasure to prepare

this A Study of automobile industry of “ASHOK LEYLAND” We would like to
thank our project guide MR. SHAKTI SHARMA, for consultative help and
constructive suggestions on the matter on this project. We would like to thanks our
parents and colleagues who have helped us in making this project a successful one.

2
 DECLARATION

This is to certify that I have completed a Project titled "A Study of automobile
industry “ASHOK LEYLAND” under the guidance of MR. SHAKTI SHARMA in
the partial fulfillment of the requirement for the award of Bachelors of Business
Administration of BharatiVidyapeeth University, New Delhi. This is an original
piece of work & I have not submitted it earlier elsewhere.

MEGHA MEHRA

3
 CONTENTS
CHAPTER 1:- Introduction to Company
1.1:- Nature of Business/History
1.2:- Type & Ownership pattern
1.3:- Organisational structure
1.4:- Production Layout
1.5:-Organizational Policies
CHAPTER 2:- Industrial Analysis
2.1:- Industrial Overview
2.2:- Current Issues
2.3:- Key Competitors
2.4:- Environmental Scanning (PESTEL analysis)
2.5:-Porter’s Five Forces Model of Competition
CHAPTER 3:- Marketing Strategy
3.1:- Products of the company
3.2:- 4'Ps
3.3:- STP (Segmenting Targeting and Positioning)
3.4:- Distribution Channels
3.5:- Promotion Strategy
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CHAPTER 4:- Financial Analysis
4.1:- Sources of Finances
4.2:- Ratio Analysis (Any 3)
4.3:-Net Profit or Net Balance Sheet
CHAPTER 5:- Key learning from the company and Recommendations
5.1:- Performance Analysis of the company [Minimum 4-5 lines]
5.2:- Reasons for the diversification of the company
5.3:- Comment on Organizational Leadership
5.4:- Market Share / Growth Rate of the company
5.5:- SWOT Analysis of the company
CHAPTER 6:- Finding
CHAPTER 7:- Conclusion

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6
1.1 Nature of Business/History:-
We are the 2nd largest manufacturer of commercial vehicles in India, the 4th
largest manufacturer of buses in the world and the 12th largest manufacturer of
trucks globally.

With a turnover in excess of US $ 3.3 billion (2016-17) and a footprint that extends
across 50 countries, we are one of the most fully-integrated manufacturing
companies this side of the globe.

Over 70 million passengers use our buses to get to their destinations every day
while over 700,000 trucks keep the wheels of economies moving. With the largest
fleet of logistics vehicles deployed in the Indian Army and significant partnerships
with armed forces across the globe, we help keep borders secure.

Headquartered in Chennai, India, our manufacturing footprint spreads across the

globe with 9 plants; including one each at Great Britain and Ras Al Khaimah
(UAE). Our Joint Venture partners include John Deere (USA) for Construction
Equipment, Continental AG (Germany) for Automotive Infotronics and the
Alteams Group for the manufacture of high-press die-casting extruded aluminum
components for the automotive and telecommunications sectors.

Ashok Leyland is an Indian automobile manufacturing company headquartered

in Chennai, India. It is owned by the Hinduja Group.[3]

Founded in 1948, it is the 2nd largest commercial vehicle manufacturer in India,

4th largest manufacturer of buses in the world and 12th largest manufacturer of
trucks globally. Operating nine plants, Ashok Leyland also makes spare parts and
engines for industrial and marine applications. It sold around 1,40,000 vehicles
(M&HCV + LCV) in FY 2016. 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 32.1% (FY 2016). With passenger transportation
options ranging from 10 seaters to 74 seaters (M&HCV = LCV), Ashok Leyland is
7
a market leader in the bus segment. The company claims to carry more than 70
million passengers a day, more people than the entire Indian rail network. In the
trucks segment Ashok Leyland primarily concentrates on the 16 to 25-ton range.
However, Ashok Leyland has a presence in the entire truck range, from 7.5 to 49
tons.

Ashok Leyland's UK subsidiary Opt are has shut down its bus factory

in Blackburn, Lancashire.[4] This subsidiary's traditional home in Leeds has also
been vacated in favor of a purpose built plant at Sherborn-in-Elmet.

HISTORY

Ashok Motors

Ashok Motors was founded in 1948 by Raghunandan Saran, an Indian freedom

fighter from Punjab.[5] After Independence, he was persuaded by India's first Prime
Minister Nehru to invest in a modern industrial venture. Ashok Motors was
incorporated in 1948 as a company to assemble and manufacture Austin cars
from England, and the company was named after the founder's 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 the assembly and distribution of Austin A40 passenger
cars in India.

Under Leyland

Raghunandan Saran died in an air crash. He had previously been negotiating

with Leyland Motors of England 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
finalized for an investment and technology partner, and thus Leyland Motors
joined in 1954 with equity participation, 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.

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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. After 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 Leyland's 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 programmed 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, a British-based and Indian originated trans-
national conglomerate after Hindujas bought Iveco's remaining ownership stakes

1.2 Type and Ownership Pattern:-

The origin of Ashok Leyland, a Hinduja group company can be traced to
the urge for self–reliance, felt by independent India. Pandit Jawaharlal
Nehru, India's first Prime Minister persuaded Raghunandan Saran, an
industrialist, to enter automotive manufacture. In 1948, Ashok Motors was
set up in what was then Madras, for the assembly of Austin Cars. The
Company's destiny and name changed soon with equity participation by
British Leyland and Ashok Leyland commenced manufacture of commercial
vehicles in 1955.
Since then Ashok Leyland has been a major presence in India's commercial
vehicle industry with a tradition of technological leadership, achieved
through tie–ups with international technology leaders and through
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vigorous in–house R&D. Access to international technology enabled the
Company to set a tradition to be first with technology. Be it full air brakes,
power steering or rear engine busses, Ashok Leyland pioneered all these
concepts. Responding to the operating conditions and practices in the
country, the Company made its vehicles strong, over–engineering them
with extra metallic muscles. 'Designing durable products that make
economic sense to the consumer, using appropriate technology', became
the design philosophy of the Company, which in turn has molded consumer
attitudes and the brand personality.
The Hinduja Group is a transnational conglomerate that provides a wide
range of products in over fifty countries worldwide. Today, the Hinduja
Group has become one of the largest transnational business conglomerates
in the world with diversified operations, spanning all the continents. The
Group employs over 25,000 people and has offices in many key cities of the
world and all the major cities in India.Ashok Leyland vehicles have built a
reputation for reliability and ruggedness.
In the populous Indian metros, four out of the five State Transport
Undertaking (STU) buses come from Ashok Leyland. Some of them like the
double–decker and vestibule buses are unique models from Ashok Leyland,
tailor–made for high–density routes.
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.
(Since July 2006, the Hinduja Group is 100% holder of LRLIH). The
blueprint prepared for the future reflected the global ambitions of the
company, captured in four words: Global Standards, Global Markets. This
was at a time when liberalisation and globalisation were not yet in the air.
Ashok Leyland embarked on a major product and process up gradation to
match world–class standards of technology.
For over five decades, Ashok Leyland has been the technology leader in
India's commercial vehicle industry, molding the country's commercial
vehicle profile by introducing technologies and product ideas that have
gone on to become industry norms. From 18 seater to 82 seater double–
decker buses, from 7.5 tonne to 49 tonne in haulage vehicles, from
numerous special application vehicles to diesel engines for industrial,
marine and genet applications, Ashok Leyland offers a wide range of
products.  Eight out of ten metro state transport buses in India are from
Ashok Leyland. With over 60 million passengers a day, Ashok Leyland
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 buses carry more people than the entire Indian rail network!

1.3 Organizational Structure:-

Name Designation
Dheeraj G Hinduja Chairman

R J Shahaney Chairman Emeritus

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Andreas H Biagosch Director

Sudhindar K Khanna Director

Shardul S Shroff

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 Vinod K Dasari Managing Director & CEO

1.4Production Layout
Trucks and buses

Early vehicles

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

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

During the early 80s 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 the H-series engine were developed with 4
and 6 cylinders, and also conforming to BS2, BS3 & BS4 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 H-series engines.

Iveco partnership

In the 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 Bengaluru.[16] 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.

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The Cargo was originally introduced in 7 and 9 long tons (7,100 and 9,100 kg)
versions; later, heavier-duty models from 15 to 26 long tons (15,200 to 26,400 kg)
were progressively introduced.[17]

Current range

Ashok Leyland's modern truck with factory built G-90 New Gen Cab

Ashok Leyland's entry into the light commercial vehicle segment with Dost

Ashok Leyland STiLE MPV

U-Truck

Ashok Leyland announced the sale of vehicles on the new U-Truck platform in
November 2010 with the rolling out of the first set of 10 models of tippers and

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tractor trailers in the 16 to 49-tonne segment. Another 15 models were set to enter
the market in the following 12 months.

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 produced in Ashok Leyland's Hosur plant in Tamil
Nadu. The LCV is available in three versions with the top-end version featuring
air-conditioning, power steering, dual-colour 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. It is

available in the range of 8T to 14T. It is available with two engine options 120IL
(LE) and 130CRS (LX) engines, and this is the first time such an engine has been
offered in this range of trucks. The LX variant is available with air conditioning
and Leymatic AMT, which are again industry firsts.

Former range

Minivan

STiLE

STiLE is a multi-purpose vehicle which was manufactured by Ashok Leyland. The

vehicle was unveiled during the 2012 Auto Expo and was launched in July 2013.
STiLE was marketed as a "multi-purpose vehicle" for use as a hotel
shuttle, taxi, ambulance, and panel van, and in courierservice. In May 2015, Ashok
Leyland stopped production due to low demand.

1.5:- Organizational Policies:-

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Ashok Leyland is committed to achieve customer satisfaction by anticipating andd
elivering superior value to the customer in relation to their own business, through
the products and services offered by the company and comply with statutory
requirements.

Towards this, the quality policy of Ashok Leyland is to make continual

improvements in the processes that constitute the quality management system, to
make them more robust and to enhance their effectiveness and efficiency in
achieving stated objectives leading to

1.Superior products manufactured as also services offered by the company.

2.Maximum use of employees potential to contribute to quality and environment

by progressive up gradation of their knowledge and skills as appropriate to
their functions.

3.Seamless involvement from suppliers and dealers in the mission of the company
to address customers changing needs and protection of the environment.

 Relationships with Customers

Quality of Products and Service

Ashok Leyland strives to provide products and services that exceed the
expectations of customers and society. In this sense, it is essential to place the
highest priority on quality and safety, voluntarily establish high standards, and
respond in an appropriate manner.

Appropriate Advertising and Publicity

Ashok Leyland engages in advertising, publicity, and sales promotion activities in

good faith so as to constantly meet the trust and expectations of customers and
society.

Compliance with Competition Laws

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 Ashok Leyland will engage in free and open competition with competitors to
maintain its stance as a company trusted by customers and society.

 Relationships with Business Partners

Sound Business Practices

Ashok Leyland will engage in sound business practices under an environment of

free and open competition which is built upon mutual trust with suppliers,
distributors/dealers, subcontractors and all other business partners, while aiming to
build long-term, constructive relationships with them.

 Relationships with Colleagues / Work Environment

Communication in the Workplace

Ashok Leyland strives to create workplaces in which co-workers can trust one
another at all times.

Respect of Human Rights

Ashok Leyland strives to maintain its stance as a company committed to

practicing fairness and sincerity and respects human rights.

Safety and Health

Ashok Leyland will provide a safe and healthy workplace to maintain a pleasant
and safe work environment.

 Relationships with Society

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Traffic Safety

Ashok Leyland will develop advanced safety technologies and engage in activities
to promote safe driving with the aim of realizing a safer motorized society.

Environmental Protection

Ashok Leyland actively endeavors to protect the global environment throughout

all business activities as a responsible member of society.

Contribution to Society

Ashok Leyland strives to contribute to society through its business activities, such
as the provision of products and services that exceed the expectations of customers
and society. Honda also engages in socially beneficial activities to fulfill its social
responsibility as a corporate citizen.

 Relationships with Shareholders, Investors, and Other Stakeholders

Timely and Appropriate Disclosure of Information

In order to remain a highly transparent company, Honda strives for appropriate

communication with customers, business partners, shareholders and investors,
local communities, and other stakeholders.

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20
2.1 Industrial Overview:-
AUTOMOBILE INDUSTRY HISTORY:

In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the
first automobile to run on roads. This automobile, in fact, was a self-powered, three
wheeler, military tractor that made use of steam engine. The range of the
automobile, however, was very brief and at the most, it could only run at a stretch
for fifteen minutes. In addition, these automobiles were not fit for the roads as the
steam engines made them very heavy and large, and required ample starting time.
Oliver Evans was the first to design a steam engine driven automobile in the U.S.

The automobile industry finally came of age with Henry Ford in 1914 for the bulk  
production in cars. This lead to the development of the industry and it first begun
in the assembly lines of his car factory. The several methods adopted by Ford,
made the new invention i.e.) car, popular amongst the rich as well as masses.

According to the history of automobile industry U.S, dominated the automobile

markets around the globe with no notable competitors. However, after the end of
Second World War in 1945, the automobile industry of other technologically
advanced nations such as Japan and certain European nations gained momentum
andwithinaveryshortperiod,beginningin the early 1980s, the U.S automobile indust
ry was flooded with foreign automobilecompanies, especially those of Japan and
Germany.

The current trends of the Global automobile industry reveal that in the developed
countries the automobile industry are stagnating as a result of the drooping car
markets, whereas
theautomobile industry in the developing nations, such as India and Brazil, have be
enconsistently registering higher growth rates every passing year for their flourishi
ngautomobile markets.

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2.2: Current Issues
Ashok Leyland to increase price of all its vehicles by 2%

Automobile manufacturer Ashok Leyland announced on Tuesday that it will

raise prices of all its vehicles by a minimum of 2 percent.

The proposed price increase will come into effect by April 1, 2018.

The flagship Hinduja Group company said that the increase in prices is due to
rising input costs and implementation of AIS 140 regulations.

AIS 140 are a set of regulations that aim to improve safety of passenger vehicles.
The guidelines require all buses to be fitted with GPS tracking system, camera
surveillance and an emergency button. This will improve communication with
authorities in case of a mishap.

The norms apply to existing vehicles as well as any future ones being

manufactured. The government has directed all vehicle manufacturers to comply
with these regulations by April 1, 2018.

Buy Ashok Leyland; target of Rs 163: Angel Broking

Ashok Leyland Ltd (ALL) is the flagship company of the Hinduja Group, and one
of the largest commercial vehicle manufacturers in India. ALL is engaged in the
manufacturing of commercial vehicles and related components. ALL’s products
include buses, trucks, engines, defense and special vehicles. Ashok Leyland offers
a range of products from 18 to 82 seater double-decker buses, from 7.5 to 49 tonne
in haulage vehicles, from numerous special application vehicles to diesel engines
for industrial, marine and genet applications. The company is headquartered in
Chennai, India.

Outlook

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At the CMP of `139, the stock trades at PE of 19.6x its FY2020E EPS of `7.1.We
initiate coverage on the stock with a Buy recommendation and Target Price of `163
based on 23x FY2020E EPS, indicating an upside of ~17% from the current levels.

2.3: Key-Competitors

Company Current Book Value P/E Ratio Market

Price Cap
(Rs. Cr.)

Eicher Motors Ltd. 28,424.10 1,440.19 49.63 77,417.89

Swaraj Mazda Ltd. 743.80 278.14 17.14 1,076.40

Tata Motors Ltd. 331.15 71.72 0.00 95,614.55

2.4: Environmental Scanning(PESTEL analysis)

PESTLE/PESTEL - Political

-governmental support

-low trade restrictions

-reduced costs

-assistance provided

-international trade agreements

-skilled government

-political stability

-low barriers of market entry

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PESTLE/PESTEL - Economic

-economic structure

-sustainable growth rates

-high productivity

-market size

-taxes

-stable economy
 
PESTLE/PESTEL - Social

-growing demand

-workforce
 
PESTLE/PESTEL - Technological

-increasing automation

-government regulations

-increasing automation in businesses

-mobile technology

-technological and industry concentration

 
PESTLE/PESTEL - Legal

-increasing automation

-government regulations

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-increasing automation in businesses

-mobile technology

-technological and industry concentration

PESTLE/PESTEL - Environmental

-green products and services

2.5:Porters five forces model of competition

1.      THREAT OF NEW ENTRANTS
A.    Achieving economies of scales is a major challenge for any potential
new entrant in this industry. Huge capital outlays to establish manufacturing
units result in very high fixed costs. Owing to the cyclicality and hence the
volatility of demand in segments such as M&HCV (strong correlation with
industrial productivity), even the incumbents with all their experience are
finding it difficult to achieve economies of scale, which makes it extremely
difficult for a new entrant. Barriers to exit for the existing players are also
high owing to their existing investments in fixed assets and technology.
B.     Strong Brand Identification of the incumbents’ brands and their
diversified product portfolios which already havedifferentiated positioning
catering customer needs of safety, comfort, total cost of ownership etc, make
it difficult for the new entrants to establish brands as well as to differentiate
their offerings from the existing players’ vehicles.
C.     The existing players have either developed extensive R&D capabilities
or have entered into joint-ventures with global OEMs providing them with
cutting edge technology. A new entrant will find it extremely challenging to
avail either of the two advantages.
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D.    Stringent emission norms and uncertainty ingovt. stance over them,
exposes the new entrant to business risk which the existing players are
largely able to overcome through their existing reputation and experience in
dealing with the policy decisions.
E.     The wide-spread service networks which the existing players have
across India, enables them to offer a product-service bundle which a new
entrant cannot offer immediately at the time of market entry.
F.      Entry of Foreign OEMs: The foreign OEMs having a globally
reputed brands, cutting edge technology, ability to invest, and
compliance to strict norms(already in-place in the west) are in a position to
overcome the above mentioned points A, B, C, D.They can overcome the
threat due to pointE (distribution network) by initially entering into
JV/alliance with existing players till they gain sufficient market knowledge
and experience.
The threat of new entrants is thus Low presently but is likely to increase
to Medium, as the foreign OEMs enter deeper into the Indian market.

2.      THREAT OF EXISTING RIVALRY

A.    Concentration: Tata Motors is the market leader in all the 3
segments, has an overall market share of 59%.  The remaining share is
intensely competed for by Mahindra & Mahindra, Eicher, Ashok Leyland.
Thus there is one dominant competitor in favorable position whereas others
are competing for the remaining share as well as trying to encroach upon
leader’s share.
B.     Slow Industry Growth[3]:The M&HCV segment which comprises
heavy trucks, trailers etc have a strong demand correlation with industrial
productivity. Thus due to the prevalent slowdown, this segment is
experiences de-growth (~30% decline in 2011-12 to 2012-13) increasing
rivalry.
26
C.     Technological diversification: The Indian players have been receiving
technology from their foreign partners by forming joint ventures allowing
them to gain a competitive advantage over indigenous players such as Tata
Motors. Some of the examples BharatBenz, VolvoEicher, Ashok Leyland-
Nissan.
D.    The product differentiation in M&HCV as well as L&ICV segments
is relatively low and all competitors are competing on the same product
attributes, hence the challenge of holding onto existing market shares.
E.     This threat due to this force is Low to Medium presently. In the
future with the rivalry is expected to intensify(points B, C, D above) and the
threat will become Medium.

3.      BARGAINING POWER OF BUYERS

A.    Changing buying behavior: The customer preferences have been
evolving from “being extremely price sensitive, willing to trade-off
performance” to “willing to pay premium for performance” owing to rising
disposable incomes. The existing players with access to technology from
global OEMs (through JVs or otherwise) are adapting international products
to serve Indian customers. These products score highly on the performance,
safety and comfort parameters, increasing the bargaining power of the
customers against Tata Motors
B.     Buyer’s profitability: With rising fuel and service costs, customer is
more focused on the total cost of ownership instead of just the acquisition
cost. Thus the customer is increasingly basing the buying decision on the
quality of service bundle (after sales).Tata Motors is well placed owing to
its strong and wide-spread service network.
C.    Customers have shown an increased adoption of newer modes of
transport such metro-rail, negatively influencing the demand for buses, in
turn affecting the buying decisions of State Transport Units.
27
D.    The threat this force poses is Low to Medium presently. It is expected
to remain the same in intensity in the near future as the factors mentioned
above will take effect gradually (over the next 3-5 years).

4.      BARGAINING POWER OF SUPPLIERS

A.    The two key raw-materials for the industry are steel and auto-
components. Tata Motors is in a unique advantage with respect to steel
supply as Tata Steel is the major supplier (a company under the same
corporate umbrella). The auto-component sector has a number of small
suppliers dependent on a few big auto manufacturers thus their bargaining
power is low due to low switching costs of CV manufacturers.
B.     The threat due this force is Low presently and is likely to remain the
same in intensity in the near future.

5.      THREAT OF SUBSTITUTES
A.    Railway network is a substitute for M&HCV and L&ICV (trucks,
trailers etc) vehicles. Indian railway network is not robust while at the same
time the national highways and road infrastructure has been improving,
weakening this threat.
B.     Metro-rail networks offer a substitute for SCV passenger vehicles and
LCV buses. But in terms of penetration they still have a long way to go to
compete with buses.
C.    The threat due this force is Low presently and may
become Medium in the near future particularly the threat from metro-
rail systems.

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3.1 Products
Ashok Leyland offers a comprehensive product range with trucks from 7.5 tons
GVW to49 tons GVW(Gross Vehicle Weight). From 19 to 80 seaters in passenger
transport, host of special application vehicles and diesel engines for industrial
genets and marine application. Product profile can be broadly split into
five categories viz. Buses, Trucks,defence vehicles, special Vehicles and Engines.

BUSES

LYNX BS-II  Viking BS-II  12 M Bus-BS II Cheetah (Front engine)

Viking BS-III  Viking AL Airport Tarmac Coach  Vestibule Bus
Panther (Rear engine) Cruiser  Viking CNG BS-III  
Falcon (Front engine)

Stag BS-II  Double Decker 

TRUCKS

4x2 Haulage models  Ecomet

4x2 and Multi-axle Tipper  Tractor 

Multi Axle vehicles

DEFENCE VEHICLES

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ShortChassisBus  Field artillery tractor
Comet 4x4Topchi field Artillery tractor  Long Chassis Bus

Stallion 6x6  Stallion truck fire fighting

SPECIAL VEHICLES

Hippo tractor  Stallion Mk III Tipper 
Hippo Tipper Beaver tractor  Rapid Intervention Vehicle

Beaver Haulage  Hippo Haulage

ENGINES

Genset application  Marine application

Industrial application  DG sets for exports

3.2. Four P’s (Product, Price, Place, Promotion)

Product In Marketing Mix Of Ashok Leyland

The products manufactured by Ashok Leyland fall under these broad categories

 Buses: Passenger buses with capacity of 19-80 seating seats. The flagship
BEST buses and double Decker buses in Mumbai and the ibus are the
products of Ashok Leyland.

 Trucks: main focus on 16-25 ton range of trucks, with presence in all
segments from 7.5 tons to 49 tons. Axle lorry with custom-built cabin is
very popular in this segment.

 Light, medium and heavy commercial vehicles for various industrial and
transport utilities are made by Ashok Leyland.

31
  Defense: road mobile launchers, protection armored vehicles, army trucks
etc are the flagship products in this segment.

 Power Solutions

Place In Marketing Mix Of Ashok Leyland

The products are exported to various countries like Ghana, Bangladesh, and Sri
Lanka etc and with various joint ventures in different countries the brandAshok
Leyland has made a global presence. The main manufacturing units across India
are in Ennore and Hosur (Tamil Nadu), Alwar (Rajasthan) and Pantnagar
(Uttarakhand). The units are highly specialized with well trained technicians and
engineers who make sure a flawless vehicle is delivered at the showroom and
ensure proper after sales service is provided to the customer.

Price In Marketing Mix Of Ashok Leyland

In the commercial vehicles segment the major competitor for Ashok Leyland
is Tata Motors. For example Ashok Leyland trucks are in the price range of Rs 13
lacs and Rs 16 lacs in two variants particular whereas similar trucks from
international manufacturer Volvo are slightly higher in price at Rs 14.25 lacs and
Rs 17.85 lacs.

As the trucks and buses have long usage life like 15-20 years minimum what gets
essential is the maintenance cost which can be minimal if the quality of product is
good. So automotive manufacturers like Ashok Leyland if have slightly higher
price on the product with respect to competitors then this assures you the quality
and future savings on the maintenance aspect.

Promotion In Marketing Mix Of Ashok Leyland

The brand’s image is built by years of hard work of thousands of employees

delivering quality products in the automotive industry. But in this competitive
world to stay in the market and protect market share, a brand needs some other
marketing strategies.

After over six decades of their business Ashok Leyland named Mahendra Singh
Dhoni as the brand ambassador. For the first time Ashok Leyland roped in
some celebrity for their multimedia advertisement campaign across
32
all markets addressing all the segments. And the rival company Volvo used the
similar strategy by getting the golfer Jeev Milkha Singh as the brand ambassador
for itself in India.

The values that the promoters have invested in the business are truly revealed by
the patronage that Ashok Leyland has and they truly reflect to be the son of the
soil.

3.3:- STP (Segmenting Targeting and Positioning)

STP marketing is a three-step approach to building a targeted marketing plan. The
"S" stands for segmenting, the "T" for targeting and the "P" for positioning. Going
through this process allows a business owner and marketing consultants or
employees to formulate a marketing strategy that ties company, brand and product
benefits to specific customer market segments.

Segmenting

The segmenting step is essentially a brainstorming activity. You list out all the
potential market segments you could target in a marketing campaign. Niche
companies sometimes have only one target market, while other businesses may
have five or 10 possible segments, or more. Cell phone providers, for instance,
often separate customers by benefits. Some buyers want high-tech gadgetry while
others want dependable communication for travel and emergencies.

Targeting

When you have multiple, distinct market segments, you typically need to
customize marketing campaigns that appeal to each. As you go through the STP
process, you select which segment to target with your upcoming campaign. Using
the cell phone example, you might decide to launch a new campaign to promote
advanced mobile features, media, apps and texting tools to younger, tech-savvy
audiences. For this campaign, you would develop messages and use media tailored
to that market.

33
Positioning

Positioning is how you align your brand or products in the target market. The goal
is to offer something that is bigger, better or more valuable than your competitors
to a particular market segment. For example, Apple attempts to position itself as an
innovative, cutting-edge technology provider to discerning tech buyers who want
top-quality solutions. Your positioning serves as your big-picture guide in building
your marketing campaign

3.4:- Distribution Channels

A distribution channel is a chain of businesses or intermediaries through which a
good or service passes until it reaches the end consumer. It can include
wholesalers, retailers, distributors and even the internet itself. Channels are broken
into direct and indirect forms, with a "direct" channel allowing the consumer to
buy the good from the manufacturer, and an "indirect" channel allowing the
consumer to buy the good from a wholesaler or retailer.

BREAKING DOWN 'Distribution Channel'

A distribution channel is the path by which all goods and services must travel to
arrive at the intended consumer. Conversely, it is also used to describe the pathway
that payments make from the end consumer to the original vendor. Distribution
channels can be short or long, and depend on the amount of intermediaries required
to deliver a product or service.

However, goods and services are sometimes passed to consumers through multiple
channels, a combination of short and long. While increasing the number of ways in
which a consumer can find a good can increase sales, it can also create a complex
system that sometimes makes distribution management difficult. In addition, the
longer the distribution channel, the less profit a manufacturer might get from a sale
due to the fact each intermediary charges for its service.

Three Types of Distribution Channels

34
While a distribution channel can sometimes seem endless, there are three main
types of channels, all of which include a combination of a producer, wholesaler,
retailer and end consumer.

The first channel is the longest in that it includes all four, from producer to the end
consumer. The wine and adult beverage industry is a perfect example of this long
distribution channel. In this industry, thanks to laws born out of prohibition, a
winery cannot sell directly to a retailer. It operates in what is known as the three-
tier system, meaning the winery is required by law to first sell its product to a
wholesaler, who then sells to a retailer. The retailer, in turn, sells the product to the
end consumer.

The second channel is one where the producer sells directly to a retailer, who then
sells the producer's product to the end consumer. This means the second channel
contains only one intermediary. Dell, for example, is large enough where it can sell
its products directly to reputable retailers such as Best Buy.

The third and final channel is a direct to consumer model where the producer sells
its product directly to the end consumer. Amazon, using its own platform to sell
Kindles to its customers, is an example of a direct model, which is the shortest
distribution channel possible.

3.5:- Promotion Strategy

In marketing, promotion refers to any type of marketing communication used to
inform or persuade target audiences of the relative merits of a product, service,
brand or issue. The aim of promotion is to increase awareness, create interest,
generate sales or create brand loyalty. It is one of the basic elements of the market
mix, which includes the four P's: price, product, promotion, and place.[1]

Promotion is also one of the elements in the promotional mix or promotional mix

or promotional plan. These are personal selling, advertising, sales
promotion, direct marketing publicity and may also include event
[2]
marketing, exhibitions and trade shows.  A promotional plan specifies how much
attention to pay to each of the elements in the promotional mix, and what
proportion of the budget should be allocated to each element.
35
Promotion covers the methods of communication that a marketer uses to provide
information about its product. Information can be both verbal and visual.

In ashok Leyland

The brand’s image is built by years of hard work of thousands of employees

delivering quality products in the automotive industry. But in this competitive
world to stay in the market and protect market share, a brand needs some other
marketing strategies.

After over six decades of their business Ashok Leyland named Mahendra Singh
Dhoni as the brand ambassador. For the first time Ashok Leyland roped in
some celebrity for their multimedia advertisement campaign across
all markets addressing all the segments. And the rival company Volvo used the
similar strategy by getting the golfer Jeev Milkha Singh as the brand ambassador
for itself in India.

The values that the promoters have invested in the business are truly revealed by
the patronage that Ashok Leyland has and they truly reflect to be the son of the
soil.

36
37
4.1 Sources of Finance:-

Authorized Issued
Period Instrument Capital Capital -PAIDUP-

From To   (Rs. cr) (Rs. cr) Shares Face Capital

(nos) Value (Rs.

38
 Cr)

Equity
2016 2017 Share 2785.6 284.6 2845876634 1.0 284.6

Equity
2015 2016 Share 2535.6 284.6 2845876634 1.0 284.6

Equity
2014 2015 Share 2535.6 284.6 2845876634 1.0 284.6

Equity
2013 2014 Share 2535.6 266.1 2660676634 1.0 266.1

Equity
2012 2013 Share 400.0 266.1 2660676634 1.0 266.1

Equity
2011 2012 Share 300.0 266.1 2660676634 1.0 266.1

Equity
2010 2011 Share 200.0 133.1 1330338317 1.0 133.0

Equity
2009 2010 Share 200.0 133.1 1330338317 1.0 133.0

Equity
2008 2009 Share 150.0 133.1 1330338317 1.0 133.0

Equity
2007 2008 Share 150.0 133.1 1330338317 1.0 133.0

2006 2007 Equity 150.0 132.4 1323870317 1.0 132.4

39
 Share

Equity
2005 2006 Share 150.0 122.2 1221586776 1.0 122.2

Equity
2004 2005 Share 150.0 118.9 1189294200 1.0 118.9

Equity
2003 2004 Share 150.0 118.9 118929420 10.0 118.9

Equity
2002 2003 Share 150.0 118.9 118929420 10.0 118.9

Equity
2001 2002 Share 150.0 118.9 118929420 10.0 118.9

Equity
2000 2001 Share 150.0 118.9 118929420 10.0 118.9

Equity
1994 2000 Share 150.0 118.9 118929420 10.0 118.9

Equity
1993 1994 Share 100.0 100.0 17100000 5.0 8.6

Equity
1993 1994 Share 100.0 100.0 69513696 10.0 69.5

Equity
1992 1993 Share 100.0 69.5 69513696 10.0 69.5

1991 1992 Equity 100.0 31.5 31496309 10.0 31.5

40
 Share

Equity
1990 1991 Share 50.0 31.5 31496309 10.0 31.5

Equity
1989 1990 Share 50.0 31.3 31342976 10.0 31.3

Equity
1986 1989 Share 25.0 21.4 21390000 10.0 21.4

Equity
1984 1986 Share 25.0 18.1 18130000 10.0 18.1

Equity
1981 1984 Share 25.0 16.5 16500000 10.0 16.5

Equity
1979 1981 Share 25.0 16.5 33000000 5.0 16.5

Equity
1977 1978 Share 25.0 14.0 28038651 5.0 14.0

Equity
1975 1976 Share 15.0 9.3 18692434 5.0 9.3

Equity
1972 1973 Share 10.0 7.8 15577029 5.0 7.8

Equity
1969 1972 Share 10.0 7.8 15578549 5.0 7.8

1965 1966 Equity 10.0 8.6 12575068 5.0 6.3

41
 Share

Equity
1965 1966 Share 10.0 8.6 1766382 2.5 .4

Equity
1963 1964 Share 10.0 5.5 11047464 5.0 5.5

Equity
1960 1963 Share 10.0 5.0 9942998 5.0 5.0

Equity
1959 1960 Share 3.2 3.2 1871476 2.5 .5

Equity
1959 1960 Share 3.2 3.2 4000000 5.0 2.0

Equity
1957 1958 Share 3.2 2.0 3742000 5.0 1.9

Equity
1956 1957 Share 2.0 1.5 1713360 5.0 .9

Equity
1952 1955 Share 2.0 .8 1091360 5.0 .5

Equity
1951 1952 Share .4 .2 242159 5.0 .1

Equity
1951 1952 Share 1.6 .5 276430 15.0 .4

1948 1951 Equity .4 .1 220000 5.0 .1

42
 Share

Equity
1948 1951 Share 1.6 .4 142859 15.0 .2

4.2 Ratio Analysis:-

Mar
Mar '17 Mar '15 Mar '14 Mar '13
'16

Investment Valuation Ratios

Face Value 1.00 1.00 1.00 1.00 1.00

Dividend Per Share 1.56 0.95 0.45 -- 0.60

Operating Profit Per Share (Rs) 7.74 7.92 3.61 0.63 3.29

70.3
Net Operating Profit Per Share (Rs) 66.54 47.66 37.37 46.91
4

Free Reserves Per Share (Rs) -- -- -- -- --

48.9
Bonus in Equity Capital 48.93 48.93 52.34 52.34
3

Profitability Ratios

11.0
Operating Profit Margin(%) 11.90 7.56 1.67 7.02
0

Profit Before Interest And Tax

8.35 9.27 4.45 -2.10 3.95
Margin(%)

43
Gross Profit Margin(%) 8.41 9.32 4.49 -2.11 3.97

10.3
Cash Profit Margin(%) 8.85 4.75 -0.99 4.18
0

10.3
Adjusted Cash Margin(%) 8.85 4.75 -0.99 4.18
0

Net Profit Margin(%) 6.10 2.05 2.46 0.29 3.47

Adjusted Net Profit Margin(%) 6.06 2.04 2.44 0.29 3.45

24.3
Return On Capital Employed(%) 25.97 10.98 -2.01 8.37
7

19.9
Return On Net Worth(%) 7.20 8.17 0.89 13.73
6

25.4
Adjusted Return on Net Worth(%) 22.18 5.70 -14.54 4.56
4

Return on Assets Excluding 21.5

19.00 14.40 12.30 11.87
Revaluations 3

Return on Assets Including 21.5

19.00 17.99 16.72 16.74
Revaluations 3

25.0
Return on Long Term Funds(%) 26.06 11.02 -2.19 9.46
3

Liquidity And Solvency Ratios

Current Ratio 0.88 1.06 0.94 0.78 0.73

Quick Ratio 0.51 0.78 0.69 0.67 0.56

Debt Equity Ratio 0.22 0.34 0.63 1.19 1.11

Long Term Debt Equity Ratio 0.19 0.34 0.63 1.01 0.87

44
Debt Coverage Ratios

11.7
Interest Cover 7.61 1.87 -0.32 1.48
2

Total Debt to Owners Fund 0.22 0.34 0.63 1.19 1.11

15.0
Financial Charges Coverage Ratio 9.58 2.93 0.51 2.49
5

Financial Charges Coverage Ratio 12.2

4.54 2.91 1.90 3.16
Post Tax 0

Management Efficiency Ratios

Inventory Turnover Ratio 8.53 12.30 10.36 8.36 6.58

18.9
Debtors Turnover Ratio 15.10 10.61 7.32 9.42
7

Investments Turnover Ratio 8.53 12.30 10.36 8.36 6.58

Fixed Assets Turnover Ratio 3.71 3.89 1.75 1.26 1.70

Total Assets Turnover Ratio 2.80 2.74 2.15 1.48 1.98

Asset Turnover Ratio 2.72 2.53 1.69 1.22 1.71

Average Raw Material Holding -- -- -- -- --

Average Finished Goods Held -- -- -- -- --

-
Number of Days In Working Capital 35.0 -10.66 -3.54 -3.54 2.63
8

Profit & Loss Account Ratios

73.7
Material Cost Composition 72.34 74.31 72.70 71.50
2

45
Imported Composition of Raw
1.88 2.46 2.28 3.52 6.89
Materials Consumed

Selling Distribution Cost

-- -- -- -- --
Composition

Expenses as Composition of Total

9.12 11.17 14.63 12.99 12.16
Sales

Cash Flow Indicator Ratios

26.6
Dividend Payout Ratio Net Profit 39.56 38.25 -- 36.80
0

18.6
Dividend Payout Ratio Cash Profit 17.56 17.04 -- 19.60
9

79.1
Earning Retention Ratio 87.16 45.25 100.00 -10.74
3

84.3
Cash Earning Retention Ratio 90.87 80.31 -- 69.59
3

Adjusted Cash Flow Times 0.65 1.09 3.99 -- 6.68

4.3 Net profit or Net balance sheet

Balance Sheet of Ashok Leyland ------------------- in Rs. Cr. -------------------
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

46
Total Share Capital 284.59 284.59 284.59 266.07 266.07
Equity Share Capital 284.59 284.59 284.59 266.07 266.07
5,841.4
Reserves 5,122.56 3,812.30 3,007.89 2,892.39
8
6,126.0
Net worth 5,407.15 4,096.89 3,273.96 3,158.46
7
Secured Loans 418.77 674.13 910.00 1,937.30 1,903.46
Unsecured Loans 926.19 1,171.91 1,681.34 1,946.61 1,601.36
1,344.9
Total Debt 1,846.04 2,591.34 3,883.91 3,504.82
6
7,471.0
Total Liabilities 7,253.19 6,688.23 7,157.87 6,663.28
3
Mar '17 Mar '16 Mar '15 Mar '14 Mar '13

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds
5,715.7
Gross Block 5,207.33 8,135.65 8,327.87 7,715.37
8
Less: Revaluation Reserves 0.00 0.00 1,021.81 1,173.93 1,296.65
Less: Accum. Depreciation 744.97 415.35 2,880.10 2,668.00 2,433.49
4,970.8
Net Block 4,791.98 4,233.74 4,485.94 3,985.23
1
Capital Work in Progress 205.86 75.86 120.14 181.53 688.93
2,878.8
Investments 1,980.44 2,648.83 2,789.69 2,337.63
6
2,501.1
Inventories 1,625.01 1,398.53 1,188.70 1,896.02
2

47
Sundry Debtors 859.90 1,250.95 1,257.69 1,299.01 1,419.41
Cash and Bank Balance 911.97 1,593.13 751.29 11.69 13.94
4,272.9
Total Current Assets 4,469.09 3,407.51 2,499.40 3,329.37
9
1,471.0
Loans and Advances 1,456.38 1,879.45 1,677.51 1,458.89
3
5,744.0
Total CA, Loans & Advances 5,925.47 5,286.96 4,176.91 4,788.26
2
5,711.5
Current Liabilities 5,208.70 5,266.80 4,320.21 4,749.58
9
Provisions 616.93 311.86 334.66 155.99 387.20
6,328.5
Total CL & Provisions 5,520.56 5,601.46 4,476.20 5,136.78
2
Net Current Assets -584.50 404.91 -314.50 -299.29 -348.52
7,471.0
Total Assets 7,253.19 6,688.21 7,157.87 6,663.27
3

Contingent Liabilities 665.35 547.55 479.22 374.65 320.70

Book Value (Rs) 21.53 19.00 14.40 12.30 11.87

48
49
5.1:- Performance Analysis of the company
Profitability Ratios

Gross, Operating, Net Profit Margin

The most important ratio is Net Profit Margin percentage or Net margin. It tells us

50
how much out of every sale ASHOKLEY gets to keep after everything else has
been paid for. It is highly variable from one industry sector to another. An ideal
company has consistent profit margins.

Gross Profit Margin = ( Revenue - Cost of Revenue ) / Revenue

Net Profit Margin = Net Income / Revenue

Return on Equity - Ashok Leyland Ltd.

From an investor's perspective, ROE is a key ratio. The ROE (after subtracting
preferred shares) tells common shareholders how effectively their money is being
employed. Ideal long term average ROE should be above 15%.

Average 2 year ROE of Ashok Leyland Ltd. : 21%

Return on Equity = ( Net Income - Preferred Dividend ) / Shareholder's Equity

51
Free Cash Flow - Ashok Leyland Ltd.

RupeesFCF201620172018-12.5B-10B-7.5B-5B-2.5B0BCraytheon.com

Free Cash Flow is a measure which is ignored by most investors. FCF represents
the cash that a company is able to generate after spending the money required to
maintain or expand its Property, Plant and Equipment (PPE) also called as Capital
Expenditure (Capex). FCF can be used by the company to invest in other projects,
thus enhancing shareholder value.

Free Cash Flow = Cash flow from operations - Capital Expenditure

Leverage Ratios

52
Current Ratio

Current Ratio measures the company's current assets against its current liabilities.
Ideally the current ratio should be greater than 1.5. Avoid investing in companies
whose current ratio is less than 1. There are exceptions to this rule, some good
companies can have less than 1 or even a negative current ratio when they recieve
money faster from their customers than they have to pay to their vendors.

Current Ratio = Current Assets / Current Liabilities

Interest Coverage Ratio

53
An interest coverage ratio less than 1.5 is a red flag. The higher the ratio the less a
company is burdened by debt. If a company has no debt or the loan interest is
being paid by interest income from investments or other activities the ratio is zero
which of course is excellent. A negative ratio tells us that the company cannot even
pay its interest on loans from its operating income, stay far away from such
companies.

Interest Coverage Ratio = Operating Income / Interest

Debt to Equity Ratio (D/E)

54
Debt-to-Equity ratio varies across industries but many companies have a ratio
larger than 1, that is they have more debt than equity. If the ratio is very high,
raising more cash through borrowing could be difficult. Capital intensive industries
such as auto manufacturing tend to have a debt/equity ratio above 2, while IT
companies have a debt/equity of under 0.5.

Debt to Equity Ratio = Debt / Shareholder's Equity

Overall Performance

Company Performance

55
Watch the overall performance of revenue and profit, needless to say you should
invest in a company whose numbers are going up. 

5.2:- Reasons for the expansion/ Contraction or diversification of the

company
"If you see our diversification, there will be a pattern and they are not only related
to our core business and strength, but also high margin businesses. For instance,
construction equipment got better margins compared to two-wheelers or passenger
cars," V Sumantran, vice chairman, Ashok Leyland, said.
The diversification includes company's foray into the light commercial vehicle
(LCV) business along with Japanese auto major Nissan, in which around Rs 2,500-
crore has been committed.
"It has been a good start. In the first year we sold 35,000 units of Dost, and now
50,000 units of Dost are on the roads. Recently, we launched a new MPV Stile, and
four more products are in the pipeline, which will also be exported," he said.
The company claims to have captured a 19 per cent market share in the LCV
segment through Dost across the country and has a 28 per cent share in the states

56
where it operates. "We could not go pan-India due to our capacity constraints," he
added.
Similarly, in the backhoe loader segment, which came from its construction
equipment JV with John Deere, it claims to be No. 2 in some of the important
markets. The JV has attracted investment of Rs 250 crore.
On technology and engineering, the footprint was through Albonair, a German
subsidiary that works on reducing vehicle emissions, and Defiance Technologies,
which provides engineering, manufacturing and enterprise services and solutions
for automotive clients.
Defiance Technologies has been working with Nissan on developing the small car.
"Defiance is opening our eyes and that was evident from the recognition we got
from Nissan," said Sumantran, who set a mandate to the company that only 15 per
cent of the business should come from the group companies.

As far as Albonair goes, in which the company had invested euro 40 million, he
said the German subsidiary got around 160 people and had been working on
affordable technologies to reduce emissions for both Indian and global markets.
The German arm claims it has become the single source supplier to a large
European truck market, and Sumantran expects the company to capture 24 per cent
share in Europe, predominantly in the emission control systems, by 2017.
 

5.3:- Comment on Organization Leadership

Ashok Leyland is an Indian automobile manufacturing company headquartered
in Chennai, India. It is owned by the Hinduja Group.[3]

Founded in 1948, it is the 2nd largest commercial vehicle manufacturer in India,

4th largest manufacturer of buses in the world and 12th largest manufacturer of
trucks globally. Operating nine plants, Ashok Leyland also makes spare parts and
engines for industrial and marine applications. It sold around 1,40,000 vehicles
(M&HCV + LCV) in FY 2016. 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 32.1% (FY 2016). With passenger transportation
options ranging from 10 seaters to 74 seaters (M&HCV = LCV), Ashok Leyland is
a market leader in the bus segment. In the trucks segment Ashok Leyland primarily

57
concentrates on the 16 to 25-ton range. However, Ashok Leyland has a presence in
the entire truck range, from 7.5 to 49 tons.

Ashok Leyland's UK subsidiary Opt are has shut down its bus factory

in Blackburn, Lancashire.[4] This subsidiary's traditional home in Leeds has also
been vacated in favor of a purpose built plant at Sherborn-in-Elmet.

5.4:- Market Share / Growth Rate of the company

Ashok Leyland Ltd surpassed industry sales in goods and passenger categories
with a growth rate of nearly 49 per cent in each of the segments, reports a business
daily. 

The Hinduja group company emerged as a clear winner in the Medium & Heavy
Commercial Vehicles (M&HCV) market during FY16, capturing better market
share than rivals, according to the paper. 

Ashok Leyland’s market share in the M&HCV segment climbed to 31 per cent in
FY16, up from 27 per cent in FY15. 

In the bus segment, the company regained its market leadership position, which it
had lost to Tata Motors. Its market share in the bus segment jumped to about 45
per cent in FY16, up from 36 per cent in FY15. 

“We have gained market share in all regions, including South, which accounts for
about half of our volumes. There were 3 major factors that contributed to our
turnaround and gain in market share - network expansion, new product
introductions and realignment of sales and internal operations,” CFO Gopal
Mahadevan told the paper.

The company has ramped up total sales and service points to 1,275 from about 275
in the past 6-7 years - a move that helped improve after-sales support quality,
according to Mahadevan.

58
“While all players had the benefit of market recovery over the past couple of years,
we were able to grow quite disruptively because we had not only strengthened
network and product portfolio, but also became operationally more efficient,”
Mahadevan told the daily.

5.5:- SWOT Analysis of the company

Strengths in the SWOT Analysis of Ashok Leyland :
The leader in domestic market: Ashok Leyland had a strong market share
(28.6%) in the medium and heavy commercial vehicle segment in FY2015. It is the
2nd largest manufacturer of commercial vehicles in India, also it is the 4thlargest
manufacturer of buses in the world. Thus, the strong market position in different
domains gives the company a better brand image and wider customer base.

Strong product portfolio: Ashok Leyland has forayed into a various segment of

heavy, medium and light vehicles which includes buses, trucks, defence vehicles,
etc. The company also offers diesel engines for industrial, marine and generator

59
applications. The strong product portfolio expands the customer base and market
share.
Robust manufacturing capabilities: The strong manufacturing facilities of Ashok
Leyland has spread all over India. It also has facilities in the UK, Czech Republic,
and the UAE. This helps the company to maintain economies of scale.

Weaknesses in the SWOT analysis of Ashok Leyland

Heavily dependent on the domestic market: In FY 2015, Ashok Leyland
generated 87.3% of its revenues from the domestic market. This makes it
vulnerable to any economic and political changes in the country. This gives an
advantage to its prime competitor Tata Motors which operates through a wider
revenue base geographically.
Termination of JV with Nissan: In 2016, a Japanese company, Nissan Motor
Company terminated the 3 JVs signed with Ashok Leyland, ending 8-year-old
business relationships. There were also lawsuits filed against each other creating an
unamicable atmosphere. Such instances can make the company weak as it hurts the
image of the company and also affects the financial condition as well
as operations.
Opportunities in the SWOT analysis of Ashok Leyland
Growing global automotive industry: The Global automotive industry has shown
constant growth in the recent years and thus creates an opportunity for Ashok
Leyland to grab upon. The company should focus on tapping the opportunities
created in the global market, especially in the emerging countries to take advantage
of the growth in the industry and with it expand its footprint over the globe.
Expanding Product portfolio: With its focus on research and development,
Ashok Leyland should look forward to expanding its product portfolio like it has
done in the recent past by introducing different heavy and medium commercial
vehicles. This helps in expanding its market and provides a competitive edge.
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Exports: Many of the competitors have become wary of Ashok Leyland as it has
entered exports of its products in a big way and a bright future is expected of
Ashok Leyland.
Threats in the SWOT analysis of Ashok Leyland
Intense competition: Ashok Leyland faces competition from companies
like Tata Motors, Mahindra & Mahindra, Eicher Motors, Marco polo, etc. The
government has allowed 100% foreign equity ownership in manufacturing vehicles
industry which also leads intensifying competition.
Environmental Regulations: The industry is subjected to constant changes and up
gradation in the environmental regulatory requirements. The company has to
comply with regulations regarding emission levels, noise, safety and pollutant
levels. Such regulations increase compliance costs which could also affect
the pricing strategy of the company.
Volatility in supply affects profitability: Some of the important commodities used
in manufacturing automobiles, including steel, aluminum, copper, zinc have been
extremely susceptible to price changes in the recent years because of the supply-
demand difference. This affects the profitability of the company directly.

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FINDINGS

1.In this organization there is good employer-employee relationship.It targets

100% of its employees to be involved in its continuous improvement
activities by motivating them through various financial and non-financial
incentives.There is a well integration of all the functional departments which
facilitates these of software like ERP .

2. To solve work related problems, QC (Quality Circle) and cross functional team
are made effective.

3. Ashok Leyland has not got a foothold in the luxury trucks segment in
its domestic market

4.The company is increasing its global foot print by entering Asian and African
markets.

5. The company reaches highest market share34.7% in the whole industry.

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Conclusion
The resulted report have been of great help to the study, as an aspirant manager, to
understand the functioning of a major establishment like Ashok Leyland. A
developing economy requires an increasing volume of investments not only in
fixed assets but also in working capital. Because of the scarcity of investible
resources, the rate of growth of such an economy depends to a great extent on the
effective utilization of the working capital. The funds required for carrying out
current operations have been variously called as short-term finance, short-term
funds and working capital. Capital requirements of a business can be fixed capital
and working capital. Fixed capital is that part of resources invested in fixed or
profit earning assets of the business. Working capital represents that part of
resources of the business which makes the business work. The report has also
revealed many unknown facts about the working of a manufacturing unit and
familiarize about the assembling of commercial vehicles.

SUGGESTIONS

The following suggestions derive from the findings of the study. The emergence
of informal groups needs accelerated the innovative capabilities of the employees
in the form of new products and service qualities, which could increase the
competitive space providing to policies to augment career growth through informal
groups participations.

 The HRD practices and informal group participations encompass the various
developmental activities like performance assessment, potential appraisal,
training and development and career planning.
 The company should also incorporate new mechanisms like stress
management, fun at work, touch ponds, competency mapping and retention
strategies.

 They must be ready enough to absorb the qualities to materialize the policy
enforcement of their organization.

 There is a need to link the survey responses across different areas of financial
management. For example, It would be interesting to know is there a link

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 between use of a particular capital budgeting method and use of a particular
source of finance or use of a particular method of determining discount rate.

 Though the conditions in India have improved significantly after economic

reforms, there is a need to study the impact of taxation and government policies
on capital budgeting decisions of firms in India.
 The company can enhance its marketing policies and strategies through
adopting new and modern techniques of marketing.

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