Professional Documents
Culture Documents
ASHOK LEYLAND
INDEX
SR No.
PARTICULARS
PAGE No.
1.
COMPANY PROFILE
2.
COMPANY STRATEGIES
3.
CORPORATE GOVERNANCE
11
4.
22
5.
CONCLUSION
29
6.
BIBLIOGRAPHY
31
ASHOK LEYLAND
COMPANY PROFILE
Ashok Leyland Limited (hereinafter referred to as the Company or Ashok Leyland) was
founded and incorporated by late Mr. Raghunandan Saran on 07th September 1948 with 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 of Hinduja group of companies (hereinafter referred to as the
group). The group was started in the year 1914 by Late Mr Parmanand Deepchand Hinduja.
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).
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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:
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The Company has the following Subsidiaries:
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
STRATEGIC MANAGEMENT PROJECT | 4
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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.
The Company carried out following Research and Development (R&D) in FY 2014:
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.
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Vehicle Models
specialized applications.
Launch of vehicles with OBD-II systems
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.
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COMPANY STRATEGIES
Ashok Leyland to boost defence 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.
STRATEGIC MANAGEMENT PROJECT | 7
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Greenfield facility on hold
In September 2008, four months after forming the JV, the partners had signed an MoU 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.
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ASHOK LEYLAND
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.
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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.
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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
STRATEGIC MANAGEMENT PROJECT | 13
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regulations. All this requires corporate governance. Without Corporate governance, it is
impossible to enter, survive and succeed the global market.
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SEBI:
SEBI has made corporate governance compulsory for certain companies. This is done to
protect the interest of the investors and other stakeholders.
The Indian corporate scenario was more or less stagnant till the early 90s.
The position and goals of of the Indian corporate sector has changed a lot after the
liberalisation of 90s.
Indias economic reform programme made a steady progress in 1994.
India with its 20 million shareholders is one of the largest emerging markets in terms of
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,
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
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Securities and Exchange Board of India
The Government of India's securities watchdog, the Securities Board of India, announced
market reforms.
SEBI, established in 1988 and became a fully autonomous body by the year 1992 with
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SEBI and Clause 49
SEBI asked Indian firms above a certain size to implement Clause 49, a regulation that
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.
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 nonexecutive 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.
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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
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.
ASHOK LEYLAND
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
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. Shekar Arora, 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.
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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
mandatory
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
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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.
ASHOK LEYLAND
Employee Outreach
Volunteerism
Ashok Leyland encourages employee volunteerism to provide employees an opportunity to look
beyond the call of routine work, to enable them be part of the Companys social initiatives and to
open up an avenue for their social spirit. The key movers of all outreach programmes in the
Units, the volunteers, are involved in several CSR initiatives of the Company.
Ashok Leyland also has payroll contribution to a worthy cause. Under this initiative, the
Company channels employee contribution from their pay every month to help their desired cause
one of the five social organisations working for the marginalised and the vulnerable - identified
by the Company.
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Community Outreach
Ashok Leyland is involved in a number of development initiatives such as construction and
repair of public buildings, drilling public bore wells, erecting bus shelters and putting up
streetlights around its manufacturing facilities. These development initiatives are supported by a
Community Development Scheme contributed and managed by representatives from the
Management and the Union. The manufacturing units have conducted over 100 medical, blood
donation and HIV awareness camps benefiting thousands of people in the immediate community.
Career guidance for high school students, skill development for unemployed youth and
vocational training for women of Self Help Groups around the manufacturing units have been
organised with help from specialists in the respective fields. Computer training is being provided
to economically marginalised students in Hosur at Ashok Leylands
Management Development Centre by the Companys resource people. The students, identified
and selected by Ashok Leyland, are put through a carefully-designed 4-module session and
certified on successful completion of the course. A batch of 25 students is trained every month
and the programme aims at covering 200 students every year. Ashok Leylands FunBus for free
use by differently abled children and children of orphanages, corporation primary schools and
other underprivileged groups based in Chennai continued its successful run last year too.
Driver Outreach
With a view to addressing the wide-ranging needs of the driver community, Ashok Leyland trains
drivers comprehensively on- and off-the-road in its driver training schools in Namakkal (Tamil
Nadu) and Burari (Delhi). Ashok Leyland has also signed an MoU with the Haryana Government
to set up a driver training school in the State.
CSR is a way of life at the driver training centres. For example, Ashok Leyland has rented a
small two-room space for the Alcoholics Anonymous group to conduct alcohol rehabilitation
programme for truck drivers and their families - a gap identified by Ashok Leyland to complete
the comprehensiveness of driver outreach in Namakkal.
ASHOK LEYLAND
Awareness programme on HIV prevention and management is being conducted for convoy
drivers at the manufacturing units on a continuing basis. A holistic health outreach programme
for truck drivers, Arogya, was rolled out this year. Implemented along with a dealer in Andhra
Pradesh, the CSR initiative began its first component of Arogya by conducting comprehensive
health outreach camps for drivers in four major trucking centres in Andhra Pradesh. While the
first component would continue, the second component of Arogya setting up a permanent
health outreach centre within the dealer service centre is in an advanced stage of formulation.
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 Company focus 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.
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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.
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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:
reactions.
Direct Induction Hardening was introduced at Ennore to eliminate the copper plating of
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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.
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CONCLUSION
A key takeaway from Ashok Leylands conference call with Anandrathi Team is managements
optimistic outlook on the Companys growth prospects, in contrast to its view on the industry,
driven by its stronghold in south Indian markets. The Company plans to invest ~`40bn till FY15,
partly on Greenfield capacity of 190,000 LCVs.
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Valuation
The stock trades at 10.5x FY13e. We retain a Sell. Risks. Strong economic growth, rise
in freight rates, greater LCV profitability.
ASHOK LEYLAND
BIBLIOGRAPHY
20
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Retrieved March 13, 2015, from http://www.businessstandard.com/article/companies/ashok-leyland-to-boost-defence-portfolio-
114020700716_1.html
Ashok Leyland-Nissan JV eyes turnaround in 3 years. (2014, July 28). Business
Standard. Retrieved March 13, 2015, from http://www.businessstandard.com/article/Company/ashok-leyland-nissan-jv-eyes-turnaround-in-3-years114072800689_1.html