Ashok Leyland (ASHOKLEY)

The Hindu Business Line  Jul 8  Comment 
Hinduja Group flagship company Ashok Leyland is gearing up to expand its light commercial vehicle business, international operations and defence mob
The Economic Times  Jul 6  Comment 
Around 11:35 am, the BSE Midcap index was 0.69 per cent up at 15,411, while the BSE Sensex was 0.46 per cent up at 35,739.
Equitymaster  Jul 6  Comment 
Posted by Equitymaster        ASHOK LEYLAND share price has Zoomed 5% and is presently trading at Rs 132. Meanwhile, the BSE AUTO Index is at 24,617 (Up 1.0%). Among the top Gainers in the BSE AUTO Index today is ASHOK...
The Hindu Business Line  Jul 3  Comment 
How has afforestation made a difference to Ashok Leyland, the company that makes buses and trucks? Going green has helped the company ensure good ambi
The Hindu Business Line  Jul 3  Comment 
Ashok Leyland explains the whys and hows of its ‘factory in a forest’ initiative
The Hindu Business Line  Jul 2  Comment 
Hinduja Group flagship company Ashok Leyland has reported a 28 per cent rise in total sales at 15,791 units in June. The company had sold 12,333 uni
The Economic Times  Jun 26  Comment 
Sell Ashok Leyland Ltd. at a price target of Rs 127 and a stoploss at Rs 134.5 from entry point.
The Hindu Business Line  Jun 25  Comment 
Reliance SecuritiesAshok Leyland (Buy)CMP: ₹131.95Target: ₹156Ashok Leyland is the second largest manufacturer of commercial vehicles in India, the fo
The Hindu Business Line  Jun 21  Comment 
Managing Director Vinod Dasari is focussing on Indian innovation to deliver the right solutions
The Economic Times  Jun 20  Comment 
Buy Ashok Leyland Ltd. at a price target of Rs 143 and a stoploss at Rs 134 from entry point.


Ashok Leyland (NSE:ASHOKLEY) is the second largest commercial vehicle company in India in the medium and heavy commercial vehicle (M&HCV) segment with a market share of 46% among passenger vehicles and a market share of 25% among goods carriers.[1]. With passenger transportation options ranging from 18 seaters to 52 seaters, Ashok Leyland is a market leader in terms of volumes in the bus segment.[2] Eight out of ten metro state transport buses in India are from Ashok Leyland.[2] With over 60 million passengers a day, Ashok Leyland buses carry more people than the entire Indian rail network.[2] The company also has a near 98.5% market share in the Marine Diesel Engines Markets in India.[3]

The company conducts most of its business in India, but it does own a bus assembly plant at RAKIA (UAE) to cater to the market in Gulf region.[4] In order to diversify into the light commercial vehicle market in India, the company entered into a joint venture with Nissan Motor Co. for the development, manufacture, and distribution of light commercial vehicles (LCVs).[5]The two companies also plan to share each others’ dealer network in India and overseas as an extension of this partnership.[5]

Company Overview

Ashok Leyland Limited is engaged in the manufacturing of commercial vehicles and related components. The products of the company include buses, trucks, engines, and defense and special vehicles.[6] Ashok Leyland's bus lines range from 18 seater to 82 seater double-decker buses. The company's haulage vehicles can haul from 7.5 to 49 tons.[6] Ashok Leyland also makes special application vehicles for industrial, marine and genset applications. In addition, the company provides independent testing services and test laboratory consulting for auto original equipment manufacturers and their suppliers.

Ashok Leyland's subsidiaries include Hinduja Foundries Limited, Hinduja Auto Components Limited and Hinduja Automotive (UK) Limited. The Company’s joint ventures include Ashok Leyland Nissan Vehicles Limited, Nissan Ashok Leyland Powertrain Limited, Nissan Ashok Leyland Technologies Limited, Ashok Leyland John Deere Construction Equipment Company Private Limited, Ashley Alteams India Limited and Automotive Infotronics Private Limited.[6]

Ashok Leyland has six manufacturing plants - the mother plant at Ennore near Chennai, two plants at Hosur (called Hosur I and Hosur II, along with a Press shop), the assembly plants at Alwar and Bhandara.[7] The total covered space at these six plants exceeds 450,000 square meters and together employ over 11,500 personnel.[7] The company has a product development facility at Vellivoyalchavadi in the outskirts of Chennai, and an Engine Research and Development facility in Hosur.[7]. It is setting up a new Plant in the North Indian state of Uttarakhand at Pant Nagar.[8] The Plant is designed to produce around 40,000 commercial vehicles to cater to the North Indian market taking advantage of the excise duty and other tax concessions.[8] The company has also announced plans to invest around Rs 30 Billion to more then double its vehicle manufacturing capacity from 84,000 to 184,000 by 2011.[9]

Business and Financial Metrics

First Quarter 2010 Results[10]

Ashok Leyland reported a 156% increase in inventory turnover to Rs. 2,347.98 crores in the quarter ended June 30, 2010. Net Profit at Rs. 122.64 crores was up 15 times against Rs. 7.77 crores in the corresponding quarter of the previous year. Sales of vehicles for the quarter were 21,400 vehicles with domestic volume at 19,460 vehicles and international operations contributing 1,940 vehicles.

Ashok Leyland's profit from operations before other income, financial expenses and exceptional items rose by 8 times at Rs. 173.93 crores. Profit before financial expenses and exceptional items increased over 5 times to Rs. 178.66 crores.

Business Segments

Medium and heavy commercial vehicles (89.03% of revenues)

This segment manufactures medium and heavy commercial vehicles like buses in passenger vehicles sub-segment and trucks in goods carriers sub-segment. In FY 2008, this segment contributed to Rs 68,819 mn in the revenues of Ashok Leyland.[11] The Company sold a total of 18,198 buses and 57,847 trucks in the Indian market during the fiscal 2007-08.[11] The Company registered market share improvement in the bus segment from 40.69% to 45.48%.[12] But it lost market share in the truck segment from 26.36% to 24.9%, due to production constraints arising out of supply chain bottlenecks.[11][13] The Company sold 7,285 vehicles in the overseas markets during 2007-08 – representing an increase of approximately 21% over the previous year.[11]

Engines and spare parts (10.96% of revenues)

In FY2008, this segment contributed Rs 8,472 mn with an increase of 51.55% over the previous year.[11] A total of 12,169 engines were sold, including engines sold under the Leypower brand of generator sets, a new line of business being pursued by the Company.[14]The engines sub-segment contributed Rs 1,921mn to the revenues, a 59% growth over the previous year level of Rs 1,210 mn.[11] During the year the Company also offered factory built genset engines, which accounted for 17% of total engine volume.[14] Spare Parts sales grew by 50% over the previous year and contributed Rs 6,551 mn to the revenues. In addition, spare parts sales in the form of knocked down kits to Indian defense establishment contributed to Rs. 685 million during 2007-08, registering a growth of 45%.[14] This segment has shown a growth of over 50% because of the focus of the company to increase the revenues from this business as it is non-cyclical in nature. The company sees it as an option to insulate itself from the cyclical changes in the economy.[15]

Trends and Forces

Raw material price fluctuations directly affect the operating margin and net profit margin

Raw material costs comprise about 76% of the price of the company's finished products.[16] Any price increase in raw materials has a direct effect on the company's overall operating margin. There is high degree of volatility in steel prices. This volatility not only affects the operating margin but also the inventory management of the steel required for production.[17] In August 2008 steel prices peaked to over 1100$/tonne 40% higher then the steel price in January 2008.[18] On the other hand in March 2009, steel prices fell to 4 year lows of $473/tonne.[19] Tires are also an important part of the raw material required for manufacturing. Tire prices are correlated with rubber prices.

Development of the Indian rail network adversely affects sales

Development of Indian rail network has a direct impact on the sales of medium and heavy commercial vehicles used for long haul. In 2006 Indian railways began building the Railway Freight Corridor.[20] The project plan is to connect all the major cities in India with special track capable of carrying double decker wagon freight trains with axle load of 30 tonnes per wagon, each train having around 200 wagons and a speed of 150 km/hr.[21] Successful completion of the project would increase the freight carrying capacity of Indian railways by 78%[22] This would adversely affect the sales of medium and heavy commercial vehicles. In 2009 the work on the first phase of eastern freight corridor commenced. The entire project is planned to be completed by 2014.[23]


  • Tata Motors - Based in Mumbai, India, Tata Motors Limited is a part of Tata Group. It manufactures commercial and passenger vehicles primarily in India. It offers passenger cars, multi-utility vehicles, and pick-ups; medium and heavy commercial vehicles, such as rigid trucks, tractor trailers, and tippers; intermediate, light, and small commercial trucks; buses; and defense related vehicles. The company, through its subsidiaries, also provides engineering and automotive products, manufactures construction equipment and automotive vehicle components, and supports supply chain activities. It also manufactures machine tools and factory automation products, as well as high-precision tooling and plastic and electronic components for automotive and computer applications. In addition, it provides automotive retailing and services, as well as financing for the vehicles sold by the company. The company markets its products in Europe, Africa, the Middle East, south Asia, south east Asia, and Australia.[24]
  • Eicher Motors (EICHERMOT.EQ-IN) - Headquartered in New Delhi, Eicher Motors Limited manufactures and markets trucks, buses, motorcycles, automotive gears, and components in India. It operates in four segments: Commercial Vehicles, Two Wheelers, Components, and Others. The Commercial Vehicles segment offers CNG trucks, cruiser buses, buses on HCB platform, and tippers. The Two Wheelers segment provides motorcycles and bikes. The Components segment offers gears, gear boxes, construction and earthmoving equipment, and forklifts. The Others segment provides engineering products to automotive, aerospace, heavy engineering, consumer durables, power generation, and other segments. Eicher Motors has a joint venture agreement with AB Volvo (VOLVY).[25]
  • Swaraj Mazda (SWARAJMAZD-BY) - Headquartered in Chandigarh, India, Swaraj Mazda Limited manufactures and sells light commercial vehicles for goods and passenger applications in India. The company also offers specialty vehicles, such as ambulances, dumper placers, water tankers, and troop carriers. In addition, it sells spare parts and scrap. It operates as a subsidiary of Sumitomo Corporation.[26]
  • Force Motors (FORCEMOT-BY) - The Group's principal activity is to manufacture and market utility and light commercial vehicles, agricultural tractors and diesel engines. Its plants are located at Bombay Pune, Akurdi, Pune and Pithampur, District Dhar, Madhya Pradesh.[27] With technical collaboration of MAN AG, Germany, Force Motors has a range of heavy commercial vehicles with a payload capacity ranging from 16 to 50 tonnes.[28]

Market share

As of 2010, Ashok Leyland's market share in India was around 27%.[10]


  1. Indian auto sector,DBS cholomandalam securities Medium and Heavy Commercial Vehicles market
  2. 2.0 2.1 2.2, Ashok Leyland India.
  3. Super brands india,ashok leyland
  4. the hindu, Ashok Leyland signs MoU with RAKIA
  5. 5.0 5.1 domain b, Ashok Leyland, Nissan in joint venture pact to introduce light commercial vehicles in India news
  6. 6.0 6.1 6.2 Reuters: Ashok Leyland Company Profile
  7. 7.0 7.1 7.2 ashok leyland, about us, manufacturing plants
  8. 8.0 8.1 business standard, ashok leyland, new highlights, New Capacities
  9. Auto india, Ashok Leyland planning huge capacity expansion
  10. 10.0 10.1 "Ashok Leyland Q1 Turnover at Rs. 2,348 crores, up 156% Net profit at Rs. 123 crores, up 15 times" July 27, 2010
  11. 11.0 11.1 11.2 11.3 11.4 11.5 Annual report 2007-08,Ashok Leyland – The year in brief
  12. Scribd, auto sector report,DBS cholomandalam securities limited, Structure of Indian CV segment,M&HCV – Passenger Carrier
  13. Scribd, auto sector report,DBS cholomandalam securities limited, Structure of Indian CV segment, M&HCV – Goods Carrier
  14. 14.0 14.1 14.2 Annual report 2007-08,Summary of Profit and Loss Account
  15. Business line,Ashok Leyland to focus on growth of non-truck products
  16. Business standard, EBIDTA margins decline by 150 bps YoY to 8%
  17. One steel, steel and tube holdings limited,chairman's address
  18. High Beam, Builders Feel Squeeze as Steel Prices Jump
  19. Purchasing, Steel-market prices reflect lack of demand at OEM, service center levels
  20. PM lays the foundation stone for the Western Rail Freight Corridor
  21. Vedic Instincts, Aspirations : The Indian Railway Freight Corridor
  22. Business line, Low-profile Lalu, Speech on Railway Budget
  23. Freight corridor, choice of traction, Motive Power Directorate
  24. Linkedin company profile, tata motors
  25. Linkedin company profile, Eicher Motors
  26. Business week, company snapshot, Swaraj Mazda
  27. Wright reports, company profile, Force motors
  28. Linkedin company profile, force motors
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