Harsh Guna

M.Com Sem – II (Accounts)

Roll No. : 37

INDEX

SR No. PARTICULARS PAGE No.

1. COMPANY PROFILE 2

2. COMPANY STRATEGIES 7

3. CORPORATE GOVERNANCE 11

4. CORPORATE SOCIAL RESPONSIBILITY 22

5. CONCLUSION 29

6. BIBLIOGRAPHY 31

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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 Raghunandan’s son, Ashok.

In 2007, the Company’s 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 Leyland’s shares are currently listed on the Bombay Stock Exchange

(Script No. 500477). Ashok Leyland’s 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% (2007–08). 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:

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

including Tractors and Haulage.

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

Platform for export applications.

Introduction based on Neptune Engine.

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The Company has the following Subsidiaries:

Albonair GmbH, Germany

It was established with a vision of being a complete solution provider for reducing

automotive emissions and has, in the short period since inception, developed the

complete solution for Selective Catalytic Reduction (SCR) and Urea Dosing System

(UDS) conforming to Euro 4, 5 and 6 emission standards for commercial as well as

passenger vehicles

Hinduja Leyland Finance Limited

Incorporated in November 2008, Hinduja Leyland Finance (HLF), jointly promoted by

Ashok Leyland and the Hinduja Group, was formed to provide finance for the purchase

of vehicles or equipment. HLF received the NBFC License in March 2010 and have

started operations with an equity of Rs. 225 crores. The strength of the Company lies in

its core competence in fund-based lending for a diversified portfolio of Commercial

Vehicles, Cars, Construction Equipment, Tractors and Used Vehicles and its network that

covers 19 states with over 275 locations.

Hinduja Tech

Hinduja Tech is a Hinduja Group Company incorporated in 2009, with a focus to provide

Engineering, Manufacturing, Information Technology and Enterprise Services and

Solutions for Automotive, Aerospace, Defence, Industrial and General Manufacturing

industries.

Hinduja Tech serves top global companies including 18 of the Fortune Global 500

companies. It is led by a management team with global experience in delivering high-end

solutions in Engineering, ERP and IT services space. As a business solution focused

Company, Hinduja Tech has established Centers of Excellence (CoE) to develop

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solutions to address key customer business imperatives in the Engineering,

Manufacturing and Enterprise domains.

Headquartered at Chennai, India, Hinduja Tech has world class development centres at

Chennai, Bangalore and Pune (India) as well as in Walldorf (Germany). Hinduja Tech

Technologies has its subsidiaries in the US, namely, Hinduja Tech Inc., and in Germany,

Hinduja Tech GmbH, respectively. Hinduja Tech also has branch offices in UK, Dubai

and South Africa.

Ashok Leyland Nissan Vehicle Limited

Ashok Leyland holds 51% of the stakes in Ashok Leyland Nissan Vehicle Limited as per

the Joint Venture with Japanese auto giant Nissan (Renault Nissan Group).

Avia Ashok Leyland Motors s.r.o

The Company carried out following Research and Development (R&D) in FY 2014:

Engines & Aggregates

Development of CPCB-II and Euro IV compliant “Neptune” Series of Engines.

Development of cost effective SCR after-treatment system to meet BS-IV emission

norms.

Development of mid-range Euro V CNG engine.

Development of a 3-Cylinder CNG engine for LCV application.

Indigenization on of 9 Speed Gearbox for M&HCV Vehicles.

Development of Automated Manual Transmission for ICV range of vehicles.

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Vehicle Models

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

Launch of two variants of ‘BOSS’ vehicles in ICV Segment.

Launch of CNG and other variants of DOST

Product on readiness for the JanBus

Development of several U-Truck tractor and tripper models and variants for

specialized applications.

Launch of vehicles with OBD-II systems

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

Alwar Plant has bagged “Golden Peacock Award” for Environment Management from

Hon’able 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.

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Ashok Leyland-Nissan JV eyes turnaround in 3 years

The JV Company reported loss of Rs 174.51 crore in 2013-14

Ashok Leyand is expecting its joint venture with Nissan for light commercial vehicle (LCV) to

turn profitable in the next three years. The Company said it would introduce more variants and

products, which would push the volume, and in turn make the venture profitable.

AL chief financial officer Gopal Mahadevan said, “We expect in two-three years it (the JV) will

be profitable.”

According to AL’s 2013-14 annual report, Ashok Leyland Nissan Vehicle Ltd reported a loss of

Rs 174.51 crore on a turnover of Rs 1,052.15 crore.

Foraying into the LCV segment was important to the Company, said Mahadevan, adding 10-12

years ago the whole trucking industry predominantly was large commercial vehicles, at best 9-12

tonne vehicles. But then the whole country went into a hub-and-spoke arrangement with long-

haulage, medium haulage and then local.

“While other players got into LCV, it was important for Ashok Leyland also to get into the

segment and so we invested with Nissan,” said Mahadevan.

Most of Company’s joint ventures are two-three years old and would require time to start making

money for which volumes has to increase, according to him.

“Dost (the first LCV rolled out by Ashok Leyland) has been a good success. After three years of

launch, the market share of Dost is around 15 per cent. We want to improve by around 300 basis

point, which we hope we can before the end of this year,” he said. A major chunk of the capex

was over and now the Company should start getting benefits.

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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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Scheme of Amalgamation with Ashley Services Limited

The Company had invested in certain associate companies, i.e. Ashley Investments Limited

(AIL) and Ashley Holdings Limited(AHL) (both engaged in holding Strategic investments

primarily in Auto and Auto Component Segment), Ashok Leyland Project Services Limited

(ALPS) (engaged in consultancy services for promoting projects in thermal power, wind energy

etc.) and Ashley Services Limited (ASL) (engaged in trading in commodities, providing

technical and management support). Under a scheme of amalgamation sanctioned by the

Honourable High Court of Madras vide its order dated July 31, 2013, AHL, AIL and ALPS

merged with ASL, effective April 1, 2013. Consequent thereto, ASL became a wholly owned

subsidiary of the Company as on the Appointed date of April 1, 2013.

In a subsequent development, on March 21, 2014, the Honourable High Court of Madras

approved the scheme for amalgamation of ASL (amalgamating company) with Ashok Leyland

from the Appointed Date of July 1, 2013. The said Scheme became effective on March 27, 2014

on filing with the Registrar of Companies. The said Scheme of Amalgamation was also approved

by all the three Stock Exchanges in India with which the Company’s shares have been listed,

namely, Madras Stock Exchange, Bombay Stock Exchange and National Stock Exchange vide

their approvals dated December 19, 2013, January 23, 2014, and January 22, 2014 respectively.

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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 2001–2002, 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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Changing Ownership Structure:

In recent years, the ownership structure of companies has changed a lot. Public financial

Institutions, mutual funds, etc. are the single largest shareholder in most of the large

companies. So, they have effective control on the management of the companies. They

force the management to use corporate governance. That is, they put pressure on the

management to become more efficient, transparent, accountable, etc. The also ask the

management to make consumer-friendly policies, to protect all social groups and to

protect the environment. So, the changing ownership structure has resulted in corporate

governance.

Importance of Social Responsibility:

Today, social responsibility is given a lot of importance. The Board of Directors have to

protect the rights of the customers, employees, shareholders, suppliers, local

communities, etc. This is possible only if they use corporate governance.

Growing Number of Scams:

In recent years, many scams, frauds and corrupt practices have taken place. Misuse and

misappropriation of public money are happening everyday in India and worldwide. It is

happening in the stock market, banks, financial institutions, companies and government

offices. In order to avoid these scams and financial irregularities, many companies have

started corporate governance.

Indifference on the part of Shareholders:

In general, shareholders are inactive in the management of their companies. They only

attend the Annual general meeting. Postal ballot is still absent in India. Proxies are not

allowed to speak in the meetings. Shareholders associations are not strong. Therefore,

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directors misuse their power for their own benefits. So, there is a need for corporate

governance to protect all the stakeholders of the Company.

Globalisation:

Today most big companies are selling their goods in the global market. So, they have to

attract foreign investor and foreign customers. They also have to follow foreign rules and

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

impossible to enter, survive and succeed the global market.

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Takeovers and Mergers:

Today, there are many takeovers and mergers in the business world. Corporate

governance is required to protect the interest of all the parties during takeovers and

mergers.

SEBI:

SEBI has made corporate governance compulsory for certain companies. This is done to

protect the interest of the investors and other stakeholders.

Trend of Corporate Governance in India:

The Indian corporate scenario was more or less stagnant till the early 90s.

The position and goals of of the Indian corporate sector has changed a lot after the

liberalisation of 90s.

India’s 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

the market capitalisation.

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

Governance.

The objective was to develop and promote a code for corporate governance to be adopted

and followed by Indian companies, be these in the Private Sector, the Public Sector,

Banks or Financial Institutions, all of which are corporate entities.

This initiative by CII flowed from public concerns regarding the protection of investor

interest, especially the small investor, the promotion of transparency within business and

industry

A National Task Force was set up. The Task Force presented the draft guidelines and the

code of Corporate Governance (Desirable Corporate Governance Code) in April 1997 (at

the National Conference and Annual Sessions of CII.

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Since 1974, CII has tried to chart new path in terms of the role of an Industry Association

such as itself. It has gone beyond dealing with the traditional work of interacting with

Government of policies and procedures, which impact on industry.

CII has taken initiative in Quality, Environment, Energy, Trade Fairs, Social

Development, International Partnership Building etc. as part of its process of

development and expanding contribution to issues of relevance and concern to industry.

Securities and Exchange Board of India

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

strict corporate governance norms for publicly listed companies in India.

The Indian Economy was liberalised in 1991. In order to achieve the full potential of

liberalisation and enable the Indian Stock Market to attract huge investments from

foreign institutional investors (FIIs), it was necessary to introduce a series of stock

market reforms.

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

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

On April 12, 1988, the Securities and Exchange Board of India (SEBI) was established

with a dual objective of protecting the rights of small investors and regulating and

developing the stock markets in India.

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

witnessed the first major scam masterminded by Harshad Mehta.

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

not have happened.

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

of ‘SEBI Act 1992’ and conferred statutory powers to it.

Since then, SEBI had introduced several stock market reforms. These reforms

significantly transformed the face of Indian Stock Markets.

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SEBI and Clause 49

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

strengthens the role of independent directors serving on corporate boards.

On August 26, 2003, SEBI announced an amended Clause 49 of the listing agreement

which every public Company listed on an Indian stock exchange is required to sign. The

amended clauses come into immediate effect for companies seeking a new listing.

Clause 49

Clause 49, which has recently been revised by the SEBI, of the listing agreement between

listed companies and the stock exchanges is all set to enhance the corporate governance

(CG) requirements, primarily through increasing the responsibilities of the Board,

consolidating the role of the Audit Committee and making management more

accountable

These changes are aimed at moving Indian companies rapidly up the evolutionary path

towards business processes and management oversight techniques.

The Major Changes to Clause 49

Independent Directors

1/3 to ½ 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

of the chief internal auditor.

Whistleblower Policy

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

protected from unfair treatment and termination.

Subsidiary Companies

50% non-executive directors & 1/3 & ½ independent directors depending on whether the

chairman is nonexecutive or executive.

Disclosures

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

from initial public offering/ Remuneration of directors.

Certifications

Reviewed the necessary financial statements and directors’ report; established and

maintained internal controls, disclosed to the auditors and informed the auditors and audit

committee of any significant changes in internal control and/or of accounting policies

during the year.

Clause 49 amended

The Clause 49 of the Listing agreement of SEBI Act is the outcome of Narayana Murthy

Committee, which has come into effect January 1st 2006.

Amended Clause 49 of the Listing Agreement.

Aid to Corporate Governance

1. Control Environment

2. Risk Assessment and Management

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Corporate Governance of Ashok Leyland towards Shareholders, Employees, Customers

and Society

The Board of Directors and the Management of Ashok Leyland are committed to the

enhancement of shareholder value,

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

ethics throughout the organization

By ensuring transparency and professionalism in all decisions and transactions

Achieving excellence in Corporate Governance by conforming to, and exceeding

wherever possible, the prevalent mandatory guidelines on Corporate Governance and by

regularly reviewing the Board processes and the Management systems for further

improvement

The Company has adopted a Code of Conduct for the members of the Board and senior

management, who have all affirmed in writing their adherence to this Code.

Ombudsman

Another significant step has been the appointment of an Ombudsman to deal with any references,

complaints or grievances about the Company, its employees or its dealings.

If the suppliers, employees or customers have any suggestions on governance issues or

grievances or complaints on Ashok Leyland's practices - inclusive of its executives in various

functions - which they feel ought to be raised with the Ombudsman and not with the usual

channels of business, they may do so.

It is advised that the regular business dealings should be through the usual business functional

channels. The Ombudsman will not deal with them under normal circumstances.

The Ombudsman is Mr. Shekar Arora, a former Executive Director of the Company, with an

excellent understanding of Ashok Leyland as an organization and it’s functioning, having been

with the Company for nearly 30 years.

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Code of Conduct for Board members and the Senior Management

Members of the Board and the Senior Management, shall

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

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

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

dealing with all matters relating to the Company.

Apply themselves diligently and objectively in discharging their responsibilities and

contribute to the conduct of the business and the progress of the Company, and not be

associated simultaneously with competing organization’s either as a Director or in any

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

Always adhere and conform to the various statutory and mandatory

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

non-conformities.

Not derive personal benefit or undue advantages (financial or otherwise) by virtue of

their position or relationship with the Company, and for this purpose

i) shall adopt total transparency in their dealings with the Company.

ii) shall disclose full details of any direct or indirect personal interests in

dealings/transactions with the Company.

iii) shall not be party to transactions or decisions involving conflict between their

personal interest and the Company’s interest.

iv) shall not assign his/her office and any assignment so made shall be void.

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

adversely affect the image or reputation of the Company.

Inform the Company immediately if there is any personal development (relating to

his/her business/professional activities) which could be incompatible with the level and

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

Bring to the attention of the Board, Chairman or the Managing Director as appropriate,

any information or development either within the Company (relating to its employees or

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other stakeholders) or external, which could impact the Company operations and which

in the normal course, may not have come to the knowledge of the Board/Chairman or

Managing Director.

Always abide by the above Code of Conduct, and shall be accountable to the Board for

their actions/violations/defaults.

In addition to the above, an Independent Director on the Board of the Company shall:

1. Exercise his/her responsibilities in a bona fide manner in the interest of the Company;

2. Devote sufficient time and attention to his/her professional obligations for informed and

balanced decision making;

3. Not allow any extraneous considerations that will vitiate his/her exercise of objective

independent judgment in the paramount interest of the Company as a whole, while

concurring in or dissenting from the collective judgment of the Board in its decision

making;

4. Not abuse his/her position to the detriment of the Company or its shareholders or for the

purpose of gaining direct or indirect personal advantage or advantage for any associated

person;

5. Refrain from any action that would lead to loss of his/her independence;

6. Where circumstances arise which make an independent director lose his/her

independence, the independent director must immediately inform the Board accordingly.

7. Assist the Company in implementing the best corporate governance practices.

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CORPORATE SOCIAL RESPONSIBILITY

Being a socially responsible and sensitive corporate citizen has always been part of business at

Ashok Leyland. The effort has been to produce vehicles that are eco-friendly, pioneer the

research and development of alternative fuels, provide comprehensive on- and off-road training

to drivers, address the health concerns of the trucking community and reach out to the

community through a number of small initiatives that have had far-reaching benefits for the

Company’s stake holders. Ashok Leyland’s CSR initiatives revolve around the welfare of

employees and their families, the driver community and the immediate community around the

units. In all CSR efforts, the Company partners with other individuals and institutions, including

government agencies, local communities, not-for-profit and social organizations, and academic

institutions which, while complementing the Company’s strengths, helps it to leverage their

expertise, reach and resources.

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 Company’s 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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Reaching Out to Employee Families

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 Company’s 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.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

Disaster and Crisis Management

The first of its kind in the corporate world, Ashok Leyland has provided training in

internationally validated disaster and emergency management modules to over 100 of its

volunteers from its manufacturing units. The volunteers are trained to manage disasters arising

from geological disturbances such as earthquakes; natural calamities such as floods; fire hazards,

industrial and road accidents; and man-made hazards such as pollution. This core group, which is

to train others in their respective units and also people in the adjoining community, are now

certified and empanelled by the Red Cross to be sent out for help during national emergencies

and calamities.

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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 Leyland’s

Management Development Centre by the Company’s 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 Leyland’s ‘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.

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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 day’s 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, Company’s 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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India’s 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.

India’s first Hybrid Electric Vehicle was showcased in 2002 marking the introduction of

another alternative vehicle technology.

India’s 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 country’s 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 Company’s eco-friendly engine technology through reduced emissions,

round-the-year awareness and action programmes are held at operator meets and service

campaigns.

While Company’s comprehensive all-India network of service and genuine parts outlets ensure

scientific vehicle maintenance, regular training is also imparted to Company’s dealers and

customer service personnel at Company’s service training centers and mobile training vans.

Driver Training

The Company was one of the first auto companies to acknowledge the crucial need for well-

trained commercial vehicle drivers. More than 3.5 lakh drivers have been trained at Company’s

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 Company’s business decisions and processes. A

constant review of the processes has been resulting in modifications and replacements with eco-

friendly ones.

India’s first commercial vehicle manufacturer to win the ISO 14001 certification – reflects

Company’s commitment towards ecology espoused in the Environmental Management System

followed at all Company’s manufacturing units.

First to achieve Zero Water Balance: – through various water conservation methodologies

including rainwater harvesting, recycling and effluent treatment.

Waste Treatment: Treating waste to produce usable by-products and safe disposal of unused

waste are the twin goals of effluent treatment plants, set up in all our Units including Ennore

where 1.28 million litres of water is redeemed from sewage every day.

Some more examples of process changes keeping the ‘environment’ in mind:

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

materials and heat treatment scaling at Ennore that eliminates the possibility of silicosis.

The blasting dust from the machines is collected by heavy duty dust collectors and go

into the making of fire-crackers.

Containment of paint particles: At the modern paint shop at Hosur II, the paint

particles in the paint booth are collected immediately by scrubbers to avoid exposure and

adverse reactions.

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

camshafts before the carburising operation.

Increasing the green belt: More than 250,000 trees have been planted and there are over

162,000 meters of grasslands across the Company’s various plants.

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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 Leyland’s conference call with Anandrathi Team is management’s

optimistic outlook on the Company’s 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.

Industry outlook bleak but Company upbeat on growth prospects.

Management estimates ~4% industry growth in FY13, but expects the Company to

outperform with 14% growth in M&HCVs’ reporting sales to 107,000 units (93,000 in

domestic and 14,000 in exports). It expects ‘Dost’ volumes to grow to 32,000 units in

FY13.

Growth to go north due to markets down south.

M&HCV growth, according to management, will be driven by southern markets. While

M&HCV volumes declined ~5% YTD vs industry’s -14%, revival is expected in 3Q,

with early signs showing up. The haulage segment volumes in the country fell ~11% y-

o-y, whereas the South grew 9% y-o-y. Bus volumes are likely to be boosted by

government incentives like JNNURM in Tamil Nadu. The ICV segment grew 8% YTD

higher than the country (flat y-o-y). Political stability in Tamil Nadu, the lifting of the

mining ban from 14-15 iron ore mines and any clarity on Andhra Pradesh’s elections

should help demand.

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Aggressive capex plans.

Ashok Leyland signed an MOU with Tamil Nadu to invest ~`40bn till FY15. The

Company spent `9.5bn on MHCVs till Mar’12, `3bn will be spent in FY13e and ~`7.5bn

in FY14 and FY15 each. It has spent `2bn till Mar’12 on LCVs. An additional `8bn is to

be funded by debt, `5bn from the Nissan JV and `5bn by itself; all for a Greenfield plant

of 190,000 units capacity. The Company seeks an enabling resolution for fund raising

through debt or equity (last option).

Valuation

The stock trades at 10.5x FY13e. We retain a Sell. Risks. Strong economic growth, rise

in freight rates, greater LCV profitability.

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turnaround-in-3-years-114072800689_1.html

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