Driving business forward Ashok Leyland

DRIVING

BUSINESS FORWARD

Global automobile manufacturer Ashok Leyland has strategically utilised the economic downturn to invest heavily, develop new products, and establish beneficial joint ventures. Emma-Jane Batey spoke to Managing Director Vinod K. Dasari, to understand how successful the strategy has been.

AS the second largest automobile manufacturer in India, Ashok Leyland is a major player worldwide. Part of the huge Hinduja Group that employs over 70,000 people across the world, Ashok Leyland is based in Chennai, India. Founded in 1948, Ashok Leyland operates eight plants globally – six in India and two overseas, sells over 60,000 vehicles and 7000 engines every year, and enjoys a domestic market share of around 30 per cent. As the fourth largest manufacturer of buses in the world, and the 15th largest manufacturer of trucks globally, Ashok Leyland is also India’s main manufacturer of logistics vehicles for the defence sector.

The past few years have proved to be pivotal to the development of Ashok Leyland. Managing Director, Vinod K. Dasari, told Industry Europe how the company’s strategic programme of growth and manufacturing focus has already proved positive: “As a company we have used the economic downturn that has characterised India’s manufacturing over the past couple of years to make sure we are truly future-ready. It’s been a great exercise in listening to our customers, evaluating our offer, and developing smart strategies for both our domestic and our core target markets outside India. I’m happy to say it’s been a very successful exercise.” Boosting fortunes

Mr Dasari explained how the recent changes in India’s manufacturing fortunes had impacted Ashok Leyland, and how the company has boosted its fortunes. He continued, “Just three years ago the Indian automotive market was growing nicely, then two years ago it simply fell by 25 per cent, which was totally unheard of. I believe this was largely due to a huge number of international companies investing heavily in India, so it went from being a two or three player market to a 10-player market very quickly. A lot of people saw India as the place to be, which proved a big challenge.”

But rather than ‘restructure ourselves to glory’, Ashok Leyland decided to invest in growth and development in order to compete, Mr Dasari continued. “We certainly did get lean too; we sold some non-core business and cut non-value added costs, including employee costs, but the most important aspects of our strategy were to enter 11 new markets outside India, launch more new products than ever before in our history, and revamp our sales approach to a unique mobile-based system. We also revamped our dealer network and our portfolio, which together has really boosted our onground presence. Essentially, all of these carefully created upgrades

help us get out of what could have been a real hole, but we turned the situation to our advantage and have come out of this economic challenge stronger and brighter than before.”

It is certainly true that difficult backdrop of Ashok Leyland’s strategic development could have broken a lesser company. In 2011, the total volume of the Indian vehicle manufacturing industry stood at 350,000 units, a figure which fell to just 200,000 units in 2012. In 2014, it was back up to 230,000, and this upward trajectory is set to continue. Mr Dasari commented, “So you can see how the very immediate challenges of the falling market could have had a huge impact. But we made all our changes with very clever use of debt, and through reducing our fixed costs where possible, without affecting our quality of performance for both products and people at all.”

Investment in the future

And the investment has certainly paid off. Ashok Leyland’s revenues gained 28 per cent in 2014 compared to 2012, and its export achievements have seen a 30 per cent growth. Mr Dasari added,

“We’re certainly doing the right thing. We will continue to develop in this same positive, investment-focused manner, as we look to further expand our export market in the Middle East, Africa and Latin America. We don’t want to just sell vehicles, we invest in the local market, and build new manufacturing sites locally as appropriate. It’s not about short-term sales, it’s long term investment for our benefit, and the benefit of the local community.

“We’ve also invested in growth in the UK with our acquisition of Optare, which is the largest hybrid bus manufacturer in the world. Optare represents a bright part of our future as we look to complement our extensive bus manufacturing capabilities with ever more ecologically responsible options.” n