Introduction of organization

Ashok Leyland is a commercial vehicle manufacturing company based in

Chennai, India. Founded in 1948, the company is one of India's leading
manufacturers of commercial vehicles, such as trucks and buses, as well as
emergency and military vehicles. 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
over 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. The joint venture announced
with Nissan Motors of Japan would improve its presence in the Light
Commercial Vehicle (LCV) segment (<7.5 tons).

The company began in 1948 as Ashok Motors, to assemble Austin cars. The
company was renamed and started manufacturing commercial vehicles in 1955
with equity participation by British Leyland. Today the company is the flagship
of the Hinduja Group, a British-based and Indian originated transnational
conglomerate.

Early products included the Leyland Comet bus which was a passanger body
built on a truck chassis, sold in large numbers to many operators, including
Hyderabad Road Transport, Ahmedabad Municipality, Travancore State
Transport, Bombay State Transport and Delhi Road Transport Authority. By
1963, the Comet was operated by every State Transport Undertaking in India,
and over 8,000 were in service. The Comet was soon joined in production by a
version of the Leyland Tiger.

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 utilized, 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.

Over the years, Ashok Leyland vehicles have built a reputation for reliability
and ruggedness. This was mainly due to the product design legacy carried over
from British Leyland.

Ashok Leyland had a collaboration with the Japanese company Hino Motors
from whom the technology for the H-series engines was bought. Many
indigenous versions of H-series engine were developed with 4 and 6 cylinder
and also conforming to BS2 and BS3 emission norms 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.

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 Fiat SpA, part of the
Fiat Group and Europe's leading truck manufacturer. 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 programme created a state-of-the-art
manufacturing base to roll out international class products. This resulted in
Ashok Leyland launching the 'Cargo' range of trucks based on European Ford
Cargo trucks. 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.

In the journey towards global standards of quality, Ashok Leyland reached a

major milestone in 1993 when it became the first in India's automobile history
to win the ISO 9002 certification. The more comprehensive ISO 9001
certification came in 1994, QS 9000 in 1998 and ISO 14001 certification for all
vehicle manufacturing units in 2002. In 2006, Ashok Leyland became the first
automobile company in India to receive the TS16949 Corporate
Certification.Editor’s note: This is part of a series of articles peeking into clean
car industries and car manufacturers of China, India, South Korea and Germany.

Among many other goals, Ashok Leyland aims to expand its operations to
penetrate into overseas markets. Included in the company’s plans is to acquire
smaller car manufacturers in China and in other developing countries. In
October 2006, Ashok Leyland bought a majority stake in the Czech based-
Avia. Called Avia Ashok Leyland Motors s.r.o., this will give Ashok Leyland a
channel into the competitive European market. According to the company, in
2008 the joint venture sold 518 LCVs in Europe despite tough economic
conditions. Furthermore, the company will expand its product offers into
construction equipment, following a joint venture with John Deere. Newly
formed in June 2009, the John Deere partnership is a 50/50 split between the
companies. The company says negotiation is progressing on land acquisition,
and the production plans are in place. The venture is scheduled to start rolling
out wheel loaders and backhoe loaders in October 2010. Aside from the full
expansion planned for the company, Ashok Leyland is also paying close
attention to the environment. In fact, they are one of the companies showing the
strongest commitment to environmental protection, utilizing eco-friendly
processes in their various plants. Even as they thrust into different directions,
Ashok Leyland maintains an R&D group that aims to uncover ways to make
their vehicles more fuel efficient and reduce emissions.

A fire truck in India manufactured by Ashok Leyland

In fact, even before laws were placed on car emissions, Ashok Leyland was
already producing low-emission vehicles. Back in 1997, they have already
released buses with quiet engines and low pollutant emission based on the CNG
technology. In 2002 it developed the first hybrid electric vehicle. Ashok
Leyland has also launched a mobile emission clinic that operates on highways
and at entry points to New Delhi. The clinic checks vehicles for emission levels,
recommends remedies and offers tips on maintenance and care. This work will
help generate valuable data and garner insight that will guide further
development.

When it comes to the development of environmentally friendly technologies,

Ashok Leyland has developed Hythane engines. In association with the
Australian company Eden Energy, Ashok Leyland successfully developed a 6-
cylinder, 6-liter 92 kW BS-4 engine which uses Hythane (H-CNG,) which is a
blend of natural gas and around 20% of hydrogen. Hydrogen helps improve the
efficiency of the engine but the CNG aspect makes sure that emissions are at a
controlled level. A 4-cylinder 4-litre 63 KW engine is also being developed for
H-CNG blend in a joint R&D program with MNRE (Ministry of New and
Renewable Energy) and Indian Oil Corporation.

The H-CNG concept is now in full swing, with more than 5,500 of the
technology’s vehicles running around Delhi. The company is also already
discussing the wide-scale use of Hythane engines with the Indian government.
Hythane engines may be expected in the near future, but these may not be
brought to the United States as yet. Ashok Leyland’s partnership with Nissan is
also focusing on vehicle, powertrain, and technology development listed under
three joint ventures. With impressive investment, the joint ventures will focus
on producing trucks with diesel engines that meet Euro 3 and Euro 4 emission
standards.

Iraq Army Ashok Leyland truck

In the coming years, Ashok Leyland also has some hybrid trucks and buses in
store for its market. The buses and trucks are set to feature a new electronic
shift-by-wire transmission technology as well as electronic-controlled engine
management for greater fuel efficiency. Ashok Leyland focuses on improving
fuel efficiency without affecting automotive power, and the vehicles will have a
5% improvement on fuel efficiency. Ashok Leyland is also developing electric
batteries and bio-fuel modes.

Ashok Leyland Ltd’s March quarter results were expected to be impressive, as

its monthly vehicle output reports had indicated a 138% jump in volumes. But
what impressed was its net profit growth of 317%, to Rs223 crore, over the
year-ago period, even as sales rose by 139%. Ashok Leyland’s operating profit
margin rose to 13% compared with 10.5%. Higher volume growth, a better
product mix due to higher sales of multi-axle vehicles and tractor trailers, and
cost reduction were key reasons for margin expansion. its estimate for volume
growth in 2011 is conservative, at 15% compared with over 30% in FY2010.

Around 1,200 buses under the Jawaharlal Nehru National Urban Renewal
Mission scheme are yet to be delivered of the 5,098 ordered. Besides, it has
orders on hand from state transport undertakings for another 2,000 buses. The
firm is investing to increase its capacity, with Rs1,200 crore proposed for
expansion plans over the next two years; mainly to increase output of engines
and new generation cabs. Besides, it plans to invest Rs800 crore in joint
ventures. Analysts believe that its Uttarakhand plant is expected to deliver
22,000-25,000 vehicles in fiscal 2011, in its first full year of operation. The
company has also steadily gained market share, from 21-22% in the first quarter
of 2010 to 28-29% in the fourth quarter. One concern is that it is not yet a strong
player in the eastern market. Besides, the southern market, traditionally its
stronghold, has grown by only 15% in volume terms in 2010. The rest of India
(mainly north and west) grew by 40% during the year.

An Ashok Leyland-Nissan joint venture produced light commercial vehicles

(LCVs) from the former's Hosur facility near Bangalore as well as from
Renault-Nissan's car plant near Chennai

Ashok Leyland is the second technology leader in the commercial vehicles

sector of India. The history of the company has been punctuated by a number of
technological innovations, which have since become industry norms. It was the
first to introduce multi-axled trucks, full air brakes and a host of innovations
like the rear engine and articulated buses in India. In 1997, the company
launched the country’s first CNG bus and in 2002, developed the first Hybrid
Electric Vehicle.

The company has also maintained its profitable track record for 60 years. The
annual turnover of the company was USD 1.4 billion in 2008-09. Selling 54,431
medium and heavy vehicles in 2008-09, Ashok Leyland is India's largest
exporter of medium and heavy duty trucks. It is also one of the largest private
sector employers in India - with about 12,000 employees working in 6 factories
and offices spread over the length and breadth of India.

The company has increased its rated capacity to 105,000 vehicles per annum.
Also further investment plans including putting up two new plants - one in
Uttarakhand in North India and a bus body building unit in middle-east Asia are
fast afoot. It already has a sizable presence in African countries like Nigeria,
Ghana, Egypt and South Africa.

Ashok Leyland has also entered into some significant partnerships, seizing
growth opportunities offered by diversification and globalization – with
Continental Corporation for automotive infotronics; with Alteams in Finland for
high pressure die casting and recently, with John Deere for construction
equipment.

As part of this global strategy, the company acquired Czech Republic-based

Avia's truck business. The newly acquired company has been named Avia
Ashok Leyland Motors s.r.o. This gives Ashok Leyland a foothold in the highly
competitive European truck market.

The Hinduja Group also bought out IVECO's indirect stake in Ashok Leyland in
2007. The promoter shareholding now stands at 51%.

Nissan Ashok Leyland

In 2007, the company announced a joint venture with Japanese auto giant
Nissan (Renault Nissan Group) which will share a common manufacturing
facility in Chennai, India. The shareholding structures of the three joint venture
companies are:

• Ashok Leyland Nissan Vehicles Pvt. Ltd., the vehicle manufacturing

company will be owned 51% by Ashok Leyland and 49% by Nissan

• Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain

manufacturing company will be owned 51% by Nissan and 49% by
Ashok Leyland
 • Nissan Ashok Leyland Technologies Pvt. Ltd., the technology
development company will be owned 50:50 by the two partners.

Dr. V. Sumantran, Executive Vice Chairman of Hinduja Automotive Limited

and a Director on the Board of Ashok Leyland is the Chairman of the
Powertrain company and he is on the Boards of the other two JV companies.
The venture, once it takes off, will be one of the largest investments made in
automotive field in the country

iBUS

Ashok Leyland announced iBUS in the beginning of 2008, as part of the future
for the country's increasingly traffic-clogged major cities. Launched as a
concept during the Auto Expo 2008 in India, a vehicle for a first production run
of pilot models should be ready by the end of this year. The start of full
production is scheduled for 2009. The bus will probably be equipped with an
engine from the new Neptune family, which Ashok Leyland also introduced at
this exhibition, which are ready for the BS4/Euro 4 emission regulations and
can be upgraded to Euro 5.

U-Truck

Ashok Leyland, announced sale of vehicles on the new U-Truck platform from
November,2010 with the rolling out of the first set of 10 models of tippers and
tractor trailers in the 16 – 49-tonne segment. Further, another 15 models are set
to enter the market in the next 12 months.

Ashok Leyland Defence Systems

Ashok Leyland Defence Systems (ALDS) is a newly floated company by the

Hinduja Group. Ashok Leyland, the flagship company of Hinduja group, holds
26 percent in the newly-formed Ashok Leyland Defence Systems (ALDS). The
newly floated company has a mandate to design and develop defence logistics
and tactical vehicles, defence communication and other systems. Ashok
Leyland is the largest supplier of logistics vehicles to the Indian Army. It has
supplied over 60,000 of its Stallion vehicles which form the Army's logistics
backbone.

Facilities

• The company has seven manufacturing locations in India:

o Ennore and Hosur, Tamilnadu (Hosur - 1, Hosur - 2, CPPS)
o Alwar, Rajasthan
o Bhandara, Maharastra
o Pantnagar, Uttarakhand

• Ashok Leyland's Technical Centre, at Vellivoyalchavadi in the outskirts

of Chennai, is a state-of-the-art product development facility, that apart
from modern test tracks and component test labs, also houses India's one
and only Six Poster testing equipment

• The company has an Engine Research and Development facility in Hosur

• The company has signed an agreement with Ras Al Khaimah Investment

Authority (RAKIA) in UAE for setting up a bus body building unit in the
Middle East.