Moving in line with its vision of entering the global top 10 in M&HCV trucks (>7.5T GVW) and the global top five in M&HCV buses (8m and above) in volume terms, Ashok Leyland has put up a reasonably strong showing in FY13, increasing its M&HCV segment market share, apart from expanding its network and brand awareness across the country.
Presenting the annual results of the Hinduja Group flagship company, Mr. Vinod K. Dasari, Managing Director, said: ”In FY 2012-13, we gained a market share of 3% while the M&HCV segment volumes fell by 25%. This can be attributed to several factors: a growing acceptance for our vehicles, especially the newly launched models, the robust network development programme that has significantly expanded our reach, our sustained brand building efforts that has enhanced the awareness for Brand Ashok Leyland in the market place and the continued success of ‘DOST’ in its first full year of operations. Our other success stories were the Spare Parts and Power Solutions businesses that demonstrated outstanding growth of 31% and 35% respectively and our new products – the 5-axle 3718il (10×2) and the select MAV models offered with the new TSRA technology have found ready customer acceptance.”
The company increased its market share from 23.5 per cent in FY12 to 26.5 per cent in the domestic M&HCV space with a volume of 70,917 vehicles. It gained market share across all truck segments despite the TIV falling across all of them. In buses, it increased its share in all segments except the STU front. The company also made very good progress regionally, expanding its share in the North, East and West.
AL’s first-ever LCV, the DOST, took the market by storm during the year with a volume of 34,917 vehicles and a network of 100 customer touch-points in the 12 markets in which it has been introduced so far. Another major growth driver for AL was its focus on network expansion. In line with its strategy of strengthening its reach to customers, the company widened its service network to over 450 centres across the country, a 26 per cent growth in the last two years.
The new dealerships accounted for nearly 20 per cent of its annual sales, a major share of it coming from new outlets in the North. Two to three years ago, nearly 65 per cent of AL’s total sales came from the southern markets, whereas currently the southern region contributes only around 40 to 45 per cent.
Leyparts, the company’s spares parts division, registered robust growth of 31 per cent, with revenues jumping from Rs. 852 crores in FY12 to Rs. 1,116 crores. The 49 new Leyparts shoppes which were opened during the year have significantly enhanced AL’s brand visibility, as it lines up opening 200 more shoppes in FY14. AL’s Defence business dipped in FY13 owing to Government cutbacks, while its power solutions division grew by 35 per cent.
AL’s international operations faced a challenging year, with total exports totalling 8,778 units, largely owing to losses in key SAARC markets. However, it has grown its sales by 11 per cent in markets outside the traditional SAARC region, making new inroads into markets like Bangladesh, Africa and CIS. The company facility at Ras-al-Khaimah, UAE, currently operates at full capacity, rolling out 140 buses a month.
FY13 saw AL launch some interesting new products and also some refreshes and range-fills. The twin-speed rear-axle truck and the 10×2 truck with pusher lift axle debuted in the market, while refreshed models of the Ecomet and U Truck hit the market as well. In the UK, Ashok Leyland Optare launched the Optare Metrocity midi-bus for the London market.
AL has been consistently working on enhancing the quality and performance of the products delivered to customers. It was the first CV manufacturer to implement the truck-on-truck movement for transporting new vehicles to customers, a move well received by the industry.
Apart from aggressively expanding its sales and service network across India, the company has also gone into a major revamp of its regional sales offices throughout the country. The year also saw AL go all guns blazing in terms of brand awareness, through its mass media campaign with Indian cricket captain MS Dhoni as Brand Ambassador. The media campaign seems to have created a better pull for its products, especially in the northern region.
In terms of financials, Ashok Leyland registered a sales turnover of Rs. 12,481.2 crores during 2012-13 compared to Rs. 12,904.3 crores in the previous fiscal reflecting a drop of 3.3 crores. Net profit was at Rs. 433.7 crores (Rs. 565.98 crores), a fall of 23.4 per cent. Financial expenses at Rs. 376.9 crores (Rs. 255.3 crores) represented a 48 per cent increase due to higher working capital levels during the year. The company plans to invest Rs. 600 crores for capacity expansion this year.
Important launches
The industry is currently witnessing a carry-over of the slow phase which prevailed towards the end of FY13, and is expected to remain the same at least till the end of the first half of FY14. With the ICV and LCV segments tipped to drive growth, the second half of the year is expected to be better than the first.
Commenting on the year ahead, Mr. Dasari said: “While the commercial vehicle market is largely tied to the general economy, the imminent release of funds for several infrastructure projects and a reduction in interest rates bode well for the M&HCV market. We expect that while the market is likely to fall slightly in the first half compared to the previous year, we expect some improvements in the second half of the year.”
AL will be coming out with some much-awaited launches in FY14. The A-Truck or the BOSS, as it will be called, will be AL’s first truck from the Avia range of products. The BOSS, with a GVW of 8 to 15T, will be AL’s challenge to competitor products in the growing ICV segment. “Ashok Leyland is preparing well by building on the successful products launched in 2012-13. We intend to launch a new range of ICV products in July and the heavy truck cab in October. Our JV with Nissan is also planning a slew of new products that will expand our range in the LCV sector”, added Mr. Dasari.
In the LCV space, the AL-Nissan JV will look to build on the runaway success of the DOST through its two new launches – the Stile and the Partner. The CNG variant of the DOST is also set to be launched soon.
The N-truck, set to be unveiled in October, will sport the Next-Gen cab which will be the new face of AL trucks from 16 to 49T. The Neptune engine will also make its debut by the end of the year, around when the JanBus will also hit the roads. The BOSS and the Stile are to be launched in July. This will be followed by the Partner.