Chairman's Speech - Ashok Leyland Corporate
I am happy to share with you the details of the performance of Ashok Leyland in 2012-13.
With the Indian economy clocking a modest 5% GDP growth last year, a far cry from the nearly 9% annual expansion only 2 years ago, the overall Commercial Vehicle (CV) market suffered a negative growth of 2% over the previous year. In that contraction, the medium & heavy duty segment, your Company's stronghold, had a decline by as much as 25% year over year. The redeeming feature in this dismal scenario, you will be happy to note, is that your Company was able to gain 3% increase in market share.
The overall sales volume was 114,611 vehicles comprising 105,833 vehicles in the domestic market and 8,778 vehicles in exports. Evidently, focused efforts in network development, product actions, customer orientation and brand building have helped to keep your Company ahead of the competition in a challenging period. The aggregate sales turnover was Rs. 12,481.20 Crores in 2012-13 as compared to Rs. 12,904.33 Crores in 2011-12 and Net Profit of Rs. 433.71 Crores as compared to Rs. 565.98 Crores in the previous fiscal.
The Spare Parts business with a revenue of Rs. 1,004 Crores and Power Solutions registering a revenue of Rs. 403 Crores continued to grow though the performance of the Defence business was tepid largely owing to Government constraints and cutbacks.
Notwithstanding the setback in the economy and the consequent impact on the commercial vehicle industry, your Company kept its sights firmly on the future and continued to take measures to reinforce its product portfolio and market standing.
Medium & Heavy Duty Segment: Undaunted by significant depression in this segment, your Company introduced a slew of new products that found ready market acceptance.
The launch of 3718il (10x2) was configured to meet the felt need for a strong, more fuel efficient, rigid truck with higher tonnage. Select multi-axle vehicle models have been offered the new Twin Speed Rear Axle technology for superior fuel efficiency and the customer feedback has been very encouraging.
For the second consecutive year, your Company's traditionally strong Southern markets turned soft.
However, the efforts to enhance your Company's presence in the North, East and West markets in India paid rich dividends. During the year, concerted efforts were made to further improve the reach and presence. There are now more than 450 full-service centers on all major highways across the country equipped to reach a customer within 4 hours and restore a vehicle within 48 hours. As you are aware, your Company pioneered driver training and I am happy to inform you, that as of now five Driver Training Institutes are operational in Tamil Nadu, New Delhi, Madhya Pradesh, Haryana and Orissa with one in Rajasthan, under construction.
Small Commercial Vehicle Segment: Riding the crest of the remarkable growth seen in the Small Commercial Vehicle segment, as well its own continuing success, 'Dost' was able to post an all-India market share of nearly 19% and emerge as the leading brand in most of the 12 markets where it was introduced. Your Company has moved aggressively to establish a network of 100 customer touch points in the markets served and the level of customer service being provided is reportedly setting new benchmarks for the industry.
R&D: Your Company maintained its thrust on R&D with a spend of Rs. 304 Crores representing 2.3% of the sales turnover. To augment your Company's R&D capabilities, a Technical Centre has been established at Warwickshire, UK, to harness the R&D skills available in Europe. In this context, I am also delighted to mention that Optareplc UK, in which your Company has 75.1% equity stake, has won the prestigious Society of Motor Manufacturers and Traders (SMMT) Award for Automotive Innovation 2012, for their all-electric bus model Versa EV.
Maximising Capacities: The ramp up of your Company's Pantnagar plant to reach an annual capacity of 40,000 vehicles was completed with the capability to ramp up to 50,000 per annum. The manufacturing facility at Ras Al Khaimah also reached full capacity and is rolling out vehicles to the Middle East and Africa. In addition, a new globally benchmarked chassis assembly line was opened at your Company's Ennore Unit that is already achieving improved standards in line efficiency and product quality.
Brand Building: The association with your Company's brand ambassador M. S. Dhoni continued and his presence in all forms of brand communication translated into very significant, positive, perceptual shifts towards your Company across target segments and markets. A high decibel TV campaign has generated favourable brand appeal which is invaluable in the evolving competitive market scenario.
Corporate Social Responsibility: Through the year, your Company remained committed to its Green Mission, ceaselessly endeavouring to manufacture vehicles that pollute less, emit less. A high point during the year was the manufacturing units at Pantnagar and Alwar winning the most prestigious National Energy Conservation Awards 2012, awarded by the Ministry of Power, Government of India, for implementing various energy conservation initiatives. 30% of the Pantnagar plant is a green belt and more than 50,000 trees have been planted in this 3-year-old plant.
2013-14: AapkiJeet. HamariJeet.
Going forward, there are shades of opinion on how the global and Indian economic scenario will unfold and in what time frame recovery would take place. Your Company is well apprised of this evolving scenario and is ready for any eventuality.
As in the previous year, your Company will remain focused on short-term actions to assure operational excellence without losing sight of the long-term initiatives aimed to position your Company to be among the Top 10 Truck and Top 5 Bus manufacturers globally. Interestingly, your Company is already the 4th largest bus maker in the world and the challenge will now be to maintain that status with the backdrop of growing domestic competition and global consolidation.
Your Company has always believed that its success lies in enhancing its customers' profitability and therefore has trained its collective focus in listening to the customer and developing appropriate transport solutions. Your Company's promise to all stakeholders remains Aapki Jeet. Hamari Jeet., because of the belief that our success is dependent on the sustained profitability of our customers and partners. Although the forecasts for 2013-14 are not very encouraging, your Company is targeting to position new products in anticipation of the brighter prospects of the business and with an eye on the future. The A-Truck model featuring the Avia cabin will be launched to give further impetus to your Company's plans in the growing Intermediate Commercial Vehicle space. I am happy to report that the in-house developed modern 'Neptune' engine has come through with flying colors in all field trials and is ready for deployment, while later this fiscal, the much awaited N-Truck with the new globally benchmarked cabin will be launched. The 'Dost' CNG will be introduced to the Delhi market shortly.
The new passenger version on the 'Dost' platform, goods and passenger versions of the multi-functional van – 'Stile' and the 6-Ton 'Partner' are slated to hit the Indian roads during this fiscal. Your Company recognises the upcoming challenges this year and is geared to face them confidently.
In closing, I gratefully acknowledge the confidence and faith reposed by you in the Board and the Management team of your Company.
You may have noted that Mr. R. Seshasayee has stepped down as the Executive Vice Chairman at the end of last year after a brilliant career with your Company for nearly 4 decades. On your behalf I would like to acknowledge his signal contribution to the sustained profitable growth of your Company over the years and his guidance for a seamless management transition to under the leadership of the Managing Director Mr. Vinod K. Dasari.
Despite having to face stiff headwinds through the year, I must compliment the attitude and determination shown by the employees of your Company to collectively turn in a praiseworthy market performance. I would also like to place on record my deep appreciation for the support and loyalty of your Company's extended family of customers, dealers and supplier partners and look forward to their continuing association in the years ahead.
Dheeraj G. Hinduja