Ashok Leyland: A Footprint that Extends Across 50 Nations

A Brief History

Based in Chennai, India, Ashok Leyland is the 2nd largest commercial vehicle manufacturer in India and the 4th largest manufacturer of buses in the world. It is also the 16th largest manufacturer of trucks globally. Other than this, Ashok Leyland also makes spare parts and engines for industrial and marine applications. It has an annual sales record of about 60,000 vehicles and about 7,000 engines. Ashok Leyland 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 per cent (2007–08). The Company is the market leader in the bus segment by offering passenger transportation options ranging from 19 seaters to 80 seaters.

Market AnalysisAshok Leyland share price closed at Rs 96.25 yesterday (24th June 2016). The share price witnessed a 52 week high and a 52 week low of Rs 112.90 on 13th April 2016 and Rs 68.50 on 29th June 2015 respectively.

International Operations

The growing international footprint of the Company has been made successful by the vehicles it manufactures. These are ideally suited for varying foreign conditions and terrains. The Company is the leader in the bus markets in countries like Sri Lanka, Bangladesh and Mauritius and has significant presence in the Middle East and Africa too. Ashok Leyland is now seeking to make inroads into CIS and Latin America.

Global Footprints

Optare plc: The Company holds a 75.1 per cent stake in Optare plc., a leading bus maker in the UK. Optare is well-known for their innovative, weight-optimized ‘Low Carbon’ range of low-floor, mid-sized and modern range of city buses. These buses operate not only in the UK but also in Continental Europe, North America and further afield.

Lanka Ashok Leyland plc: This is a venture with the Government of Sri Lanka in which Ashok Leyland has a 28 per cent equity holding. The Company supplies chassis in both completely built-up as well as knocked down conditions to LAL, which, in turn, assembles the chassis and builds bodies for the local market.

Ashok Leyland UAE, LLC: With the Ras Al Khaimah Investment Authority (RAKIA), Ashok Leyland has set up a state-of-the-art facility, with an initial annual capacity to manufacture 2,000 international quality vehicles. Strategically located, this plant will feed the growing demands of the GCC and African markets.

Recent Happenings

On March 22nd 2016, Ashok Leyland Defense Systems (ALDS) announced that it selected US global security and aerospace company Lockheed Martin for the pursuit of its Indian Armed Forces Light Specialist Vehicle (LSV) and Light Armored Multipurpose (LAM) vehicle programs.

Investor Rational

Growth in export volume by 31.7 per cent and maintaining leadership position in Sri Lanka, Middle East and Africa.

More than 11 times growth in profit after tax.

Increase in market share of the Medium & Heavy Commercial Vehicle (M&HCV) segment from 26.1 per cent to 28.6 per cent in the face of fierce competition.

Increase in market share in the immediate vehicle domain enabled by the newly introduced BOSS range.

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