Ashok Leyland on growth mode, to focus on exports
As the Indian market is becoming more cyclical off late, Ashok Leyland, the ninth largest truck maker and fourth largest bus maker in the world, is looking at increasing its exports, especially to the Middle East, SAARC, and African markets. It is also looking at Russia, Ukraine and Latin America.
Rajive Saharia, President, Global Sales and Distribution, Ashok Leyland said that the company plans to export 1 CV for every 2 CVs sold in the domestic market. For buses the domestic and export sales ratio is 58:42, T Venkataraman, Senior Vice President, Global Buses, Ashok Leyland said. “We are supplying Euro 5 vehicles to Ukraine, and to Latin America,” he said. Supply of bus kits to Ukraine is on. The local converters build bodies on them.
Saharia said that more trucks were sold overseas last year than buses. “Close to 60% of export sales was through trucks,” he said. As part of its strategy to averse risk and grow faster than the industry, Ashok Leyland exited from some of the STU business owing to “low profitability,” Vinod K Dasari, Managing Director and CEO, Ashok Leyland said. Ashok Leyland has, meanwhile, diversified to innovative products like Captain, Guru, Circuit electric bus, Sunshine school bus with roll-over protection, and the Oyster (safest) school bus in the Gulf. Since its launch the company has sold over 3000 Sunshine school buses. There is a waiting list of 500 vehicles.
Despite a single product (Dost), Ashok Leyland’s LCV portfolio, said Dasari, witnessed a growth of 4%. According to Nitin Seth, President, LCV and Defence, “We are now looking at running faster. We will launch the passenger version of Dost followed by the bigger version of
Dost called the Dost+. An eight-metre long bus on the Mitr platform will be introduced. We will also address the demand for 32-seater school bus and a CNG vehicle. These would be developed in left-hand drive variants as well by keeping in mind the export markets.” Ashok Leyland is keen to tap world’s 80% LCV market that is lefthand drive-oriented. To cater to the market for smaller buses, the left-hand drive Mitr will be its trump card.
Apart from expanding the 3 LCV platforms the company currently has, the plan, according to Seth, is to develop new LCV platforms by 20192020. Well aware of the domestic LCV market turning eight-per cent positive for the first time this year, Seth is looking at hitting a six-lakh volume by 2021. He hopes LCV will be a bigger player with the coming of GST.
In the export markets, Seth is keen to leverage the fact that Nissan LCVs were present in many markets. Filling up the gaps in the LCV product portfolio by developing new platforms, Ashok Leyland is looking at quadrupling the sale of LCVs, with the Nissan joint venture behind it. Ashok Leyland is banking on Dost+, which offers a 1400 kg capacity and rides on 15-inch dia. Wheels, to further increase its LCV market share in the near future. The Dost+ comes equipped with six leaf spring suspension at the rear, and a fourleaf spring suspension at the front.
Owing to its growth potential, Ashok Leyland paid attention to the coal tipper and construction truck market. There has been good uptake in 10x2 and 8x2 mining tippers and construction trucks. It sold over 1500 units according to Dasari. The share of Ashok Leyland’s mining tipper and construction truck market grew 50% over the industry average of 30%, he said.
Providing further impetus to its defence strategy, the supply of Stallion vehicle kits grew 7.4%, from 3076 to 3304 units. In order to cater to 25% of the Defence budget, Ashok Leyland has invested in a new defence vehicle facility at its Ennore plant. According to Dasari, close to 95% of the UN peace keeping force in Africa use Ashok Leyland vehicles. The company has received 4x4 mine protected vehicle order from the Indian Army, he said.
According to Dasari, the market share of Ashok Leyland grew from 24% to 32%. Gopal Mahadevan, Chief Financial Officer, Ashok Leyland, said, “We are attributing growth to addressing the exact needs of the market. We are the only manufacturer to increase the price of our products in January 2017 by 4%. We are also the only one to gain maximum market share in March 2017.”
Of the view that they have seen good growth despite hiking product prices, Mahadevan said, “the solutions we offer are about total cost of ownership. Working on multiple channels, Ashok Leyland increased its points of presence from 50 to 1,600. Putting money on channel expansion rather than discounts, the company concentrated on efficient breakdown services. This was necessary because the vehicles we sell are often misused, and are therefore prone to a breakdown.”
Apart from investing in the channel, Ashok Leyland has also invested in new products. The Boss, Captain, Partner, Janbus, Mitr, Guru, and others are examples. The company leveraged technology to address the requirements of the customers at any given time. There is a clear focus on return on investment at Ashok Leyland when it comes to technology. Mahadevan said, “As far as technology is concerned, ours is the only electric bus that climbed the Rohtang pass without a breakdown.”
Ashok Leyland is building its capabilities in parallel. It is digitising. Digitisation for Ashok Leyland, apart from commonrail engines, means telematics and a slew of ‘support’ technologies. Dasari said, “We have developed a new way of providing telematics in the form of a single device that works on any Ashok Leyland vehicle, and without any kind of engine or associated architecture. It provides driver information, diagnostics, etc., and is found on BSIV CVs.”
Ashok Leyland has developed a scan tool for onboard diagnostics for a fraction of a cost, and sans the need for a laptop. The company has also developed Ley Assist, which according to Dasari is a Bluetoothoperated phone-based tool to diagnose error without any physical connection. Looking at autonomous vehicles and vehicle platoon technologies as the future, Ashok Leyland is working in that direction, though with limited resources.
Mahadevan said, “I have limited Dollars, and I am spending them efficiently. Our net price realisation in March was better than in February, and it is something that is hard to believe but true,” he added.
Vinod K. Dasari, MD & CEO, Ashok Leyland