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Ashok Leyland is banking on innovative new products to continue in the growth path. The Hinduja Group company will launch 30 new products to improve its performance across light, medium and heavy segments. Claiming to earn a price premium on over 1 lakh trucks sold with ‘intelligent’ EGR technology in FY2017-18.
Vinod K. Dasari, Managing Director of Ashok Leyland said that, his vision was to be in the global top 10 manufacturers of trucks and top 5 manufacturers of buses.
Stating that the company is the fourth biggest manufacturer of buses and the thirteenth biggest manufacturer of trucks, Dasari described FY2017-18 as an interesting year. “The Supreme Court put a ban on the sale of BS III vehicles. With the ‘intelligent’ EGR technology up our sleeve, we could support our channel partners to meet the challenge. We could convert BS III vehicles to BS IV and whatever remained were exported. It was painful, but we could tackle it successfully unlike many others who had to take significant hits,” he said.
Terming FY2017-18 as a year of aggressive competition, Dasari said, “it is necessary to look at how high the margins are rather than how high the discounts are.” The company has earmarked Rs 1000 crore for capital expenditure. Having won an order for 10x10 high mobility vehicles (valued at Rs 100 crore) to carry the Smerch Rockets from the Ministry of Defence (MoD), Government of India, is banking on innovative new products that will address the changing requirements of transporters and fleet operatoRs Aggressively bidding for defence contracts involving mobility needs of the Indian Army, riding alongside its US-based partner Lockheed Martin, the CV maker, won 12 out of the 15 tenders it participated in last year.
Announcing that there was irrational discounting and acerbic competition against the EGR, Dasari stated, “We offered an innovative product range then, and will continue to do so.” Displaying 50 new elements in Chennai recently, including trucks, buses, defence vehicles, spare parts, network and service initiatives, telematics initiatives, gensets and powertrains, Ashok Leyland hinted at a growth strategy that is limited not just to India or just to CVs, but to a wide range of offerings, and in markets outside of India like the Middle East, Africa, Ukraine and Russia.
Said to have begun participating in the Euro 5 Russian market with the supply of Boss 1223 (with 12-tonne GVW and SCR exhaust aftertreatment) in left-hand drive form with heated cabin and heated rear view mirrors, Ashok Leyland displayed (out of the 50 elements) a number of left-hand drive CVs in the form of trucks and buses, underlining its stress on exports and to gain a firm footing in some of the fast growing overseas markets. Some of the interesting left-
hand drive vehicles the company showcased were a left-hand drive Partner with 6500 Kg GVW, 24-seater Mitr bus, 33-seater Oyster air-conditioned staff bus, and 47-seater Falcon school bus with three-point seatbelts. The Falcon and Oyster are made at Ashok Leyland’s Ras Al Khaimah (RAK) facility in the Middle East, which was established in 2010 as a joint venture between Ashok Leyland and the Ras Al Khaimah Investment Authority at an estimated investment of $ 50 million, and an initial capacity to build 2000 buses and trucks.
Doubling up the RAK capacity on the back of the plant creating a new record production, the company is pursuing its overseas ambitions by the creation of the Bangladesh plant with a local partner to gain a local edge. Production at that plant achieved record levels according to Dasari, and the production was ramped up. The new target is set for 200 to 400 vehicles per week. Ashok Leyland has invested in a substantial operation in Dubai, and in the Ivory Coast to tap the Middle East and African markets. The company has also invested in operations in Nepal and Kenya. The strategy followed is through dealerships, local assembly plants, new products and more.
Over 750 units of the Oyster have been sold in the overseas market. The Sunshine school bus and the Captain heavy truck range has been introduced in Nepal. These vehicles, said Dasari, have been positioned at the same price as Japanese vehicles and are continuing to perform very well. Under the gloabl GET programme, Ashok Leyland is investing in people. Averred Dasari, “Graduate engineers were hired from markets like Ivory Coast, Kenya and Bangladesh and brought to India.
Faced with severe production constraints last year, Ashok Leyland enacted a substantial change. Experiencing a 5x change (read growth) in the 10x2 trucks the CV maker made in the period between Q1 and Q4 last year, influenced by GST, and the hub and spoke transportation model, the company sold 158, 612 units last year, marking a growth of 19%, which was slightly less than the industry growth of 20%. An estimated 856453 CVs were sold last year, clocking a growth of 20%. Responding to market needs by launching the 3718 and 3718 Plus multi-axle rigid truck models amounting to a 37-tonne GVW each, Ashok Leyland made substantial changes to the production capacity to tackle constraints.
“We had to increase the capacity overnight. The production of ninespeed gearbox was quadrupuled” informed Dasari. Figuring out a way to hike the production of heavy trucks, Ashok Leyland experienced a good upswing in the North Indian markets. From 18,000 numbers in Q1, the market rose to 43,000 by Q4. It marked a substantial change. In earlier instances, the company would lose market share when the northern markets saw an upswing and the south markets shrunk. The same did not happen, and the upswing in northern markets actually worked to the advantage of the company.
Making substantial investment in network overtime, Ashok Leyland, said Dasari, has been able to hold on to the market share of 34% because of a solid growth in the northern markets which is where we have grown our network. An upswing in the northern markets benefitting Ashok Leyland, the CV OEM over the last 5 years significantly expanded its network. An innovative strategy to include
3S, 1S dealerships and quickservice motorcycle mounted teams is claimed to help. Pushing the digital initiatives like iAlert telematics (that looks far beyond track and trace), LeyAssist, LeyKart, and Servicemandi, Ashok Leyland did its first digital transaction in August 2017. “Since our first digital transaction in August 2017, we have bridged the 50,000th transaction mark in March 2018. Operating only across 3 routes, we reached in March alone a Servicemandi run rate of Rs 100 crore. We created a Rs 100 crore business in 6 months, and we are hoping it to be grow to Rs 500 crore next year,” said Dasari.
Claiming to retain the marketshare despite aggressive competition and other challenges, Ashok Leyland is continues to focus on dealer profitability. Initiatives like Maxserve are said to have led to a substantial improvement in dealer profitability as well as customer satisfaction. “Our dealers were selling Rs 500 crore to Rs 600 crore worth of service 2-3 years ago. The service revenues have doubled through the Maxserve intitiative,” said Dasari.
The other, and a big initiative from the company to expand its reach as well as the market share is the introduction to up to 30 new products, including a 41-tonne rigid 10x2 haulage truck with a 10-tonne parallelogram type four-wheel (high) lift axle. Aimed at those who are looking for a rigid multi-axle truck with a GVW of more than 37-tonne, the 41-tonne truck, called the 4123 will be launched later this year and incorporates a number of innovations like just 2 greasing points, adjustable torque rod on the live axle, a 213cc compressor, and slipper suspension from Meritor.
Employing a unitised front axle, the 4123, according to Dr. N Saravanan, Senior Vice President, Product Development, Ashok leyland, offers higher payload (up to 3.8-tonne more) and is cost efficient. “We have managed to ensure higher payload with adding too much weight to the lift axle despite having to lift 4 wheels. To ensure optimum tyre life, we have developed a system where the lift axle slightly lift when the truck is taking a turn of over 30-degree at slow speeds. The bellows automatically deflate to ensure this.”
Having higher payload and lower maintenance model, according to Dr. Sarvanan, the 4123 comes with a fully-built cabin, and is easy to manoeuvre. Terming the Indian market as weird when asked if a 40-tonne prime mover trailer combination will make more economic sense than to have such a rigid truck, he said, “The tractor-trailer market is evolving, and will take some time to gain in efficiency.”
In the area of gas propelled CVs, Dr Saravanan said, “At some point electric CVs may not make sense from a payload point of view. On a 25-tonne vehicle for example, the battery capacity is so high that a significant amount of payload will be lost. The thought process in CVs therefore is to have electric and other propulsion systems like fuell cell, LNG, CNG, or diesel. LNG or CNG can be had as a standalone propulsion medium too. The challenge is in the supply chain.”
With the move to EuroVI, CVs will become cleaner than CNG without having to deal with the challenges associated with it. Ashok Leyland could look at LNG bus applications, he said. As far as the 4123 10x2 truck is concerned, Dr. Saravanan is hoping for a shift from 37-tonnes, and from 40-tonne tractor-trailer segment in applications like cement, to the 4123 because of the higher payload advantage it offers.
Ashok Leyland is aggressively bidding for defence contracts involving mobility needs of the Indian Army
Vinod K. Dasari, MD, Ashok Leyland, is pursuing a vision to be in the global top 10 truck makers, and in the top 5 bus makers
Ashok Leyland displayed the Guru 1010, and hinted at a growing focus on light and intermediate CVs
Dr N. Saravanan, Senior Vice President, Product Development, Ashok Leyland, is confident of the 41-tonne truck aligning well with the higher tonnage shift in haulage segments like cement