Dear Shareholders,
I have great pleasure in informing you that your Company has achieved
excellent results last year. Considering the uncertain industry outlook which loomed at
the beginning of the year, the performance truly exemplifies the immense resilience Ashok
Leyland possesses in braving the odds and emerging successfully. I would like to, on your
behalf, congratulate and thank the entire team in Ashok Leyland and its wider ecosystem
for their conscientious efforts to make it possible.
Reflecting on our endeavour last year, it can be noted that our journey
has not been an easy one. There was volatility in commodity prices which pushed up costs,
that could not be fully recovered in pricing due to unprecedented competitive pressures.
Due to a combination of economic factors, the commercial vehicle industry had yet to
gather momentum in the latter part of FY22 and the residual effect remained well into the
initial period of FY23. Amid this turmoil, which had an impact on our market share and
profitability, Ashok Leyland team quickly rejigged its product-market efforts, revamped
the customer orientation and was able to realise the high aspirations that were set. While
stability in the market from the second half of the year buoyed up the sentiment to an
extent, our key success factors were superior product performance, clinical efforts in
cost reduction and above all the “can do - will do" attitude of the Ashok
Leyland team.
To enumerate some of the high points across business units,
* We sold 114,247 Medium and Heavy commercial vehicles in the
domestic market comprising 10,767 buses and 103,480 trucks including
Defence vehicles, registering a growth of 75.5% and posting a market share increase of
approximately 5% over the previous year, closing at 31.8%. It is gratifying that we have
gained share in every region and in almost all the product subsegments, attributable to
the superior performance of AVTR models, focused network development and additional thrust
given on customer centricity.
* Our used vehicle business - ReAL- made good progress during
the year as was expected.
* In the Light vehicle segment, with sales of 66,669 vehicles, the
growth was 27.7% over the previous year. The Bada Dost range posted its highest ever sales
volume since introduction and was awarded RsPick up of the YearRs and a special edition
model was awarded the RsMarketing campaign of the yearRs by ET Now and World Leadership
Congress.
* Despite difficult market situation in target countries which faced
issues of currency depreciation and forex availability, International Operations could
achieve a growth of 2% year over year. We expanded the reach by adding distributors in 12
countries and launched 5 new products and their variants.
* Power Solutions and Aftermarket businesses had clocked a growth of 9%
and 31% respectively in FY23.
* Backing this spectacular market performance, the Operations team kept
pace with the highest ever LCV production and the highest monthly overall vehicles
production along with the highest ever material cost savings.
All these helped us achieve an all-time high revenue of Rs 36,144
Crores with a 67% growth over previous year along with nearly 3 times growth in EBITDA -
from Rs 995 Crores in FY22 to Rs 2,931 Crores, operating profit grew by 120 times and a
cash surplus of ^ 243 Crores at the end of FY23.
On the product and technology front, which is our passion, we are
making good progress in alternate propulsion development. At the Auto Expo held in Delhi
in January this year, a wide range of alternate fuel driven products were displayed across
our LCV, ICV and MDV platforms. This covered CNG, LNG, Hydrogen, Fuel Cell and Battery
Electric options. Switch Mobility, through which we are positioning the electric vehicles,
has gained considerable momentum in FY23 and has already made a mark in the industry. The
electric LCV is slated for introduction later this year.
Recognising the importance of building a talent pipeline in an
environment of homogenous culture, our HR team was on an overdrive launching several
initiatives and cascading them across the board. These initiatives include defining the
organisation purpose as “Transforming Lives & Businesses through Leadership in
Mobility" and driving a new culture throughout the organisation. Preparing future
leaders saw the introduction of a new AL-Young Talent Program and the AL-Emerging Leaders
Program. Another significant milestone in our gender diversity pathway is the establishing
of an all women-run engine assembly line in our Hosur plant.
I would like to take this opportunity to present some of the key
initiatives in other areas that are relevant to our business. Our plants have won 13
CII-Environment, Health, and Safety Excellence Awards. Use of renewable solar power is at
the top of the agenda. Renewable energy now constitutes 57% of our total requirement.
Furthermore, your Company believes sustainability is key to its overall strategy and is
consciously moving from compliance to competitiveness in the overall ESG approach. And as
part of a holistic approach to sustainability, your Company has developed an ESG vision:
“To create and lead sustainable practices, across Environment, Social and Governance
initiatives, delivering outstanding stakeholder value." This vision has been further
operationalized into 10 Focus areas deep diving individually in E, S, and G areas. Moving
forward, your Company is also preparing for some major commitments around becoming
carbon-neutral in its operations in the medium term and becoming Net Zero in the long
term.
Under CSR, our Road To School programme (RTS) is making strides and the
coverage has increased from 98,000 to over 150,000 children. During the year, the RTS
initiative has been extended to J&K and Assam and is gaining ground gradually. RTS has
also received awards from the Tamil Nadu Government, ASSOCHAM, FICCI and SIAM. The Road to
Livelihood programme, which was introduced this year for Classes 9-12 has been well
received by parents and the community. Your Company is determined to expand this further,
not just impacting a greater number of students but also widening its reach to many more
states.
You may recall we had a tagline Aap Ki Jeet Hamari Jeet for about 10
years. It symbolized a mission and a role for us as relevant then. With the changed
business dynamics and our heightened self-belief together with our aspirational vision,
Ashok Leyland management felt that the tag line needs to be renewed and be reflective of
our current outlook. Also, this is our 75th year Anniversary and an occasion
befitting a suitable tagline that galvanises the organisation towards a limitless horizon.
On that basis, Koi Manzil Door Nahin (No Dream too far) has been chosen, which will guide
and power all our strategies and actions from now on.
Moving on, it is reasonably expected that in FY24, the demand is
expected to exceed pre-COVID levels of 2018-19. Government infrastructure spending, strong
replacement demand and a healthy traction from core industries like steel, cement and
mining are expected to drive growth. You will be pleased to note that your Company is
fully prepared to take advantage of the anticipated opportunities without compromising on
market share and profitability targets.
As we move forward in our aspirations positively, I would like to
gratefully acknowledge your continued trust and faith in us and would like to assure you
of progressive growth in shareholder value year after year.
Yours sincerely,
Dheeraj G Hinduja
Chairman
13 June 2023