Ashok Leyland, the country’s second largest medium and heavy commercial vehicle company, ended fiscal year 2017-18 with annual truck sales of more than one lakh units, its highest ever.The flagship company of the Hinduja Group has managed to maintain its market share despite intense competition and constraints in production during the year. Managing Director Vinod Dasari spoke to BusinessLine on the sidelines of its Annual Global Conference, held recently in Chennai. He touched on the company’s new initiatives and preparedness for the future. Excerpts:

You have ended FY18 with record sales. What has aided this growth?

Certainly, the market has helped and despite having severe constraints in production because of supply chain related challenges, we still maintained our market share and were selling our vehicles always at a premium. I think that says enough to all those people who were critical, sceptical or negative about our technology and capabilities. Ultimately, the customer decides everything and they have seen good value for money, ease of maintenance and good mileage on our trucks. Many said the company wouldn’t know how to make SCR (selective catalytic reduction) technology.

Remember, we were the first to launch SCR in India. There are five companies in the world that provide SCR systems and we own one of them (Albonair). We will do what is right for India and we did that with iEGR technology. Look at our sales, we have sold more than a lakh trucks powered by iEGR, a result of Indian innovation.

Many things such as a 41-tonne truck, swappable battery model are all Indian innovation.

Given the strong sales of commercial vehicles, is the economy on the right track to achieve higher growth?

We are facing production constraints in meeting demand. For six months, we have been facing challenges in delivering large trucks.

JCB is producing construction equipment like never before. Their sales numbers are hitting the highest levels. Where are these vehicles and equipment going? It is not mining. Coal mining or iron-ore mining have their challenges. All those vehicles and equipment are going to infrastructure development.

Nobody will buy so many tippers to park somewhere. If the economy was not performing, who is consuming all of these?

Many say such record sales are due to the pent-up demand…

Ok, pent-up demand for how long? Many say truck sales could be due to the rated load regime that has kicked in. Fine, if you are loading 50 per cent more and you wanted two vehicles, now you may have to buy three vehicles. But that is a one-time issue.

What is the missing factor in all these things?

I can only say that the demand is at its peak and something positive should be happening. Even our small dealers are selling ten times more than what they used to sell. The cash crunch might be a temporary thing because of logistics issues. I am very bullish about the economy and I am quite satisfied with the growth.

Are you planning capacity expansion with new units?

We are one of the companies that operate on one of the highest return on capital employed (ROCE) levels. A primary driver of shareholders’ wealth is ROCE. We are possibly the only commercial vehicle manufacturer in the world that operates on a negative working capital. We have more plants than all our competitors combined and that doesn’t mean I get more capacities than all of them.

We may invest in de-bottlenecking our existing plants, outsourcing wherever it is necessary and investing in suppliers to improve their capabilities. I don’t think we require a new plant now. Maybe, we might put up a new unit for LCV in Pillaipakkam where we already have some lands.

How is Ashok Leyland getting ready for the future?

There are two important areas which we have not talked about in detail so far. We are sowing the seeds now and that will show very good results in future.

First is our digital strategy. We have created a telematics unit that collects all kinds of data on the truck, sends it back to us as we have created machine learning algorithms etc to improve the performance of the vehicle, driver and so on.

Service mandi (a digital mobile app for locating the nearest local mechanic in India to avail services such as breakdown, repair or maintenance related) is another successful venture. This business is now worth ₹100 crore and we expect this to grow to about ₹500 crore by next year.

Other digital initiatives include Leykart, e-diagnostics, i-Alert.

Another important area is on an emerging trend. Maybe in five years, a truck will become a commodity. There will hardly be any difference between trucks of different brands. Today, we can say this is iEGR and that is SCR, etc. But in future, if you cover the face of the truck, all will look same. So, how do you make money in that environment where differentiation is not possible? One of the things that we learnt is 90 per cent of what our customer spends in a life-time of a vehicle comes after the vehicle is sold. So, we have created a whole new vertical customer solutions business, launched about six months ago, to tap the opportunities in the after-sales segment.

Technology is our core — whether its trucks, buses or electric vehicles. We will continue to focus on Indian innovation. But, how do I partner with my customer for his life-time and how do I partner him not analog-wise, but digitally? This is the new Ashok Leyland we are trying to build.

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