In a week from now, Ashok Leyland's iconic Managing Director, Mr Ramaswamy Seshasayee, will lay down office and the company's reins will be taken over by a man who has been long groomed for the job ? Mr Vinod Dasari.

Mr Dasari, 43 (currently, the Chief Operating Officer and a whole-time Director), inherits a company that has more firepower in its arsenal than it did ever before, for a few epochal events have either taken place or are in the making.

While 2010-11 will be remembered for a new peak in sales (over 90,000 vehicles) and the launch of the U-truck (which is a range of vehicles produced on a new platform) and the homemade Neptune engine ? both of which could have a discernible bearing on Ashok Leyland's fortunes ? 2011-12 will see the company selling its first light commercial vehicle.

Therefore, the end of this month is exactly the mid-point of a swing ? a transformation that is coincidentally symbolised by the passing of the baton from a man who has debugged a race-car to one who is expected to run it down the track.

Looking back

The year 2010-11 saw the total sales of medium and heavy duty vehicles in the country grow by a heady 35 per cent to 320,000 units. Ashok Leyland would end up with sales of around 90,000 vehicles, close to a 28 per cent market share.

But a notable feature of the sales is the number of U-trucks sold ? 1,600. This, according to the company's Executive Director-Marketing, Mr Rajiv Saharia, exceeded the company's expectations. Considering that U-truck sales were at this level despite production constraints (since removed), Ashok Leyland is prepared to declare the product a success.

The U-truck clicking is significant for Ashok Leyland, in a few ways. The range of trucks made on this platform have common parts, and hence it is possible to keep the parts inventory low ? a step that will go towards Ashok Leyland's stated aim to bring down working capital by about Rs 700 crore. But more significant than inventory management is the ability to be ?far more responsive to customer needs?, because the U-truck vehicles are of modular design.

Neptune engine

The Neptune engine has been put on field trials and the initial feedback, according to Ashok Leyland, is positive. What if the engine ( which is capable of achieving a power of up to 360 hp) does not succeed in the market? ?We still have the H-series engine, which is good for most of our products, and all the products from commercial engine manufacturers,? says Mr Saharia.

Looking ahead

What is in store for the company in 2011-12? The industry volumes will be ?flat to ten per cent,? says Mr Saharia. Ashok Leyland itself expects to sell 100,000 vehicles. Capacity is no constraint ? across its plants it has a capacity of 120,000, which is ?ramp-able to 150,000 in quick time.? The supply side constraints have since been addressed and reaching the target, unlike in 2010-11, will not be hampered on that count.

The challenge is in marketing. The competition will be stiffer, given that for at least two new players ? Daimler and Mahindra Navistar ? it will be the first full year of operations in India.

Mr Saharia points to a uniqueness of the commercial vehicles industry ? the volumes may go up, but the number of customers does not increase much. It is the large ones that buy more and, as such, all the players are after a well-known set of big ticket customers, who, by the virtue of their size, are hardnosed businessmen.

Ashok Leyland admits it will find it difficult to repeat the ?pricing action? of 2010, when it raised prices by 12 per cent, given the heightened competition. On the other hand, any let up in cost pressures is unlikely. Rubber components for sure will cost more, given that rubber prices have touched a historical high of Rs 200 a kg.

With product development having been achieved in 2010, the task for Ashok Leyland in 2011 is to achieve the targeted volumes. Towards this, the company intends to open 100 more dealerships, adding to the existing 350. ?Most of them will be in the North and the East,? Mr Saharia says. Opening new dealerships is easy, but the big deal is to find the 1,500-odd new technicians to take care of servicing. ?It is a big challenge,? Mr Saharia says.

LCV in June

The other big thing about 2011-12 for Ashok Leyland will be the launch of the light commercial vehicles (produced in a joint venture with Nissan). At the moment, all that the company would say is that the project is on schedule and the first vehicle will roll out in June. Formal announcements are to be made next week.

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