Vinod Dasari has an interesting goal for his human resources team.

“I have challenged them to have 100 CEOs developed inside the company,” says the Managing Director of Ashok Leyland during a recent interaction in Mumbai. This is part of his plan to get the building blocks in place for the future.

It also explains why the ‘3-Horizon’ strategy is so critical to the entire process. The first portion is the foundation, which comprises quality, people and brand, key elements that need to be continuously enhanced irrespective of the market or the company’s performance.

Quality, people, brand

“You cannot ever tamper with quality, people and brand,” reiterates Dasari while indicating that a leadership development pipeline has been created across hierarchies right from the shop floor level to the top guns. A third of the senior management team is in Japan learning TPM techniques to sharpen their skills.

The next layer in the Horizon pyramid is the ability to compete in terms of the products to be launched, network, pricing strategy, etc. This is essentially short-term and at best, for the next couple of years.

The third aspect of the Horizon vision relates to activities that could impact Ashok Leyland three to five years from now. It is hardly surprising that Dasari spends nearly 40 per cent of his time on Foundation Horizon as well as planning for the future, while it is barely 20 per cent on what needs to be done now. This means that he may not have an idea of sales in a particular month simply because there are capable people handling it.

There is no reason for the MD to micro-manage small details since the larger task is for Ashok Leyland to constantly deliver different value propositions. “To do that, we need a different mindset of people for the future and our entire leadership development pipeline focusses on this,” says Dasari.

People are now being pushed into new businesses within the ecosystem to understand things better. From his point of view, Ashok Leyland is historically about “functional excellence people”, which is a great thing in terms of possessing skills and being able to deliver on a job.

Yet, this may not be enough for the future, where the business paradigm is changing rapidly. “We need to think like entrepreneurs, which means finding news ways to make money,” explains Dasari.

He cites the case of the recent digital initiative, Service Mandi, which is quickly on its way to becoming viable and profitable. Going forward, the team will constantly think of similar businesses, which can hold their own in a rapidly changing landscape.

Going beyond trucks

It is in this context that Dasari drives home the point that Ashok Leyland is no longer just a company that makes trucks for the domestic market. While this accounted for 90 per cent of its business some years ago, it has since come down to 70 per cent and will fall further, even while the numbers will grow.

Beyond trucks, Ashok Leyland’s bus business is the largest in India and among the top five in the world. It is also investing in a brand new platform for light commercial vehicles, which will have left and right-hand-drive options. The defence business is doing well as also the after-market vertical.

In addition, there are new businesses for electric vehicles and customer solutions while a new digital team is in place to take the story forward. Clearly, the idea is to guard against the cyclicality of the truck business.

As Dasari says, this is the time to invest in capabilities that have the potential to become big money spinners in the future. He is, however, categorical that the company needs to come up with solutions the Indian way instead of aping the West.

“I believe in what George Patton once said: ‘Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.’ I live by this motto,” says Dasari. (Patton was a senior officer of the United States Army whose leadership came to the fore during the Normandy invasion in World War II). While telling his “guys to figure out solutions on their own”, the underlying message from the Ashok Leyland MD is to work on Indian innovation, which goes beyond the oft-repeated ‘jugaad’.

At present, Dasari is pleased with the way the truck business is booming. Clearly, the Goods and Services Tax has played a big role here going by the experience in other countries, which showed a consistent eight to ten per cent demand upswing annually.

Infrastructure is also doing its bit and the current pace of road development has fuelled demand for tippers. There is some concern on diesel prices but as he laughingly says, this works well for his company since it makes fuel-efficient trucks. After all, 60-65 per cent of operating costs is taken up by fuel.

“Our business is simple and we complicate it to sound intelligent. Anyone can make a truck that is competitive and helps the customer to be able to make money. No one is buying my truck because of the way it looks,” says Dasari.

By the end of the day, it is about making a vehicle, which is better than everybody else’s and then backing it up with a service network. If the operator’s wheels are not turning, he is not making money. “That is our main focus and it is a relentless pursuit. We need to produce the right vehicle at the right time and in right quantities,” he says.

The forecast

Dasari is also reasonably confident that this boom will continue till 2019, thanks to the focus on infrastructure development, and for a year after that. From April 2020, BS VI emission norms come into force, which will make trucks more expensive following investments in technology where costs will have to be passed on to the end-user.

Given this scenario, it is only logical to expect a fall in demand, but this will be offset by the scrappage policy, which will also be implanted in April 2020. This could see at least 2.5 lakh trucks go off the roads and they will need to be replaced. Even if half the number comes into the market during BS VI, it is still good news for truck-makers.

“I am fairly bullish and think this year will see a 10 per cent increase while next year will be 20 per cent. The year after that might be flat because whatever is the fall with BS VI will be made up by the scrappage policy,” says Dasari.

Going by these projections, truck numbers will increase from the present 3.3 lakh units to 4.5 lakh units in the next two years. Assume it falls by 30 per cent after that during BS VI, this will still be partly made up by the 2.5 lakh old trucks that will head out to the scrapyard. No wonder that Dasari is pretty confident about the future.

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