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Ashok Leyland steps on it with new growth plan

Murali Gopalan | Updated on March 10, 2018

Looking forward Ashok Leyland is keen on expanding its presence beyond India

Dheeraj Hinduja

Dheeraj Hinduja, Chairman, says focus will be on quality, customer proximity

It may sound clichéd but Ashok Leyland is virtually on a roll. Sure, it was in the headlines this week for consolidating its light commercial vehicle operations with Nissan but there is a clear strategy in place for the overall business.

“One of the main issues we felt is that we did not want to be only Indian and created a new vision for ourselves, which was to be one of the top 10 truck manufacturers and the top five bus makers globally,” said Dheeraj Hinduja, Chairman, in a recent telephone interview from London.

The goal for buses has already been achieved, but Leyland wants to continue this growth, which reflects a new found aggression that has not escaped the attention of rival companies. From Hinduja’s point of view, the winning edge will be achieved only by coming closer to the customer and this is where the company has been pulling out all stops in increasing its network.

“The interaction we have with customers is a lot stronger and what we are really working towards is to ensure that our competitiveness comes from quality, cost and customer proximity that should be second to none,” he says.

Employees of Leyland also realise that staying ahead of the curve is the key to continous growth. “We do not get perturbed if the market share is 29 per cent during one month or 32 (per cent) in the next but we have to be growing long-term every year. That is the mantra everyone has right now,” says Hinduja.

And while youngsters are thronging Leyland today, he reiterates that there needs to be a good blend within. “Although the average age of the management is just over 35 today, you need the grey hair and a combination of both that really makes it work,” he adds. In addition, appropriate growth opportunities and incentive structures give a clear message that not only people can grow, but also encourage others to apply as well.

Leyland is also keen on expanding its presence beyond India, but it is not as if this will mean making a huge splash across the world. “You need to be clear which matrix you are going for. We do not want to go for the western hemisphere whether it is the US, Europe and Japan where there is lots of competition,” says Hinduja.

From the management’s perspective, the key is to ensure that its technology is suited not only for the Indian market and its neighbouring countries, but also capable of taking on all high growth markets like Africa, ASEAN and the Middle East. “We have positioned ourselves very well to grow in these fast growing countries even as we see a slowdown within the global space,” adds Hinduja.

Equally, from a quality perspective, the company is clear that it should be benchmarked with the best whether it is a “European product selling in Germany or a Japanese product in Japan”. Yet, from a cost perspective, it should be “competitive at the Indian market level and not European or Japanese. That is our key differentiator”.

Given the cyclical nature of the commercial vehicle business, Hinduja believes it is important to ensure that there is growth in global operations, after-market/sales, defence as well as the LCV segment.

In fact, it was tough during from 2012-14 that the management realised that it was important to keep the cost structure and breakeven very low. As Hinduja puts it, everyone forgets costs begin increasing during good times, but “we made sure to remain lean and never go through that phase over again in the event of another slowdown”.

It was during 2008-09 when Leyland delivered one of its strongest profits that it decided to diversify by creating new joint ventures. “Yet, reflecting back, we realised that the core of the company is its competency in commercial vehicles. I believe what we have created today has a clear charter in terms of vision, after-sales, global operations and that in itself should create quite a formidable company for the future,” says Hinduja.

On the challenges ahead, he believes technology is taking on a different role in the auto industry.The company is ready with hybrid solutions and electric buses, but these options are expensive. “From an Indian perspective, electric buses are the best bet for emissions but the challenge for manufacturers is to make products even more (cost) competitive,” says Hinduja. The bigger task on hand, however, is in making the transition from BS IV to BS VI in less than four years from now.

Published on September 08, 2016

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