From a net profit of ₹1.83 lakh in its first year to adjusted profits of ₹962 crore in 2015-16, Ashok Leyland has come a long way since it began operations as Ashok Motors on September 7, 1948.
The arrangement to assemble Austin cars and trucks in India and the right to import and manufacture Leyland vehicles in India worked well for the company initially. By the end of 1951, revenues, which stood at ₹35 lakh in the first year, grew to ₹2 crore. Profits moved up to ₹5 lakh. The company sold 1,282 cars and 366 commerical vehicles that year.
But the good times were cut short by irregular issue of import licences, inability to utilise the full production capacity, Austin’s reluctance to invest in Indian manufacturing – and the promoter’s sudden death.
Leyland provided support to the rechristened Ashok Leyland in that period. It gave a licence to Ashok to make 1,000 Comet trucks a year; they proved a roaring success. By 1959, the company obtained licences to bring in other heavy vehicles and declared an 8 per cent dividend, up from 6 per cent.
The 1960s not only brought in expansion in product offerings, but also saw the company focus on localisation of components to improve profitability. Indigenous content increased to 86 per cent 1967, from 35 per cent in 1956, with the local manufacture of crankshafts and rear axles.
Barring some headwinds in the early 1970s, the decade was eventful for Ashok Leyland, which crossed several financial milestones. By 1973, the silver jubilee year, licensed capacity had moved up to 10,000 vehicles. A record number of vehicles – 7,295 – wre sold in 1974, up 40 per cent from the previous year. Turnover crossed ₹100 crore for the first time. Production crossed 10,000 vehicles in 1978; and 1979 saw the company going public.
The company expanded into the medium and light commercial vehicles range towards the late 1970s, setting up plants at Hosur, Bhandara and Alwar. Recession in the early 1980s put the brakes on growth. Volumes remained sticky at around 15,000 units for a few years. In 1987, Leyland International’s holdings were bought over by the Hinduja group in association with technical partner IVECO, ushering in the next phase of growth.
While sales in the mid-1990s received a boost from liberalisation, the 2000s saw the company enter into JVs to expand its product portfolio. It also increased its export presence, added capacities, introduced cost-control initiatives in this period. Self-reliant technology has been a focus area, especially after the Hinduja’s bought out IVECO’s stake in 2006.
In 2015-16, the company sold 1,21,321 vehicles in the domestic market and 13,037 vehicles in the export market. Revenues stood at ₹18,577 crore and operating margins at around 10 per cent.
(With inputs from Moving India on Wheels: The story of Ashok Leyland )