Ashok Leyland Financial Analysis Essay Example
Ashok Leyland Financial Analysis Essay Example

Ashok Leyland Financial Analysis Essay Example

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Ashok Leyland's Current Status

Ashok Leyland is the second technology leader in the commercial vehicles sector of India behind Tata Motors. The company has also maintained its profitable track record for 60 years. The annual turnover of the company was USD 1.4 billion in 2008-09. Selling 54,431 medium and heavy vehicles in 2008-09, Ashok Leyland is India's largest exporter of medium and heavy-duty trucks. It is also one of the largest private-sector employers in India - with about 12,000 employees working in 6 factories and offices spread over the length and breadth of India.

The company has increased its rated capacity to 105,000 vehicles per annum. Ashok Leyland has also entered into some significant partnerships, seizing growth opportunities offered by diversification and globalization - with Continental Corporation for automotive infotronics; with Alteams in Finland for high pre

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ssure die casting, and recently, with John Deere for construction equipment. The HinduJa Group also bought out IVECO'S indirect stake in Ashok Leyland in 2007. The promoter shareholding now stands for total industry volumes for the preceding years.

Performance in 2009-2010

Against the backdrop of an increase in demand for commercial vehicles, the Company registered sales of 57,139, 21 percent more than the previous year.

This includes 16,405 buses and 40,734 trucks, 2 percent, and 31 percent respectively more than the previous year. The Company lost 2.4 percentage points market share in the Indian medium and heavy commercial vehicle market during the financial year 2009-10, mainly due to loss in share of the bus segment.

The Company sold 5,979 vehicles in the overseas markets during 2009-10. This represents a decrease of approximately 12 percent over the previous year, which

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was largely due to the reduced demand especially in the Middle East (economic downturn), where volume dropped from 2,525 units in 2008-09 to 868 units in 2009-10 i.e. a fall of 66 percent.

Future plans

Further investment plans including putting up two new plants - one in Uttarakhand in North India and a bus body building unit in middle-east Asia are fast afoot. It already has a sizable presence in African countries like Nigeria, Ghana, Egypt, and South Africa. The company plans to penetrate European markets hard-hit by the recession. Toward this end, it has formed a Joint venture with the Czech firm Avia.

Furthermore, the company will expand its product offers into construction equipment, following a Joint venture with John Deere. Newly formed in June 2009, the John Deere partnership is a 50/50 split between the companies. The venture is scheduled to start rolling out wheel loaders and backhoe loaders in October 2010. Aside from the full expansion planned for the company, Ashok Leyland is also paying close attention to the environment.

In fact, they are one of the companies showing the strongest commitment to environmental protection, utilizing eco-friendly processes in their various plants. Even as they thrust into different directions, Ashok Leyland maintains an R&D group that aims to uncover ways to make their vehicles more fuel-efficient and reduce emissions.

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