Sales slowdown a blessing in disguise for Ashok Leyland

Tags: News
Economic slowdown is bad, especially for companies that have drawn their growth paths. However, commercial vehicle major and Hinduja flagship, Ashok Leyland seem to have gained a lot for the recent slowdown.

The slowdown had offered the company the much needed opportunity to look within and bring in necessary changes to put the machinery on a better growth path, when the market picks up. It had not only looked at reducing costs, both in terms of men and material, but also focused systematically to improve efficiency of the system, even while not taking its eyes of the customers, a senior official of the company said.

“We have done a lot internally to not only reduce costs on various fronts, but also improve efficiency. Simultaneously, we focused on investing in new products, expand geographically as well as enlarge the network. This resulted in a systematic transformation of the company towards its core areas, even while not sacrificing on quality that the customers want,” Vinod K Dasari, managing director, Ashok Leyland told FC. “In fact, we will continue to invest more to bring out better and new products,” he added.

According to him, even as the economic slowdown brought down sales and increased losses, the company relentlessly focused on improving profitability to all, with whom it deals with. These include the suppliers, dealers, customers, community and not but not the least, the shareholders.

“The market has now started coming back. The stock market seems to have understood whatever we did right during the recent past,” he said.

Consider this : Between November last and now, the BSE Auto index grew by about 29 per cent, whereas Ashok Leyland’s stock jumped by 85 per cent during the same period. “We have done quite a few things to improve the company’s operational efficiency and brought in fundamental and structural changes that resulted in reducing the break-even point by about 20 per cent,” Dasari said.

“We structurally reduced our working capital, non-core assets and non-core subsidiaries, while at the same time invested heavily to improve our reach much closer to the customers. We have added 200 Ashok Leyland parts store and 100 containerised work shops deeper into new regions, especially in the north east,” he said.

In addition, the company launched Gulf Ashley Motor, its own dealer network especially in states like Jharkand and Chattishgarh and also Northeast. “There are about 12 of them now functional. We have invested in areas, where our customers are finding value. Whether it is downturn or upturn, our focus on customers and his profitability will be our focus,” Dasari added.

The ‘Tatkal’ plan, announced by the company – wherein a customer’s vehicle problem will be attended to within four hours of receiving a complaint and the vehicle will be up and running in 48 hours – is one more such initiative on this front.

The company expects the domestic market to bounce back sooner than later. The sales during September, where the industry, for bus and trucks, grew by two per cent, Ashok Leyland grew by five per cent, has indicated the good signs of the way forward.

On the export front too, the signs are better. The assembly unit at ras al Khaimah, which initially had a capacity for four units per day, rolled out ten units per day in September. “We will be focusing on several markets including Africa, West Asia , CIS, Latam and Asean for Euro4 products. We will start with buses and then move on to others,” Dasari observed.


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