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Ashok Leyland Ltd.

BSE: 500477 Sector: Auto
BSE 00:00 | 24 Apr Ashok Leyland Ltd
NSE 05:30 | 01 Jan Ashok Leyland Ltd
OPEN 46.40
VOLUME 590158
52-Week high 95.85
52-Week low 33.70
P/E 13.34
Mkt Cap.(Rs cr) 13,195
Buy Price 44.95
Buy Qty 2303.00
Sell Price 45.05
Sell Qty 10.00
OPEN 46.40
CLOSE 46.70
VOLUME 590158
52-Week high 95.85
52-Week low 33.70
P/E 13.34
Mkt Cap.(Rs cr) 13,195
Buy Price 44.95
Buy Qty 2303.00
Sell Price 45.05
Sell Qty 10.00

Ashok Leyland Ltd. (ASHOKLEY) - Director Report

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Company director report

To the Members


Your Directors have pleasure in presenting the Annual Report of Ashok Leyland Limited(AL/the Company) along with the audited financial statements for the financial year endedMarch 31 2018.


(Rs. in Lakhs)



2017-18 2016-17 2017-18 2016-17
Revenue from Operations 2652451.19 2145314.33 2990109.18 2418982.20
Other Income 18976.47 13627.01 19988.42 13069.22
Total Income 2671427.66 2158941.34 3010097.60 2432051.42
Profit Before tax 223071.54 133008.62 257766.60 183326.25
Less: Tax expenses 66812.58 10700.90 75111.55 19611.91
Profit after tax 156258.96 122307.72 182655.05 163714.34
Profit/(Loss) from discontinued operations - - (1273.15) (423.31)
Profit for the period 156258.96 122307.72 181381.90 163291.03
Balance profit from last year 259427.47 256853.43
- F rom Debenture Redemption Reserve to Statement of Profit and Loss 6250.00 5250.00
Profit available for appropriation
Dividend paid during the year (45653.92) (27035.83)
Corporate Dividend tax thereon (9294.07) (5503.86)
Pursuant to amalgamation - (92323.21)
Other Comprehensive Income arising from re-measurement of defined benefit obligation (net of tax) (2252.26) (120.78)
Balance of profit carried to Balance sheet 364736.18 259427.47
Earnings per share (Face value of '1/-)
- Basic (') 5.34 4.24 6.02 5.51
- Diluted (') 5.32 4.24 6.00 5.51


The Commercial vehicle industry in India grew by 23% in the financial year 2017-18 ascompared to the same period last year. The Medium & Heavy Commercial Vehicles(M&HCV) segment showed a growth of 12% and Light Commercial Vehicles (LCV) segmentshowed The althy growth of 25% during the financial year 2017-18 over the same period lastyear. This growth has come on the back of Government's push towards infrastructuredevelopment road construction mining activities and an increased demand from e-commerceand FMCG logistics.

In addition there was strict enforcement on vehicle overloading in some key stateswhich also drove commercial vehicle demand.

Your Company continued to steadily grow sales and revenues across all its businessdivisions. M&HCV sales grew 15.8% to 131432 units (116534 in domestic and 14898 inexport markets). LCV achieved record sales of 43441 vehicles with a growth of 37% overthe previous year. Your Company took multiple initiatives to improve market coverageresulting in strengthening its footprint across the country especially in the Northernand Eastern States of India. Your Company achieved market share growth in almost allsegments and regions of the Country leading to a record full year sales of 102826M&HCV trucks. In addition your Company exported 8000 vehicles primarily to SouthAsian and African markets.

The Power Solutions business witnessed a growth of 14% over the previous yearsupported by new customers and applications in Industrial segment. The Aftermarketbusiness of your Company has been delivering consistent growth. Spare Parts revenuesclocked a 39% growth backed by improved penetration in multiple product groups enhancednetwork reach strategic supply chain Initiatives and deeper customer engagement.

Highlights of performance are discussed in detail in the Management Discussion andAnalysis Report attached as Annexure E to this Report.


During the year under review the Share Allotment Committee at their meeting held onJune 13 2017 had issued and allotted 80658292 fully paid equity shares of '1/- each tothe equity shareholders of the erstwhile Hinduja Foundries Limited (Transferor Company) onthe record date fixed for this purpose i.e. Wednesday June 7 2017 as per the Scheme ofAmalgamation approved by the Honb'le National Company Law Tribunal Division BenchChennai vide order dated April 24 2017.

During the year under review the Nomination and Remuneration Committee (NRC) hadissued and allotted 569175 shares to Mr. Vinod K Dasari Chief Executive Officer andManaging Director upon exercise of stock options granted under Ashok Leyland EmployeesStock Option Plan 2016. On April 11 2018 the NRC had issued and allotted 3727000shares to Mr. Vinod K Dasari Chief Executive Officer and Managing Director upon exerciseof stock options granted under Ashok Leyland Employees Stock Option Plan 2016.

Consequent to the above the issued and paid up share capital of the Company stands at' 2930831101/- of '1/- each as on the date of the report.


The Dividend Distribution Policy framed in line with Regulation 43A of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (SEBI Listing Regulations) isappended to this report and is also uploaded on the Company's website at http://www.ashokleyland . com/sites/default/files/Listing Regulation/ Dividend DistributionPolicy.pdf.

In line with the policy your Directors are pleased to recommend a dividend of '2.43/-per equity share of '1/- each for the financial year ended March 31 2018. Payment ofdividend is subject to the approval of shareholders at the forthcoming Annual GeneralMeeting (AGM) and would involve a cash outflow of '8585850797.73/- including dividenddistribution tax.


There are no material changes and commitments affecting the financial position of theCompany between the end of the financial year and the date of this Report.


Your Company does not propose to transfer amounts to the general reserve out of theamounts available for appropriation and an amount of '1562.59 Crores is proposed to beretained in the profit and loss account.


Long Term Funding:

(a) Secured Non-Convertible Debentures

During the year your Company has fully redeemed NCD Series AL 18 of '100 Crores and AL20 of '150 Crores on due dates. No fresh NCDs were issued during the year.

(b) Rupee Term Loans

Your Company has prepaid Secured Rupee Term Loan of '350.53 Crores. In addition yourCompany repaid Secured Rupee Term Loan of '16.67 Crores on due dates.

(c) External Commercial Borrowings (ECBs)

During the year under review your Company has repaid ECB loan instalments that felldue equivalent to USD 83.33 million on the due dates. No fresh ECB loans were availedduring the year.

As at March 31 2018 Long term borrowings stood at '904 Crores as against '1965Crores on March 31 2017.


Your Company continued to focus on the three levers of people framework - CultureCapability and Capacity with focus towards building a high performing innovative andcaring organisation where it is fun to work for the workforce. An organisation wideemployee engagement survey - "Expressions" was introduced couple of years ago toseek employee feedback and build the culture. The dipstick survey on engagement conductedthis year to assess the effectiveness by choosing a random stratified sample of 20% ofthe total population indicated that the scores have moved significantly over last year.

As your Company steps into seventieth year the competition is tougher and thechallenges are steeper. To keep abreast of the constantly changing environment yourCompany focused on various people development initiatives like 'Game Changers' 'BusinessLeaders Program' 'Emerging Leaders Program' 'Young Talent Program' etc. across levelsbased on the refined Competency Framework.

Your Company launched a premium program HIRE (Harnessing Internal RecruitmentExpertise) aimed at achieving excellence in recruitment by building a pool of certifiedhiring managers.

The focus of the program was to bring in consistency in selection process using ascientific methodology.

Your Company hired talented young women from premier institutes and have put themthrough a long-term Women Leadership Program providing them a platform for learning sothat they can take up leadership roles in business in future. Also to bring ingeographical diversity in the organisation your Company hired Graduate Engineers fromvarious countries and trained them in India.

To imbibe a strong brand your Company initiated several workshops on Living the Brand- Aapki Jeet Hamari Jeet. Your Company also rolled out technical learning interventionsand workshops for upskilling the work force.

Your Company launched the digital HRM and learning platform of SuccessFactors whichprovides the employee with an opportunity to learn anytime - anywhere. Programs such asPOSH (Prevention of Sexual Harassment) Information Security Awareness Diversity andInclusion BS4 Readiness etc. were mandated across the organisation. Your Company useddigital platform to disseminate the Mission Vision Values and Culture that would helpthe employees to imbibe the Ashok Leyland Way.

Glad to mention that your Company got featured on ET now for "India's FinestWorkplaces". Your Company also received TISS LEAPVAULT CLO 2017 award for the BestInduction Training Program and the BML Munjal Awards for "Business Excellence throughLearning and Development".


Your Company is committed to maintain the highest standard of Corporate Governance andadhere to Corporate Governance guidelines as laid out in the SEBI Listing Regulations.All the Directors and the Senior Management personnel have affirmed in writing theircompliance with and adherence to the Code of Conduct adopted by the Company.

The annual report of the Company contains a certificate by the Chief Executive Officerand Managing Director in terms of SEBI Listing Regulations on the compliance declarationsreceived from the Directors and the Senior Management personnel.

The Statutory Auditors of the Company have examined the requirements of CorporateGovernance with reference to SEBI Listing Regulations and have certified the complianceas required under SEBI Listing Regulations. The Certificate in this regard is attached asAnnexure D to this Report.

The Chief Executive Officer and Managing Director/Chief Financial Officer (CEO/CFO)certification as required under the SEBI Listing Regulations is attached as Annexure F tothis Report.

Related party transactions / disclosures are detailed in Note No.

3.8 of the Notes to the financial statements.


As per Regulation 34 of the SEBI Listing Regulations a Business Responsibility Reportis attached as Annexure K to this Report.


Pursuant to Section 129(3) of the Companies Act 2013 (Act) and SEBI ListingRegulations the consolidated financial statements prepared in accordance with the IndianAccounting Standards prescribed by the Institute of Chartered Accountants of India isprovided in the Annual Report.


The Company has 23 Subsidiaries 6 Associates and 2 Joint ventures as on the date ofthe report.

During the year the members of Ashok Leyland (UK) Limited (AL UK) United Kingdomsubsidiary initiated the voluntary winding process and AL UK was dissolved on April 102018.

Automotive Infotronics Limited Joint Venture dissolved on April 5 2017 and AshleyAirways Limited Associate liquidated on December 23 2017.

During the year under review the Company has increased its stake in Hinduja LeylandFinance Limited from 57.20% to 61.85% and in Optare PLC from 75.11% to 99.08%.

The Board of Directors at their meeting held on May 18 2018 approved the Scheme ofAmalgamation of its three wholly owned subsidiaries viz. Ashok Leyland Vehicles LimitedAshley Powertrain Limited and Ashok Leyland Technologies Limited with Ashok LeylandLimited under Sections 230 to 232 of the Act read with relevant Rules as applicablesubject to various regulatory approvals and the Honourable National Company Law TribunalChennai Bench. The Appointed Date for the Scheme of Amalgamation shall be April 1 2018.

A report on the performance and financial position of each of the subsidiariesassociates and joint venture companies is provided in the notes to the consolidatedfinancial statements. Pursuant to the provisions of Section 129(3) of the Act read withRule 5 of the Companies (Accounts) Rules 2014 a statement containing salient features ofthe financial statements of the Company's subsidiaries Associates and Joint Ventures inForm AOC-1 is attached to the financial statements of the Company.

Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited financial statements in respect of the subsidiaries are available on the websiteof the Company.


During the year under review Mr. A K Das Non-Executive NonIndependent Director andMr. Shardul S Shroff Independent Director stepped down from the Board with effect fromJuly 21 2017. The Board wishes to place on record its appreciation for the valuablecontributions made by them to the Board and the Company during their long tenure.

Mr. Dheeraj G Hinduja Chairman retires by rotation at the forthcoming AGM and beingeligible offers himself for reappointment. The resolution seeking approval of the membersfor the re-appointment of Mr. Dheeraj G Hinduja Chairman have been incorporated in theNotice of the AGM of the Company along with brief details about him.

The Independent Directors of the Company have submitted a declaration under Section149(7) of the Act that each of them meets the criteria of independence as provided inSection 149(6) of the Act and there has been no change in the circumstances which mayaffect their status as Independent Director during the year.

The terms and conditions of appointment of the Independent Directors are placed on thewebsite of the Company http://www

The Company has also disclosed the Director's familiarisation programme on its website programme for Independent Directors-update.pdf.

During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than sitting fees commission andreimbursement of expenses incurred by them for attending meetings of the Company.

Pursuant to the provisions of Section 2(51) and 203 of the Act the Key ManagerialPersonnel of the Company are Mr. Vinod K. Dasari CEO & MD Mr. Gopal Mahadevan ChiefFinancial Officer and Mr. N Ramanathan Company Secretary. There has been no change in KeyManagerial Personnel during the year.


Price Waterhouse & Co Chartered Accountants LLP (FRN 304026E/ E300009) StatutoryAuditors of the Company hold office till the conclusion of seventy third Annual GeneralMeeting of the Company.

The Auditor's report to the shareholders on the standalone and consolidated financialstatement for the year ended March 31 2018 does not contain any qualificationobservation or adverse comment.


Pursuant to the provisions of Section 148(3) of the Act the Board of Directors hadappointed Messers Geeyes & Co.

(Firm Registration No.: 00044) as Cost Auditors of the Company for conducting theaudit of cost records for the financial year ended March 31 2018. The audit is inprogress and report will be filed with the Ministry of Corporate affairs within theprescribed period. A proposal for ratification of remuneration of the Cost Auditors forthe financial year 2017-18 is placed before the shareholders.


Pursuant to the provisions of Section 204 of the Act read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company engagedthe services of Ms. B Chandra (CP No. 7859) Company Secretary in Practice Chennai toconduct the Secretarial Audit of the Company for the financial year ended March 31 2018.The Secretarial Audit report for the financial year ended March 31 2018 in Form No. MR-3is attached as Annexure H to this Report.

The Secretarial Audit report does not contain any qualification reservation or adverseremark.

The Board confirms the compliance of the Secretarial Standards notified by theInstitute of Company Secretaries of India New Delhi.


Pursuant to the provisions of Section 92(3) of the Act an extract of Annual Return inForm MGT-9 as on March 31 2018 is attached as Annexure G to this report.


As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and Rules made thereunder your Company hasconstituted an Internal Complaints Committee. During the year under review there were nocases received/filed pursuant to the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.


Five meetings of the Board of Directors were held during the year. The details of themeetings are furnished in the Corporate Governance Report which is attached as Annexure Cto this Report.


Pursuant to the provisions of Section 134(5) of the Act the Board of Directors to thebest of their knowledge and ability confirm that:

a) In the preparation of the annual financial statements for the year ended March 312018 the applicable Accounting Standards had been followed along with proper explanationrelating to material departures;

b) for the financial year ended March 31 2018 such accounting policies as mentionedin the Notes to the financial statements have been applied consistently and judgments andestimates that are reasonable and prudent have been made so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theProfit of the Company for the financial year ended March 31 2018;

c) f hat proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) f he annual financial statements have been prepared on a going concern basis;

e) f hat proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and were operating effectively;

f) that proper systems have been devised to ensure compliance with the provisions ofall applicable laws were in place and that such systems were adequate and operatingeffectively.


The objective of the Remuneration Policy is to attract motivate and retain qualifiedand expert individuals that the Company needs in order to achieve its strategic andoperational objectives whilst acknowledging the societal context around remuneration andrecognising the interests of Company's stakeholders.

The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate Governancereport which forms part of the Board's Report.


Disclosure pertaining to the remuneration and other details as required under Section197(12) of the Act and the Rules framed thereunder is enclosed as Annexure B to theBoard's Report.


During the year under review NRC issued and allotted 569175 equity shares of '1/- toMr. Vinod K Dasari Chief Executive Officer and Managing Director upon exercise of optionsunder Ashok Leyland Employees Stock Option Plan 2016. Further on April 11 2018 the NRCallotted 3727000 equity shares of '1/- upon exercise of options under Ashok LeylandEmployees Stock Option Plan 2016.

During the year under review the NRC has granted 2000000 options convertible intoequal number of equity shares of '1/- each to the senior management personnel of theCompany.

Disclosures with respect to Employee Stock Option Scheme of the Company is attached asAnnexure J.


The particulars of loans guarantees and investments under Section 186 of the Act readwith the Companies (Meetings of Board and its Powers) Rules 2014 for the financial year2017-18 are given in Note 3.8 of the Notes to the financial statements.


The Audit Committee and the Board of Directors have approved the Related PartyTransactions Policy and the same has been hosted on the Company's website /sites/default/files/AshokLeyland Limited-Policy on Related Party Transactions.pdf.

There were no materially significant transactions with Related Parties during thefinancial year 2017-18 which were in conflict with the interest of the Company. Suitabledisclosures as required under Ind AS 24 have been made in Note 3.8 of the Notes to thefinancial statements.


The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure I of this report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014. The policy is available on the website of theCompany.


Pursuant to the provisions of the Act and SEBI Listing Regulations the Board ofDirectors have carried out annual performance evaluation of its own performance theDirectors Individually as well as the evaluation of the working of its Committees. Themanner in which the evaluation has been carried out has been explained in the CorporateGovernance Report attached as Annexure C to this report.


As on March 31 2018 the Company has Audit Committee Nomination and RemunerationCommittee Stakeholders Relationship Committee Risk Management Committee CorporateSocial Responsibility Committee Investment Committee and Technology Committee. During theyear a Share Allotment Committee was formed for the purpose of making allotment to theshareholders of erstwhile Hinduja Foundries Limited arising out of the Scheme ofAmalgamation.

Mr. Jose Maria Alapont was inducted as a member of the Investment Committee on November8 2017. He was inducted as a member of the Technology Committee and Nomination andRemuneration Committee with effect from May 18 2018.

Detailed note on the composition of the Board and its Committees are provided in theCorporate Governance Report attached as Annexure C to this Report.


Pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of theCompanies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of the SEBIListing Regulations the Board of Directors had approved the Policy on VigilMechanism/Whistle Blower and the same was hosted on the website of the Company. ThisPolicy inter-alia provides a direct access to the Chairman of the Audit Committee.

Your Company hereby affirms that no Director/Employee has been denied access to theChairman of the Audit Committee and that no complaints were received during the year.

Brief details about the policy are provided in the Corporate Governance Report attachedas Annexure C to this Report.


The Company has not accepted any deposit within the meaning of provisions of Chapter Vof the Act read with the Companies (Acceptance of Deposits) Rules 2014 for the year endedMarch 31 2018.


There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company.


The Company has designed a proper and adequate internal control system to ensureadherence to Company's policies assets are safeguarded and that transactions areaccurate complete and properly authorised prior to recording. Information provided tomanagement is reliable and timely and statutory obligations are adhered to. Details areprovided in Management Discussion and Analysis Report in Annexure E to this report.


Your Company has established a robust Enterprise Risk Management (ERM) frameworkembodying the principles of COSO ERM framework and ISO 31000:2009 standards to facilitateinformed decision making.

ERM process is overseen by the Risk Management Committee of the Board which isresponsible to ensure that the Company has an appropriate and effective framework formanaging and reporting enterprise risks.

The Steering Committee chaired by the CEO & MD consists of business verticalheads and is responsible for the risk management process including risk identificationimpact assessment effective implementation of risk mitigation plans and risk reporting.

The details of risk management as practiced by the Company are provided as part ofManagement Discussion and Analysis Report attached as Annexure E to this Report.


Your Company continues to focus on Research and Development activities with specificreference to emission conformance fuel efficiency vehicular performance and enhancementof safety aesthetics and ride comfort. Further development of the engine range and cabinis also a key result area. Expenditure incurred by way of capital and revenue on theseactivities is shown separately.

Information as required under Section 134(3)(m) of the Act read with Rule 8 (3) of theCompanies (Accounts) Rules 2014 relating to Conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo are furnished in Annexure A to thisReport.


The Directors wish to express their appreciation for the continued co-operation of theGovernment of India Governments of various States in India bankers financialinstitutions Shareholders customers dealers and suppliers and also the valuableassistance and advice received from the joint venture partners Elinduja AutomotiveLimited the Hinduja Group and all the shareholders. The Directors also wish to thank allthe employees for their contribution support and continued commitment throughout theyear.

For and on behalf of the Board of Directors

Chennai Dheeraj G Hinduja
May 18 2018 Chairman