Highest M&HCV market share in last 10 years achieved
Ashok Leyland (AL) has registered its highest-ever M&HCV market share in the last 10 years in FY15, ending the year with a share of 28.6 per cent. The feat is a reflection of the company’s measured approach and long-term plans which were initiated a few years back, with key contributors being the success of its new products, aggressive network expansion, lean manufacturing and operations and various customer-centric initiatives.
The Hinduja Group flagship reported sales revenues of Rs. 13,562 crores in FY15 as against Rs. 9,943 crores in the previous fiscal. Its net profit was at Rs. 334.80 crores during the year against a net profit of Rs. 29.38 crores in the previous fiscal. During the year, the company generated surplus cash of around Rs. 2,000 crores, aided by positive accruals, qualified institutional placement (QIP), sale of non-core assets, and reduction in working capital, all of which resulted in a sizeable reduction in debt.
Addressing the media while announcing the FY15 results, Mr. Vinod K. Dasari, Managing Director, said: “It has been a very gratifying year. All our efforts towards the transformation of the company in terms of pruning costs, rationalizing overheads, reducing working capital, and at the same time investing smartly in new products and network are paying off. The industry has turned the corner and so have we. I am confident that coming years will see us build on this momentum.”
The overall M&HCV market clocked a volume of around 230,000 units in FY15, 16 per cent higher than FY14. AL made the most of the market revival by registering its highest market share in 10 years, an achievement which deserves special praise, especially considering the kind of competition that has entered the market in the last few years.
Explaining how AL managed to do it, Mr. Dasari said: “Our market share in the M&HCV segment has improved, with domestic sales of 66,442 vehicles. This was possible primarily due to an enhanced product range with market leaders like 3718, Boss, Captain and JanBus, as well as continued network expansion across the country, despite the downturn. Further, a renewed focus on customer and network profitability, new service products like AMC, insurance and extended warranty, and our vast service network, provided confidence to our customers about our capability of offering nationwide service. This combined with a completely revamped IT enabled sales process, helped us reach more customers, and understand their requirements better and faster.”
AL holds a share of around 33 per cent in the heavy commercial vehicle space while its medium commercial vehicle share stands at 14.9 per cent at present. Its top-of-the-line product Captain which is currently available only as a tipper is expected to hit the market in its Defence and haulage versions this year.
AL’s presence in the ICV goods segment has been bolstered by the success of the Boss which has given it a 13.9 per cent share in the segment. In buses, AL garnered a share of nearly 58 per cent in the MDV segment, its highest-ever mark, while the JnNurm phase II has driven sales of the JanBus, over 700 of which are already on road. The company expects bus sales to pick up further once the JnNurm funds are released, thereby making way for further bus deliveries to states. It is also exploring the possibility of setting up two or three small assembly facilities for buses, both within the country and overseas.
On the LCV side, the company continued to ride on the success of its Dost while its new products Partner and Mitr have had good initial response in the market. The company currently offers the Dost for different applications such as ambulances and reefers as well and plans to bring out more variants of the product. “While the Total Industry Volume (TIV) in the LCV segment dropped, we retained domestic market share in the 2.5T LCV segment on the back of the Dost’s strong performance. The Partner and Mitr have also received positive feedback in the market. Our LCV network is growing well and we will come up with some more variants of the Dost in the near future”, he added.
AL has done well on the defence front too bagging new orders, while it has also expanded its product offering in the space extensively. “We have won many tenders in defence vehicles – both domestic and international markets. While we have been just a 4×4 player all these years, we have now expanded in to 6×6, 8×8, 10×10 applications as well. We used to support the army only with people-carrying applications but we now have products for all the needs of the army”, he stated.
AL also registered strong growth in aftermarket sales and exports, achieving Rs. 967 crores in the aftermarket which is a 16 per cent growth from last year, while its M&HCV exports grew by 32 per cent to 10,806 units during FY15. The company also expanded its network on the international arena, opening 138 new touch points during the year.
Apart from focusing on developing new products, AL has scored big in other crucial aspects as well, which have gone a long way in contributing to the company’s success last year. The company has adopted new techniques and brought out attractive schemes in sales, service and customer support. “When we say ‘Apki Jeet Hamari Jeet’, it truly means that the customer should gain in profitability and, regardless of whether there is a slowdown in the industry, we will develop and launch new products so that our customers’ profitability goes up. While our Prism sales initiative, towards which we invested around Rs. 40 crores, has created a revolution in the market, our Tatkal promise ensures our service team reaches a broken down vehicle on national and state highways within four hours. We have 17 company-owned dealerships today, all of which were opened because the customer wanted it. We have opened containerized workshops across the country and have nearly 50 of them only in the North East region, again because our customers wanted it. We have also opened 200 new Leyparts stores in the last two years”, explained the MD.
“Significant successes in export markets, a well-diversified product portfolio and a range of business verticals helps us manage the cyclicality of the CV business. I must specifically mention the stellar support we received from our suppliers and dealers without whom this transformation wouldn’t have been possible”, Mr. Dasari concluded.
The country’s CV market is clearly getting back on the right track, for instance, the Q4 FY15 TIV was up 31 per cent as compared to Q4 FY14. Looking at the same period, AL sales grew by 46 per cent, outpacing the industry by quite a margin. The company expects the overall CV industry to grow at least 10 to 12 per cent in FY16 and is confident of matching the growth and probably even topping it by a few numbers.