ASHOK LEYLAND LTD

BSE: 500477 | NSE: ASHOKLEY | ISIN: INE208A01029

MARKET CAP: [RS.CR.] 6,977 | FACE VALUE: [RS.] 1 | INDUSTRY:
AUTOMOBILES - LCVS / HCVS

Contents

 INTRODUCTION
 MISSION AND VISION
 KEY EXECUTIVES
 BOARD OF DIRECTORS
 PRODUCTS
 FINANCIAL RESULTS
 FINANCIAL ANALYSIS
o PROFIT & LOSS
o BALANCE SHEET
o CASH FLOW
o KEY RATIOS
 DIVIDEND
 BUSINESS OPERATIONS
 EXTERNAL COMMERCIAL BORROWINGS (ECBS)
 CONCLUSION

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Introduction:

For over five decades, Ashok Leyland has been the technology leader in
India's commercial vehicle industry, moulding the country's commercial
vehicle profile by introducing technologies and product ideas that have gone
on to become industry norms.

From 18 seater to 82 seater double-decker buses, from 7.5 tonne to 49 tonne

in haulage vehicles, from numerous special application vehicles to diesel
engines for industrial, marine and genset applications, Ashok Leyland offers
a wide range of products.

Eight out of ten metro state transport buses in India are from Ashok Leyland.
With over 60 million passengers a day, Ashok Leyland buses carry more
people than the entire Indian rail network!

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Prepared By: Jogeshwar Pandit, College Roll No: 308C179
MISSION AND VISION
"We are concerned about the earth our children will inherit. That's why
we make sure our vehicles consume less,
pollute less. This concern is reflected in the
manufacturing systems, the various processes,
energy conservation measures and conscious
greening initiatives of the Company.”

In 2002, all the vehicle manufacturing units of Ashok Leyland were ISO
14001 certified with Environmental Management System..

Over the decades, Ashok Leyland's R&D engineers have been addressing the
twin concerns of fuel-efficiency and emissions. Not surprisingly, when the
legislation came in 1987, limiting vehicular emission, Ashok Leyland
vehicles were already meeting them. In 1992, came the more stringent norms
for gaseous emissions. By then, Ashok Leyland, through timely technology
tie-ups - and ahead of competition - had absorbed and was offering eco-
friendly engine technology. In 1996, when the permissible levels of gaseous
exhaust emissions were further tightened, Ashok Leyland again met the
norms with ease.

Ashok Leyland has pro-actively developed its engines to meet the

progressive emission norms, including the Bharat Shage II norms.

Energy Conservation

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

The Ennore unit was recently identified as one of the model energy-efficient
units by a CII-TNEB organised Energy Conservation (ENCON) mission.
Systematic management of all energy resources from the 1980s through
better housekeeping and awareness has made this possible. The 1980s also
saw Energy Audit being introduced. Improvement in machine tools, furnace-
loading pattern, design of heating elements and an energy efficient lighting
system has all led to energy savings of 30,782 units per day.

For Ennore, practicing the 3Rs of Reduce, Reuse and Recycle has surely
paid-off. Recently, an opinion survey conducted in the neighbourhood
reveals that both industries and the public are happy to have Ashok Leyland
as their neighbour. Building on the eco-friendly measures over the years,
Ennore has received the ISO 14001 certification for Environmental
Management Systems.
The Emission Mission

To get the best out of Ashok Leyland's eco-friendly engine technology,

round-the-year awareness and action programmes are held at operators'
meets and service campaigns. Ashok Leyland has also launched a dedicated
mobile emission clinic operating on highways and at entry points to New
Delhi. The clinic checks vehicles for emission levels, recommends remedies
and offers tips on maintenance and care. Even as it spreads the emission
mission, it will generate valuable data and garner insight that will guide
further development.
Road Map For Vehicular Emission Norms For New Vehicles

Emission Standard Effective Locations covered

Bharat Stage II 2000 / 2001 Delhi, Mumbai, Kolkatta, Chennai

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

 Bangalore, Hyderabad, Ahmedabad,
Bharat Stage II April 2003
Pune, Surat, Kanpur and Agra
Bharat Stage II April 2005 Whole country
Delhi / NCR, Mumbai, Kolkatta,
Chennai, Bangalore, Hyderabad,
Euro III Equivalent April 2005
Ahmedabad, Pune, Surat, Kanpur and
Agra
Euro III Equivalent April 2010 Whole country
Delhi / NCR, Mumbai, Kolkatta,
Chennai, Bangalore, Hyderabad,
Euro IV Equivalent April 2010
Ahmedabad, Pune, Surat, Kanpur and
Agra

Permissible Limits

Emission Standard CO HC NOX PM

(Grams per Kilowatt hour)
Bharat Stage I 4.5 1.10 8.0 0.36
Bharat Stage II 4.0 1.10 7.0 0.15
Euro III Equivalent 2.1 0.55 5.0 0.10
Euro IV Equivalent 1.5 0.36 3.5 0.02
Tightening Norms (for diesel vehicles > 3.5 ton gvw)

India's first CNG-run bus

In January 1997, Mumbai's taxi drivers had a complaint about a BEST bus:
they couldn't hear it coming! Not only did it make next to no noise, it also
emitted very little pollutants. What makes this bus different is the fuel that
powers it. Spearheading the induction of CNG technology in the National
Capital Region, Ashok Leyland has put out over 2,500 buses on its roads.

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

 Processes

A serious and responsible approach to protecting the environment forms one

of the abiding principles at Ashok Leyland. That's why, we strive beyond
compliance with the Law to create and implement sound environmental
practices into our business decisions and processes. A constant review of the
processes has been resulting in modifications and replacements with eco-
friendly processes. Back in the 1960s, shot blasting used for surface cleaning
treatment of rough materials and heat treatment scaling at Ennore was
replaced with sand-blasting, to eliminate the hazard of lead shots. Later, sand
was replaced with steel shots, to eliminate the possibility of silicosis. The
blasting dust from the machines is collected by heavy-duty dust collectors
and goes into the making of firecrackers.

Sodium Cyanide was used in salt bath furnaces for carburising and
hardening of components. This involved an elaborate process of handling
and disposal of residual cyanide salts. In 1980, this was replaced by
carbonitriding process. The four 'Sealed Quench Furnaces' that do
carbonitriding now operate without any Sodium Cyanide. At the modern
paint shop at Hosur II, scrubbers to avoid exposure and adverse reactions
collect the paint particles in the paint booth immediately.

Trichloroethylene and Carbon Tetrachloride - two compounds used for de-

greasing at Ennore - were eliminated once they were categorised as 'ozone
depletion substances'. At the same location, introduction of direct induction
hardening has eliminated the copper plating of camshafts before the
carburising operation. From August 1999, 'green energy' has been powering

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

the Hosur I factory. Electricity generated by windmills is supplied to the
factory through a special agreement with the Tamilnadu Electricity Board.
Why, even cooking is eco-friendly here. The canteen runs on solar heaters
and food waste becomes fodder to cattle at a cattle farm at Mathagiri, near
Hosur. In the generator room at Hosur I, modifications to the air filter near
the exhaust pipe led to reduction of noise level by 40 decibels. Test beds are
made soundproof by packing sound absorbing material.
Effluent Treatment

Treating waste to produce usable by-products and safe disposal of unused

waste are the twin goals of effluent treatment plants, set up in all the Units of
Ashok Leyland including Ennore where 1.28 million liters of water is
redeemed from sewage everyday. Illustrating the efficacy of an effluent
treatment plant is the one at Hosur I. One of the most modern of its kind in
the area, it has several state-of-the-art features like Mechanical Bar Screen, a
Detritor for grit removal, Flow Meter, two Aerator Tanks with surface
aerators, a Secondary Clarifier, a rare chlorination facility and sludge drying
beds.

The plant can do primary, secondary and tertiary treatment operations. About
55,000 liters of effluents flow into the plant every day. Five kilograms of
solid hazardous waste is stored as per Pollution Control Board standards and
the rest of the water portion is treated and used for organic farming. Manure
extracted from the sludge replaces artificial chemical fertilizers saving
Rs.165000 per annum. On an average, 250,000 liters of recycled water is
pumped into the garden saving Rs.1.5 million per annum.
Greening

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

 The Ennore Unit is known for its lush green cover.
Almost 10 % of the total ground area of 53.41
hectares is covered by greenery creating an oasis in
the arid zone of Ennore.
Of the 12.44 hectares of land available for tree planting, landscaping and
lawns at Hosur I, 1.44 hectares has been used for growing 1,623 trees. A
herbal garden right next to the effluent treatment plant serves as an open lab
of medicinal herbs.Hosur II has a green belt stretching 15 hectares with
nearly 4,500 trees.

Bhandara has over the years systematically developed green belt zones. A
mind-boggling 179,000 trees cover 50 hectares of the 101-hectare unit. Teak,
Shisham, Subabul, Eucalyptus, Bamboo, Bori, Asoka, Neem, and Suru are
among the 35 varieties that adorn the landscape. The trees are home for a
wide variety of birds, almost converting the factory into a conservation zone.
Environmental Policy

We are committed to preserving the environment through a comprehensive

Environmental Policy and a proactive approach in planning and executing
our manufacturing and service activities.The objective of Ashok Leyland's
Environmental Policy is to adhere to all applicable environmental
legislations and regulations, adopt pollution preventive techniques in design
and manufacture, conserve all resources such as power, water etc., and
optimise its usage, through scientific means, minimize waste generation by
all possible ways and Reduce, Reuse and Recycle the same through a time
bound action plan as well as provide a clean working environment to our
employees, contractors and neighbours.Towards this, we propagate our

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

environmental policy and our commitment to continuous improvement to all
employees, suppliers, customers and neighbours

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Key Executives

Chairman R J Shahaney
Co-Chairman D G Hinduja
Director D J Balaji Rao
Director A K Das

Board Of Directors

Chairman R J Shahaney
Co-Chairman D G Hinduja
D J Balaji Rao
A K Das
Director F Sahami
Shradul S Shroff
A Spare
Managing Director R Seshasayee
Whole Time Director & COO Vinod K Dasari
Executive Director & CS A R Chandrasekharan
Director V Sumantran
Nominee (LIC) Ramachandran R Nair
Independent Director Anil Harish
Y M Kale
Alternate Director
P Banerjee

Products
There are Buses, Trucks, Engines, Other Defense Vehicles are produced in
the farm of Ashok Leyland.

Buses

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

 Viking BS II
Viking BS - II Viking BS - III

Viking SLF BS-III Viking CNG BS-III 12 M Bus - BS II

Cheetah BS - II 12 M Bus BS-II Cheetah BS-III

Cheetah BS - II Panther BS - II Lynx BS-II

Vestibule Bus -
BSIII Double Decker Airport Tarmac coach

Trucks

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

4 X 2 Haulage Models 4 X 2 and Multi-axleMulti-axle Vehicles
Tippers

Tractors

FINANCIAL RESULTS

(Rs. Lakhs)
2008-2009 2007-2008
Profit before tax 20,844.63 63,815.02
Less: Provision for taxation 1,845.00 16,884.00
Profit after tax 18,999.63 46,931.02
Excess provision written back
– Dividend 22.05 —

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

– Corporate dividend tax thereon 3.75 —
Balance profit from last year 50,227.38 36,168.59
Transfer from/(to):
Debenture redemption reserve (2,958.33) 500.00
General reserve (2,500.00) 10,000.00
Profit available for appropriation 63,794.48 73,599.61
Appropriation:
Proposed dividend 13,303.38 19,977.12
Corporate dividend tax thereon 2,260.91 3,395.11
Balance profit carried to balance sheet 48,230.19 50,227.38
Earnings per Share (face value Re.1/-)
– Basic (in Rs.) 1.43 3.53

Financial Analysis
Profit & Loss
(Rs. in Crores)

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 Mar-04

INCOME :
Sales Turnover 6,783.99 9,141.78 8,475.42 6,170.41 4,886.81 3,979.57
Excise Duty 657.98 1,206.30 1,155.05 840.60 639.16 539.03
Net Sales 6,126.01 7,935.48 7,320.37 5,329.81 4,247.65 3,440.54
Other Income 91.23 84.18 111.56 87.34 81.36 57.24
Stock
1.04 97.48 48.98 300.60 18.20 53.03
Adjustments
Total Income 6,218.28 8,117.14 7,480.91 5,717.75 4,347.21 3,550.81
EXPENDITURE
:
Raw Materials 4,481.08 5,861.09 5,493.78 4,133.62 3,052.49 2,438.31
Power & Fuel
38.42 44.89 45.43 41.41 49.66 48.67
Cost

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Employee Cost 563.08 613.97 478.67 402.49 352.95 318.27
Other
Manufacturing 93.49 115.69 92.74 79.61 67.50 57.38
Expenses
Selling and
Administration 485.08 574.58 572.16 432.81 319.75 245.91
Expenses
Miscellaneous
18.15 15.77 14.34 9.26 11.05 0.32
Expenses
Less: Pre-
operative
8.20 0.67 0.13 0.41 0.81 0.37
Expenses
Capitalised
Total
5,671.10 7,225.32 6,696.99 5,098.79 3,852.59 3,108.49
Expenditure
Operating Profit 547.18 891.82 783.92 618.96 494.62 442.32
Interest 160.32 76.31 28.84 40.65 30.40 59.41
Gross Profit 386.86 815.51 755.08 578.31 464.22 382.91
Depreciation 178.41 177.36 150.57 126.01 109.21 96.45
Profit Before
208.45 638.15 604.51 452.30 355.01 286.46
Tax
Tax 0.00 101.40 135.05 117.75 89.50 73.84
Fringe Benefit
6.00 7.00 5.15 NA NA NA
tax
Deferred Tax 12.45 60.44 23.02 7.23 -5.90 19.04
Reported Net
190.00 469.31 441.29 327.32 271.41 193.58
Profit
Extraordinary
11.21 18.55 15.52 24.85 20.99 -3.03
Items
Adjusted Net 178.79 450.76 425.77 302.47 250.42 196.61

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

 Profit
Adjst. below Net
0.25 0.00 2.96 0.00 0.00 0.00
Profit
P & L Balance
502.27 361.69 230.37 178.41 133.92 97.22
brought forward
Statutory
0.00 0.00 0.00 0.00 0.00 0.00
Appropriations
Appropriations 210.22 328.73 312.93 275.36 226.92 156.88
P & L Balance
482.30 502.27 361.69 230.37 178.41 133.92
carried down
Dividend 133.03 199.77 198.58 159.79 118.93 89.20
Preference
0.00 0.00 0.00 0.00 0.00 0.00
Dividend
Equity Dividend
100.00 150.00 150.00 120.00 100.00 75.00
%
Earnings Per
1.26 3.27 3.12 2.50 2.14 15.32
Share-Unit Curr
Earnings Per
Share(Adj)-Unit 1.26 3.27 3.12 2.50 2.14 1.53
Curr
Book Value-Unit
15.85 15.99 14.14 11.37 9.61 86.32
Curr

Balance Sheet
(Rs. in Crores)

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Particulars Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 Mar-04
SOURCES OF
FUNDS :
Share Capital 133.03 133.03 132.39 122.16 118.93 118.93
Reserves Total 3,340.87 2,015.95 1,762.18 1,290.29 1,048.94 932.87
Total
Shareholders 3,473.90 2,148.98 1,894.57 1,412.45 1,167.87 1,051.80
Funds
Secured Loans 304.41 190.24 360.22 184.69 263.50 310.35
Unsecured
1,657.57 697.26 280.18 507.24 616.91 188.55
Loans
Total Debt 1,961.98 887.50 640.40 691.93 880.41 498.90
Total Liabilities 5,435.88 3,036.48 2,534.97 2,104.38 2,048.28 1,550.70
APPLICATION
OF FUNDS :
Gross Block 4,953.28 2,942.44 2,620.20 2,138.50 2,002.25 1,875.64
Less :
Accumulated 1,554.16 1,416.89 1,313.16 1,195.23 1,108.41 1,000.81
Depreciation
Less:Impairment
0.00 0.00 0.00 NA NA NA
of Assets
Net Block 3,399.12 1,525.55 1,307.04 NA NA NA
Lease
0.00 0.00 0.00 0.00 0.00 0.00
Adjustment
Capital Work in
998.29 529.24 237.49 141.42 85.16 46.27
Progress
Investments 263.56 609.90 221.09 368.18 229.19 146.60
Current Assets,
Loans &
Advances
Inventories 1,330.02 1,223.91 1,070.32 902.56 568.08 506.94
Sundry Debtors 957.97 375.84 522.88 424.34 458.77 405.62
Cash and Bank 88.08 451.37 434.94 602.87 796.68 324.98

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Loans and
789.54 824.14 669.57 302.64 333.74 226.13
Advances
Total Current
3,165.61 2,875.26 2,697.71 2,232.41 2,157.27 1,463.67
Assets
Less : Current
Liabilities and
Provisions
Current
1,868.87 1,926.71 1,651.62 1,146.89 961.19 685.66
Liabilities
Provisions 268.08 345.23 104.23 261.63 204.48 147.04
Total Current
2,136.95 2,271.94 1,755.85 1,408.52 1,165.67 832.70
Liabilities
Net Current
1,028.66 603.32 941.86 823.89 991.60 630.97
Assets
Miscellaneous
Expenses not 9.69 22.29 24.42 7.31 19.34 32.32
written off
Deferred Tax
74.99 15.96 17.42 7.61 5.37 1.41
Assets
Deferred Tax
338.43 269.78 214.35 187.30 176.22 181.70
Liability
Net Deferred
-263.44 -253.82 -196.93 -179.69 -170.85 -180.29
Tax
Total Assets 5,435.88 3,036.48 2,534.97 2,104.38 2,048.28 1,550.70
Contingent
418.63 1,100.89 801.33 713.60 448.90 246.66
Liabilities

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Cash Flow
(Rs. in Crores)

Particulars Mar-09 Mar-08 Mar-07

Cash and Cash Equivalents at Begi.. 815.73 195.20 708.29
Net Cash from Operating Activitie.. -525.58 1,065.69 499.95
Net Cash Used In Investing Activi.. -664.18 -809.68 -722.20
Net Cash Used In Financing Activi.. 459.18 364.52 -290.84
Net Inc/(Dec) In Cash And Cash -730.58 620.53 -513.09
Cash And Cash Equivalents At End .. 85.15 815.73 195.20

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Key Ratios
Years Mar-09 Mar-08 Mar-07 Mar-05 Mar-04
Debt-Equity Ratio 0.7 0.4 0.4 0.6 0.6
Long Term Debt-Equity
0.7 0.3 0.4 0.6 0.6
Ratio
Current Ratio 1.2 1.2 1.3 1.5 1.6
Fixed Assets 2.1 3.3 3.6 2.6 2.2
Inventory 5.3 8.0 8.6 9.1 8.7
Debtors 10.2 20.3 17.9 11.3 8.6
Interest Cover Ratio 2.2 9.4 22.0 12.7 5.8
PBIDTM (%) 7.7 9.8 9.3 10.1 11.1
PBITM (%) 5.1 7.8 7.5 7.9 8.7
PBDTM (%) 5.3 8.9 8.9 9.5 9.6
CPM (%) 5.3 7.1 7.0 7.8 7.3
APATM (%) 2.6 5.1 5.2 5.6 4.9
ROCE (%) 9.8 26.1 27.8 22.0 22.0
RONW (%) 8.4 23.5 27.1 25.0 19.8

Dividend

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

The Directors recommend a dividend of 100% (Re.1/- per equity share of
Re.1/-) for the year ended March 31, 2009.

Business operations

The global economic crisis had a severe adverse impact on the Indian
economy, in the second half of the year. The Commercial Vehicle industry,
which was already facing a slowdown in the first half of the year, due to a
cyclical downturn, was suddenly faced with a precipitous decline in demand
from October 2008. Medium and Heavy Duty Commercial Vehicles segment
was the worst affected in the automobile industry and your Company could
not escape the crisis. Consequently, sale of vehicles for the year declined by
35% compared to the previous year.

Highlights of performance are discussed in detail in the Management

Discussion and Analysis Report attached as Annexure - D to this Report.

Research and Development, Technology Absorption, Energy Conservation,

etc.

Your Company has been increasing its spend on Research and Development
activities. The increased infrastructural and financial support reflects the
Company’s resolve to stay ahead of competition by delivering innovative
quality products and its commitment to total customer satisfaction.

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

The particulars prescribed by the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules,1988 relating to Conservation of
Energy, Technology Absorption and Foreign Exchange are furnished in
Annexure - A to this Report.

External Commercial Borrowings (ECBs)

In December 2007, despite difficult conditions in the financial market, the

Company had successfully contracted for a US$ 200 mn loan. While US$ 20
mn was drawn in March 2008, balance of US$ 180 mn was drawn during the
financial year. The funds drawn were fully utilised for the approved end uses
permitted by Reserve Bank of India.

Foreign Currency Convertible Notes (FCCNs)

The Foreign Currency Convertible Notes (FCCNs) for US$ 100mn issued in
April 2004 are convertible into shares of the Company (Fixed Rate USD 1=
Rs.44.10). As of March 31, 2009, 99,000 Notes (99%) have already been
converted into underlying shares, thereby increasing the paid-up capital as of
March 31, 2009.

All the procedures consequent to the conversion are being completed on

time and these shares, which rank pari passu with the earlier shares in all
respects, are tradeable on the Indian Stock Exchanges. The share capital as
on March 31, 2009 and corresponding revised shareholding pattern are
shown in the Corporate Governance Report (Annexure - B) to this Report.

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

FCCNs not converted aggregating to 1000 nos. have since been redeemed in
April 2009 as per the terms of issue. With this redemption, FCCNs would
cease to be traded in the London Stock Exchange, where it was listed.

Joint Venture with Nissan Motor Co. Ltd., Japan

A Joint Venture Agreement was signed on May 26, 2008 with Nissan Motor
Co. Ltd., leading to formation of three Joint Venture companies for the Light
Commercial Vehicle (LCV) business in India for technology development,
vehicle manufacturing and powertrain manufacturing. Fiscal and other
incentives from Government of Tamilnadu for the project have been secured
although allotment of the land for the project is awaited. However, in view
of the global slowdown, the two partners are reworking the manufacturing
plans including the option of phased implementation of the project.

Joint Venture with John Deere, USA

A Joint Venture Agreement was signed on September 30, 2008 with John
Deere, USA for manufacture and marketing of Construction Equipment. The
Joint Venture is scheduled to commence production by early 2010 and will
initially roll out backhoes and four-wheel-drive loaders.

Prepared By: Jogeshwar Pandit, College Roll No: 308C179

Conclusion:

Company is fully compliant with the Corporate Governance guidelines, and

has exceeded them in some aspects. All the Directors (and also the members
of the Senior Management – of the rank of General Managers and above)
have confirmed in writing their compliance with and adherence to the Code
of Conduct adopted by the Company. The details of the Code of Conduct are
furnished in Annexure-B to this Report. The Managing Director has given a
certificate of compliance with the Code of Conduct, as required by SEBI
guidelines.

Prepared By: Jogeshwar Pandit, College Roll No: 308C179