Ashok Leyland's 75 year old journey in India

A journey that started in 1948 with a small factory at Ennore, Chennai, Ashok Leyland has over the years become India's second-largest commercial vehicle major globally.

By T E Narasimhan calendar 25 Sep 2023 Views icon28137 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Ashok Leyland's 75 year old journey in India

On August 7, 2023, commercial vehicle manufacturer Ashok Leyland celebrated its 75th year anniversary. An exhibition was held at the Chennai Trade Centre to commemorate the occasion that looked back at its history, milestone achievements and much more. Started in 1948 with a small factory at Ennore in North Chennai (earlier Madras) under the name of Ashok Motors, 75 years later, Ashok Leyland is now India's second-largest commercial vehicle major globally.

According to reports, the global commercial vehicle market size was US$ 821.28 billion in 2021 and is projected to grow from US$ 955.57 billion in 2022 to US$ 1,712.44 billion in 2029, growing at a CAGR of 8.7 percent during the 2022-2029 forecast period.

Today, the company has world-class facilities in India, UAE and several assembly facilities globally. Ashok Leyland has transformed itself in quality aspects, developed components and platforms, entered into JVs, presented
many concepts and tech-led innovations.

"In the last 75 years, there were many challenges and Ashok Leyland has come out stronger," said the company’s Executive Chairman Dheeraj Hinduja, whose family has always believed in professional management running the company. Since its inspection, the company has been driven by some of the best brains in the global auto industry including R Seshasayee, V Sumantran, Vinod K Dasarai and Vipin Sondhi among others.

“Ashok Leyland's 75-year journey is a story of transformation and innovation. As we celebrate this milestone, we look ahead to the future with excitement
and determination and renew our pledge to further shape the future of the CV Industry. We have set our sights on pioneering sustainable transportation solutions and aim to support India’s economic development for years to come,”
said Hinduja.

“Over the course of its remarkable journey, Ashok Leyland has consistently redefined industry standards, setting benchmarks for cutting-edge technology in its
products and services, and partnering with marque names in offering innovative, customer-centric solutions. The 75th anniversary celebration is not just a reflection of the company's history, but a testament to its determination to continue shaping the future of mobility,” added Ashok Leyland’s Managing Director and Chief Executive Officer Shenu Agarwal.

The early years
Ashok Leyland began life in Chennai (then known as Madras) the year after independence as Ashok Motors, founded by Raghunandan Saran, a freedom fighter from Punjab. Named after the promoter's son, the company was set up in collaboration with Austin Motor Company, England and incorporated on September 7 for the assembly of Austin cars.

It got its current name in 1955 when British Leyland acquired a 40 percent stake in Ashok Motors. This was the culmination of a 1950 agreement with Leyland UK,
Ashok Leyland's 75-year- old under which Ashok Motors had the sole rights to import, assemble and progressively manufacture Leyland trucks for seven years. In 1954, at a time when production was still licensed, the company was granted a licence to make 1,000 Comets a year.

This collaboration was to prove a little troublesome, because British Leyland ran into financial difficulties. Eventually, after several developments at the UK end, the
equity stake in Ashok Leyland came to be controlled by the Rover group.
By 1967, Ashok Leyland had diversified into bus manufacturing, launching the Titan, the first Indian-made the Indian Army in 1970. Steady expansion and innovation followed such as the Cheetah, India's first rear-engine bus.

In 1980, the company's second plant was setup at Hosur, also in Tamil Nadu and by 1982, the company made its first foray into the west and north with facilities in Bhandara in Maharashtra and Alwar in Rajasthan. In 1976, it launched Viking, the first ever bus with an alternator and a unique front overhang that facilitated front entry. It launched India's first rear-engine bus Cheetah, which was a revolution that made the drivers complain that they "could not hear the engine"! In 1980, the company's second plant was set up at Hosur in Tamil Nadu and as per the claims of the company, it launched India's first 13-tonne truck Tusker and first multiaxle truck Taurus during the year.

But it was partial economic liberalisation under Rajiv Gandhi's one term as prime minister that really shook things up for the CV industry. Economic growth picked up and, on the back of forex relaxations, several Indo-Japanese collaborations took place in the medium CV segment, pointing to a general uptick in the otherwise slow-moving CV industry. 

It was in 1987 that the otherwise low-profile Ashok Leyland shot into the limelight with the entry of the Hinduja group. Hinduja's interest attracted attention partly because the non-resident Indian group was known to be secretive about its business dealings and, at the time, at the receiving end (never proven) of links in the Bofors arms scandal that eventually brought down the Rajiv Gandhi government.

Ashok Leyland marked the Hinduja group's first entry into a listed business in India and it came after it bought out the Rover group's stake and brought in Fiat Group's Iveco as a partner. That association lasted two decades until Iveco, which owned 15 percent, started pressing for majority control. Unwilling to concede, the Hindujas bought out Iveco in 2007 and currently hold a majority stake in the company. 

It continued its steady course, launching India's first CNG-powered bus (that was run by the Mumbai bus service company) in 1996, and its Stag became the first Indian vehicle to cross from the Indian side when the Srinagar- Muzzafarabad road route was opened in 2005.

By the mid-2000s, in sync with many Indian businesses, Ashok Leyland started stretching its wings globally. In 2006, it acquired the truck business of Czech Republic-based Avia and, in the same year, signed an agreement with Ras Al Khaimah Investment Authority to set up a bus assembly facility in UAE, which was inaugurated in 2010. Joint venture agreements with John Deere (for construction equipment), Siemens (automotive infotronics), Albonair (green technologies) and a stake in UK-based Optare (for buses) added to hectic activity in the global arena.

On the manufacturing side, it launched the Pantnagar plant in Uttarakhand in 2010. The entry into the burgeoning LCV segment, along with Nissan, was released in 2011, with the launch of the first product in the segment, Dost. The tie up with John Deere came out with its construction equipment in 2011, under the brand Leyland
Deere. In 2013, it also launched the electronic fuel efficient engine Neptune engine and a multi-purpose vehicle Stile. The company has also announced plans to launch its electric and hybrid bus brand in India soon.

The management has said that the important thing they have been doing, knowing that the industry goes through cycles, is to ensure that the growth momentum and the profitability of the company should not suffer. And that's why they started diversifying into different segments like LCVs (light commercial vehicles), international operations, parts business, defence business, power solution business and others.

Cultural changes
In the past, Ashok Leyland was inside a cocoon somewhere, protected by some big brother who had technology and products, so on, today it is self-reliant. Triggers for the change were the fact that nobody is going to provide technology anymore, the two player (Tata and Ashok Leyland) market had many players, after the
entry of new players from India and outside.

Then there was the cultural change inside the organisation, which was not an easy task. The company was changing itself from a South India-based company to
not only a national company, but also a global company. For this, the company expanded its footprint, by setting up subsidiaries, new plants and even went for acquisitions in UK (Optare), Czech Republic (Avia), in US (Defiance
Technologies).

The point is, this required a completely new thought process inside the company and it had to hire a whole bunch of new people in various levels to reshape it.

Traditionally it was a two-player market with Ashok Leyland and Tata and the benchmark has been how much we manufacture and how much they did, and whose finance is better than the other's. It was never about improving the quality of the trucks than the competitor and the technology used in it or what kind of service was provided, whether it is better than anybody else coming into the market. 

That is where the organisation completely changed, which from an outside perspective, was a cultural one. More than 50 percent of the workforce in Ashok Leyland is less than 35 years old, which made it easier to bring in change. As part of winning the Northern market and making the brand younger, the company roped in Indian cricket team captain Mahendra Singh Dhoni when the transformation phase started.

It also entered into new businesses, which are “adjacent” expansions for the core business. The company came out with a new cabin, engine, a world class facility in Pantnagar and the Ennore facility was completely revamped. The company also built a new bus facility in Dubai and Alwar and acquired a bus plant in Trichy.

While it finished off its investments in the new facilities, products and cabin and was confident of starting off, the economy collapsed which in turn had hit the commercial vehicle industry.

Way forward
For nearly 10 years, ALL’s (Ashok leyland's) tagline was ‘Aap Ki Jeet Hamari Jeet’. It symbolised a mission and a role for us as relevant then, said Hinduja. With the changed business dynamics and its heightened self-belief together with its aspirational vision, Ashok Leyland management felt that the tag line needed to be renewed and be reflective of its current outlook and galvanises the organisation towards a limitless horizon. On that basis, ‘Koi Manzil Door
Nahin’ (No Dream too far) has been chosen, which will guide and power all company’s strategies and actions from now on, he said.

Hinduja has lined up two major goals for the company. First, get into the top 10 global commercial vehicle (CV) manufacturers (currently 20 globally) in the near future and second, achieve the net zero target by 2048, when
it completes 100 years. As the company celebrates its milestone, ALL set out its sights on pioneering sustainable transportation solutions and aim to support India’s
economic development for years to come.

The company is investing in new products and technologies, facilities, and alternate fuels, expanding its global footprint in a much more aggressive manner.

For example, ALL will roll out the country's first hydrogen fuel bus developed by them and will be commercially plying on the road by December.

Leading into the future, ALL also powered the setting up of SWITCH Mobility — a next-generation electric bus and light commercial vehicle company dedicated to green mobility. A mature start-up, SWITCH was forged from the innovative EV elements of Ashok Leyland, the fourth largest bus OEM in the world, and Optare, the UK bus manufacturer with over a century of expertise in using the latest technologies in bus design. In 2014, SWITCH (then Optare) introduced the first British built, pure electric buses on London’s roads.

With dedicated teams at sites in Warwick and Leeds in UK, Spain and Chennai, India, as a Group, its vehicles are sold in over 46 countries around the globe and combine the best of British and Indian design, technology and engineering. With demonstrable experience and proven expertise in lightweight architecture, net zero carbon technologies, data analytics, software and customer service, SWITCH Mobility aims to be the commercial EV provider and employer of choice in the industry. Through its subsidiary OHM, SWITCH also offers a range of eMaas services, supporting communities in their transition to a zero-emission transport network. The company has launched its electric light commercial vehicle, the IeV series. Interestingly, it has signed an Memorandum of Understanding with several e-commerce and other industry players — including Amazon and Flipkart — to
supply around 13,000 vehicles in the IeV series, over a period of three years. The expansion into global markets and the aggressive foray in the electric vehicle (EV)
segments are expected to be the key drivers of growth. Besides electric and CNG trims, the company is looking at all kinds of alternate fuels like hydrogen, ethanol among others to power its model range going ahead.

Expanding global footprint is another focus area for the company and in the last 16 months, 13 distributors have been appointed in the African market, with some of them having their own local assembly facilities.

The company has developed ‘Avtr’ modular truck platforms for the international markets and plans to launch its first electric bus in the European market by 2024.
According to Hinduja, the future of Ashok Leyland and its
electric vehicle arm Switch Mobility is integrated.

“Breaking into the European market is not that easy. We have strong competitors there, and Ashok Leyland is offering the right products at the right price point for such markets. With products like our electric buses, you will not
be constrained to one traditional market,” Hinduja said.

This story was first published in Autocar Professional's September 15, 2023 issue.

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