Ashok Leyland eyes Rs 1000 crore revenue from Defence in FY24

Ashok Leyland – India’s second largest medium and heavy truck maker expects to cross the four-digit crore mark from its defence business for the first time in FY24.

Speaking to investors and analysts earlier in the month, Shenu Agarwal, MD and CEO, Ashok Leyland said “Defence business has been one of the highlights of this year, the kind of (order) pipeline for Defence is at a historic high. We should cross four digit topline on defence this year, even if we miss it, we would surely cross Rs 800 crore in business,” said Agarwal to investors earlier in November. 

The MD  and CEO of Ashok Leyland believes that the defence business has been a “strong pillar” of growth for the company and the latest order in July had further established the leadership in the defence mobility vehicles business for makers of Dost and Avtr trucks.

So far in the first half of FY24, Ashok Leyland has generated business of over Rs 300 crore, with a significant part of order likely to be executed in the last quarter of FY-24, there is a significant spike in turnover for defence business expected in the second half of this fiscal year.

To be sure, the company expects the Defence business to accelerate and grow multi fold in the coming years on the back of new generation platforms and growing order book both in India and overseas.

The strategic expansion into the light commercial vehicle business, exports, defence and power solution business are critical pillars of Ashok Leyland's strategy to de-risk itself from the cyclical medium and heavy commercial vehicle business, where the company has had strong spell of market share growth too.

To be sure, Ashok Leyland won the orders of Rs 800 crore in July including the procurement of the Field Artillery Tractor (FAT 4x4) and the Gun Towing Vehicle (GTV 6x6). The FAT 4x4 and GTV 6x6 are specialized vehicles employed by the artillery for towing light and medium guns, respectively. Both these platforms were prominently featured in the initial positive indigenization list announced by the government of India. Ashok Leyland's selection for these crucial Defence contracts underscores the company's commitment to indigenous manufacturing and its position as a trusted partner for the Indian Armed Forces.

Ashok Leyland will deliver these vehicles to the Indian Army over the next 12 months. 

The company has so far catered to the diverse needs of personnel and logistics across the armed forces and the company has invested in the development of a range of mobility platforms, including 4x4, 6x6, 8x8, 10x10 & 12x12, for various applications and operational requirements of the Indian Armed Forces. These platforms are indigenously designed, developed and manufactured by Ashok Leyland and contribute significantly towards import substitution claims the company.

In FY23, Ashok Leyland supplied 782 completely built-up units (CBUs) in the defence segment and reduced the dependence on VFJ (Vehicle Factory Jabalpur) kits. It also delivered 360 water bowsers in record time to the Indian Army. It has expanded into DGBR (Directorate-General Border Roads) with BAGH variants, and into the Indian Navy with HMV 4x4 (RIV – Rapid Intervention Vehicle). 

Over the last five years, Ashok Leyland has won over 80% of tenders garnering over Rs 2000 crore of the business.

The company expects to generate an additional Rs 3500 crore of business in the next three years from the Defence business as per the mid term plan shared by the company to the investors in June.

Apart from catering to the domestic defence business with over 24 vehicle platforms in service with Ministry of Defence, it has been aggressively building exports business in 15 countries in Assia and Africa.