Power solutions, defense, and aftermarket shift Ashok Leyland from cyclical dependence to steady growth.
02 Jan 2026 | 9397 Views | By Shahkar Abidi
The fortunes of Ashok Leyland, just like the rest of the commercial vehicle industry, were inextricably linked to the rhythmic but volatile cycles of the truck and bus markets. In an industry where "seasonality" is often a euphemism for unpredictable downturns, the company’s Power Solution Business (PSB), the unit responsible ...
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The fortunes of Ashok Leyland, just like the rest of the commercial vehicle industry, were inextricably linked to the rhythmic but volatile cycles of the truck and bus markets. In an industry where "seasonality" is often a euphemism for unpredictable downturns, the company’s Power Solution Business (PSB), the unit responsible for its engines, was initially conceived as a tactical hedge to utilize excess manufacturing capacity. However, what began as a strategy to mitigate the peaks and troughs of the Medium and Heavy Commercial Vehicle (M&HCV) segment has evolved into a formidable, standalone business vertical.
Today, the PSB vertical is no longer a mere auxiliary. It has achieved a scale surpassing Rs 1,000 crore in annual revenue over the past few years, signaling a shift from a back-office support function to a front-line income center.
Beyond Trucks and Buses
The arithmetic of this evolution is visible in the production volumes. Ashok Leyland now sells between 3,000 to 4,000 engines per month through its PSB arm.While a significant portion caters to power generation (gensets), a steady 1,000 to 1,200 units are specifically funneled into the industrial and construction sectors every month.
The power solutions (engines) volumes grew to a new lifetime high of 32,930 units in FY25 representing a growth of 2% over FY24 volumes (32,374 units). Elaborating further, Ashok Leyland in its Q2FY26 post results earnings call, had revealed a striking drop in its break-even volume, now just 1,000 to 1,200 vehicles a month, down from the previous 6,000 to 7,000. This means the company needs to sell far fewer trucks monthly to cover its basic expenses, thanks to the financial contributions of these complementary businesses, Autocar Professional had earlier reported in November last year.
Ashok Leyland’s share of revenue from non-truck businesses, including defense, power solutions, and aftermarket services, now accounts for half of its total income, marking a rise from 40% in fiscal 2022. This diversification has boosted profitability by enhancing margins, as these segments tend to be less capital intensive and more resilient to economic swings.
Aftermarket revenues, which include spare parts and maintenance services, grew by 11% year-on-year. Power solutions, covering engines and related equipment, expanded 14%, while defense revenues, the company’s offering to the armed forces, jumped a notable 25%.
This transition is fueled by more than just volume. The company has moved away from simply repurposing truck engines. Instead, it has established a dedicated engineering team that collaborates with original equipment manufacturers (OEMs) to develop bespoke solutions. As Amandeep Singh, President – LCV, International Operations, Defence & Power Solutions at Ashok Leyland, notes, "the business now provides solutions that keep operations running smoothly and cost-effectively".
In the construction equipment industry, Ashok Leyland has carved out a position of market leadership in several critical segments, including compressors, compactors, and motor graders. By leveraging the economies of scale from its massive automotive business, where it produces over 250,000 engines annually, the company boasts to offer a cost advantage that few can match.
The Regulatory Squeeze: CEV Stage V and Beyond
The construction equipment engine market is currently navigating a significant technological pivot. The industry has recently transitioned to CEV Stage V emission norms, a stringent set of standards for off-highway vehicles that roughly parallels the BS-VI norms seen in the automotive sector.
While such transitions often trigger price shocks for equipment, Ashok Leyland’s leadership views it as a competitive moat. "All the learnings from the automotive [sector] have already cascaded to this domain," says Sathyanandan M, Head – Power Solutions at Ashok Leyland.
The Competitive Landscape and Future Friction
The path forward is not without hurdles. The broader construction industry is grappling with a lag in rentals. While the cost of machinery has risen due to advanced emission-control technology, the rental rates for this equipment have not yet increased proportionally to cover the higher capital expenditure.
Despite these challenges, the outlook remains optimistic, buoyed by India's infrastructure spending. At the EXCON 2025 trade fair in Bengaluru, the company showcased its next-generation P15 and H4 Unipack engine series.
The P15 engine is ideal for compact machines such as skid-steer loaders, mini compactors, sweepers, and forklifts with the option to choose from a high-speed non-emission variant (up to 3300 rpm) for faster operations or a CNG version for a cleaner energy option.
The H4 Unipack (55 & 74 HP), on the other hand is engineered for demanding applications such as backhoe loaders and has high-altitude performance capability (up to 5,500 meters) and reliable cold starts.
Additionally, the company also showcased A6 Series – 380 HP CRS engine for heavy-duty performance, H6 Series – Hydrogen / Flex-Fuel Engine, H6 Series – 133 HP CEV Stage V Engine without intercooler, 82.5 kVA Diesel Genset, Compact Flex EATS (Exhaust After-Treatment System) for CEV Stage V / Trem Stage V applications and Airless DEF Tank Solutions for simplified emission control
For a business that started as a way to fill idle factory hours, Ashok Leyland’s power vertical is now, quite literally, engineering its own future.