Hinduja group flagship Ashok Leyland Limited (ALL) said it has drawn both short-term and long-term strategies to be more resilient and future ready. The company said it has weathered a lot, including economic downturn, NBFC crisis in 2018, axle load norms in mid 2018 and GST. Despite short-term blips and challenges, the company sees opportunities, both in India and abroad, to drive future growth.
In an investor presentation, which was released to the stock exchanges on Wednesday, the company said that under its short-term strategy it will strive to ensure profitability and cash flows while creating sustenance through devolatisation on the long-term strategy basis.
As part of the short-term strategy, the company will make only vital capital expenditure, reduce fixed costs, reduce inventory levels — both at factory and dealers’ levels and improving supply chain. It said there was a 53% drop in its inventory (from June to October) to around 13,000 units now.
Under long-term strategy, the company will pursue aggressive growth push through its new range of BS VI trucks, growing LCVs with new modular platform, transforming the bus business with fully-built bus solutions, expanding international reach, enhanced after market services and competitive electric bus offerings, the company informed the investors. As it had heavily invested over the years in capacity creation, BS III, IV technologies, the capital allocation in future would be towards new geographies as well new capabilities, it added.
The company expects its new modular truck programme will bring a host of benefits, including leaner inventory, faster development, high number of variants, global portfolio, faster takt time, faster service and greater reliability. While the existing BS IV models come with 12,000 parts and can help produce 400 truck variants, the modular programme BS VI models come with only 8,000 parts but help develop 5,000 truck variants.
According to its presentation, the company said that modular BS VI trucks have been extensively tested with 3 million kilometres ride, 5,000+ analysis and proved to be most successful. This new technology assures lower inventory cost, lower development cost, lower floor space, lower material cost and higher economy of scale.
Ashok Leyland further said that it has gone through one of the worst phase of challenges in the last two years and sees opportunities emerging in India. The fall in commodity prices, reduced interest rates, stable oil prices, improved ranking in ease of doing business and recent cut in corporate taxes will make India an attractive destination for investments and hence huge growth opportunities for the company. It further said that as compared to China and Russia, the penetration levels in India is much lower. The proposed spending on infra, roads, and the ensuing scrappage policy will throw further opportunities.