Ashok Leyland to enter Russia with a local partner

Ashok Leyland.

Chennai, ┬áCommercial vehicle major Ashok Leyland Ltd will enter the Russian market with a local partner in a year’s time, said a top company official.

He also said the company plans to enter the top 10 global commercial vehicle manufacturer’s club soon and betting big on its modular platform.

“We have identified a local assembler in Russia to take our franchise. We will enter the Russian market in next 12 months,” Dheeraj G. Hinduja, Chairman, told reporters here on Monday.

According to him, in the new markets, the company will have a local partner as there will be tax concessions.

Hinduja said large distributors in newer markets are now showing interests in taking Ashok Leyland franchise.

He said the company is looking at newer overseas markets like Indonesia, Malaysia and others apart from Russia.

As a measure to look at newer overseas markets, Ashok Leyland has decided to come out with a left hand drive vehicle for all its new models.

Currently, the company exports to Sri Lanka, Bangladesh, Nepal, Middle East, Bhutan, East and West African markets.

He said, Ashok Leyland is faring better during this downturn as compared to earlier downturn in 2013-14.

“We have gained market share in the bus and medium and heavy commercial vehicle’s segment. Our market share now is 31 per cent. We are also cutting costs,” Hinduja said.

According to him, the company had a debt levels of about Rs 6,000 crore during 2013-14 and it has come down to about Rs 1,800 crore.

Hinduja said, earlier the company was in an investment mode putting money in joint ventures with John Deere, Nissan and others which was draining cash.

He said the company had exited the joint ventures with John Deere and Nissan.

Hinduja said the company saw good potential in the light commercial vehicle (LCV) rolled out by the joint venture with Nissan and bought out the Japanese company’s stake in the venture.

Globally LCV’s account for about 70 per cent of the market and the severity of the industry down cycle is lesser than that of the medium and heavy vehicles.

According to him, the company will be launching the BS-VI vehicles and the vehicles will be built on modular platform.

Queried about the time frame for Ashok Leyland to enter the top 10 global commercial vehicle makers club, Hinduja said the idea is to enter it soon.

“The last vision was to enter the top 10 medium and heavy commercial vehicle segment. That target was fixed in 2010 and was achieved in 2019,” Hinduja said.

“I will be disappointed if we don’t achieve this less than last time frame,” he added.

He said the company rolled out about two lakh units last year and to achieve the global vision the volume required will be about four lakh units.

Hinduja said LCV’s share in achieving that target will also be major.

According to Gopal Mahadevan, Wholetime Director and Chief Financial Officer the company will be focussing on customer solutions business that includes finance, fuel, vehicle performance management systems, maintenance parts, re-sale and driver skilling.

He said over the next decade one-third of industry’s profits is expected to come from offering various solutions to customers.

The company’s Chief Operating Officer Anuj Kathuria said the transition from rolling out vehicles confirming to BS IV emission norms to BS-VI emission norms will be smooth.

Queried about the costs savings by the company by going for modular vehicle platform having common parts Kathuria said it will be known only after stabilisation of BS-VI sales.

On Monday, the company showcased its BS-VI trucks and buses.