The face of the company is changing4 min read . Updated: 08 Jan 2012, 11:46 PM IST
The face of the company is changing
The face of the company is changing
New Delhi: From being a manufacturer of staid trucks and buses and one with a regional focus, Ashok Leyland Ltd, the Hinduja Group flagship, is transforming itself into a firm that produces modern, technology-led commercial vehicles with a global appeal.
The Chennai-based company has ceded some ground to traditional rivals such as Tata Motors Ltd and smaller ones such as Eicher Motors Ltd in terms of volumes, but V. Sumantran, executive vice-chairman of Hinduja Automotive and chairman Nissan Ashok Leyland Powertrain Ltd, and who is at the helm of the transformation, says the investments the group has made in the past five years will start producing results now. Edited excerpts:
We have seen Ashok Leyland losing some traction in the market in the recent past in terms of volumes. When do we see it regaining ground? How will it be helped by the slew of new initiatives you have taken over the last few years?
Optare gives us a range of opportunity from mid-size to big bus. In addition to that, Optare has zero-emission buses which are ready—not in a research development or concept phase. All of this allows us to leverage all the investment in whichever (way) we like...
The face of the company is changing. None of the products you see here was there earlier and they are all very different from whatever Ashok Leyland has been offering. There is a new corporate identity, a lot has been happening at a very frenetic pace. We have added capacities at Pantnagar; Ras al-Khaimah (the company’s plant near Dubai) has started production. We have been expanding our business in several geographies.
Thirdly, we have also been expanding our defence business to take care of the cyclicality of the business. The idea is to address various white spaces. We were not present in the light commercial vehicles business and Nissan came up with a very interesting proposition. Now Dost (the first product of the joint venture) has come up and we have two more products. Dost has been received very well and there is a robust demand. The other white space we saw was the construction business and went in for a joint venture with Deere & Co.
So if you look at it, it’s been a very careful strategy of shoring up domestic business, look at overseas growth, address some white spaces—all of this has been happening step by step. In that respect we are on course.
The capacities at your plants have been under utilized. How do we see that changing with new products?
Hosur (in Tamil Nadu) has added a new product line. It made 100 units last month. This month it will be much more. Even capacities at Pantnagar will be utilized very soon. In fact, we are looking at selective capacity enhancement now. You may not see a new plant but debottlenecking and improving efficiency in the existing ones.
What will be your growth strategy for overseas markets?
We are looking at small operations to tap into tactical opportunities. Ras al-Khaimah (in the United Arab Emirates) is a big bus plant now. A product like Optare Solo (a bus brand) can take us to several new markets. In order to grow overseas we will continue to look at inorganic expansion. I don’t know when the right deal will happen. We are constantly scouting for opportunities and will go for it when the right time comes.
Are you interested in Saab (Swedish car maker that’s up for sale)?
We have said clearly we will not get into the car business.
How do we see models panning out from the joint venture with Nissan Motor Co.?
The Dost is in the very light truck segment. The larger truck, Partner, will have a passenger variant like the kinds you see in Japan. Together with the MPV (multi-purpose vehicle), Stile, that makes it four products below 7.5 tonnes. Every six months there will be new products.
The light commercial vehicles have been growing at an explosive rate. Is it sustainable?
If you look at the way Europe has grown, LCVs (light commercial vehicles) are a fraction of total commercial vehicles. It’s good for another 10 years.
What kind of work has Defiance Technologies Ltd been doing?
Defiance has been a phenomenal experiment. It started off with 14 people and has 1,400 now.
It’s like a window to how the business or an enterprise is going to be like in the next few years.
Defiance has been working with Nissan to develop a car for them. It’s working with a tier-1 supplier for Airbus A350 programme, it’s working on developing a completely new power plant for aerospace application, it’s operatioanlizing IT (information technology) and ERP (enterprise resource planning) for the top 50 Fortune 500 companies. It’s also running a very interesting experiment in social media by tracking social media and doing customer analytics for a very large global auto maker.
Where do you see the Hinduja Automotive group five years from now?
I think lot of investments we have been making, will start showing now. We will be seen as a broad spectrum technology-oriented enterprise with a lot of emphasis on mobility in technology.