Ashok Leyland bets on overseas growth as West Asia risks weigh on supply chains

New Delhi: Ashok Leyland is tightening costs, reinforcing supply chains and accelerating its overseas push, including into Indonesia and other Asean (Association of Southeast Asian Nation) markets, betting on operational discipline to sustain growth after a year of double-digit earnings expansion, according to top company executives.

The country’s third-largest commercial vehicle maker reported a 10% year-on-year rise in net profit to ₹3,721 crore and a 16% increase in revenue to ₹56,362 crore for FY26. In the war-hit January-March quarter (Q4FY26), net profit rose 11% to ₹1,381 crore while revenue increased 17% to ₹14,695 crore.

Volumes supported the performance. Truck and bus sales rose 12% to 126,745 units, while light commercial vehicle volumes increased 18% to 74,448 units in FY26.

Supply edge

Managing costs and supply-chain resilience has become central to the company’s approach after the pandemic-led disruption, according to Dheeraj Hinduja, chairman at Ashok Leyland, in a post-results interaction with Mint.

“Post-covid, we realized that we need to have a supply chain that is able to support us, come what may, in terms of the different scenarios that we might face. So from that perspective, I think there was good learning from the past,” Hinduja said. “But as required, I would say, we are taking cost measures as well. We are looking at, without affecting the long-term growth prospects of the company when it comes to capex, when it comes to new models.”

Chief financial officer KM Balaji said cost measures are being driven through value engineering, e-sourcing and commercial negotiations.

“It includes even looking at the component design, weight, as well as the materials that are used in that shape,” Balaji explained. He has also been elevated to the board of directors for a period of two years.

The company has also set up cross-functional operational teams to improve coordination and reduce supply-chain disruptions.

Together, these measures and higher volumes have supported growth, executives said.

Peer Tata Motors Ltd reported a 5% decline in consolidated net profit in FY26 to ₹3,030 crore. Excluding a ₹1,428-crore loss on investments linked to its equity stake in Tata Capital, profit rose 9% to ₹4,458 crore. Revenue increased 44% to ₹83,855 crore, supported by 14% growth in domestic and international volumes to 428,000 units.

Ashok Leyland's international sales rose 19% to 18,082 units, although disruption at its United Arab Emirates facility pulled down volumes in Q4 by 3% to 5,322 units.

Hinduja struck an optimistic tone on FY27 growth prospects even as West Asia conflict weighs on demand. To support its overseas expansion, Ashok Leyland has set up a wholly owned subsidiary in Indonesia, where Tata Motors and Mahindra and Mahindra Ltd had secured orders for more than 105,000 LCVs earlier this year.

“It is one of the largest markets and we are making a start over there, exploring different options of products. And as we have said that Bahrain, Middle East (West Asia), Africa, Saarc, Asean is our next major hub that we are trying to break into. So we are already present in the Philippines, we are already present in Malaysia and now starting into the Indonesian market as well,” Hinduja said.

The company is also accelerating development of battery technology through a partnership with Chinese battery firm CALB. A battery pack plant is being set up near Chennai under the partnership and is expected to begin operations in the first half of next financial year.

“We've put a very strong battery team together now. They're working not only on a current facility that we're putting up for the battery pack but they're planning for the future as well,” Hinduja said.