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Last year was not a good one for Ashok Leyland, considering the overall lacklustre shape of the industry. Sales and volumes dropped. However, leaving the past behind, Ashok Leyland is set to ramp up things this year. The country's second largest commercial vehicle manufacturer has given a guidance of 4-5 per cent growth for 2013-14, higher than the industry average of 3-4 per cent. The company is banking on new products and its revamped sales network to achieve this target.
"Two new products which we are going to launch in the next six to nine months will change the face of Ashok Leyland," says Vinod K Dasari, managing director, Ashok Leyland.
This optimism has been reinforced by the fact that despite poor demand, Ashok Leyland managed to increase its market share in all major categories in 2013-14. For instance, in the truck market, its share rose 3.6 percentage points to 24 per cent in 2012- 2013. In the intermediate commercial vehicle (ICV) segment, it rose five percentage points to 11.2 per cent and in the multi-axle vehicle (MAV) category, it increased 4.5 percentage to 29 per cent. Among other categories, market share for tractors rose 0.6 percentage points, while that for tipper increased 2.7 per cent.
Dasari says sales network outside the southern region and new products helped the company stay ahead of the curve. Over the past couple of years, Ashok Leyland has been aggressively focusing on building its base in north India. It roped in Indian cricket team captain M S Dhoni to endorse its trucks in an attempt to create visibility for its brands across the country. "While Dhoni's endorsement created a strong visibility among the trucking community, our network expansion was also a key factor," says Dasari. Ashok Leyland has 460 full-service centres across the country, an increase of 26 per cent in two years. A wider market has helped the company. In 2012-13, about 20 per cent of its sales came from new dealers, especially in the northern region, says Dasari. While Ashok Leyland's market share was flat at 46.4 per cent in the south for 2012-13, the share in the north and east went up.
Analysts agree the branding and marketing exercises have been a step in the right direction. K Sridharan, chief financial officer, Ashok Leyland, while addressing analysts, said that the company would grow by around 4-5 per cent (in volumes) in 2013-14, even as the industry is expected to grow by around 3-4 per cent.
However, it may not be all smooth sailing. In the event that industry growth remains flat, Ashok Leyland could see a decline in the first half of the year. Dasari admits sales in the first half of 2013-14 will be 10 per cent lower than last year in terms of volumes. However, in the second half, the company hopes to see 20 per cent higher volumes as infrastructure projects are expected to pick up after the monsoon, he says.
The company will launch products in the ICV (intermediate commercial vehicles) and LCV (light commercial vehicle) segments. "We will launch a truck (the Boss), which will fill the ICV gap", says Dasari. The BS-III compliant Boss, expected to be launched in July this year, will offer automated transmission in one of its versions.
However, the new ICV product may not be able to rake in more revenue. Yaresh Kothari, research analyst (automobile) at Angel Broking, says margins are not high in ICVs as compared to M&HCV and profitability will be under pressure.
Another analyst says the Boss will "give more numbers, but not value." He says with this product, the company will be able to cover customers across all the segments. "In this industry, people are loyal to one brand, so if you offer all the products, it will be a great advantage. For Ashok Leyland, it will be even more advantageous since it has got a good track record".
There are similar doubts about another upcoming product. For instance, Ashok Leyland will launch N-Truck (16-49 tonnes) with new and modern cabins in the 16-49 tonne category. The product is being hailed by the company for its driver comfort features. But experts say it will just be another add-on that will help build its image, but won't be a big winner.
However, the company is hopeful the new products will boost sales. In 2013-14, the company expects to sell 85,000 units in the domestic market as compared to 75,000 units.
Meanwhile, it is also planning a product for the LCV category. "We will be launching the Stile-a LCV that can be used as a passenger (six seater) or a cargo carrier by removing the seats-the Partner (5-6 tonner) and a CNG version of the Dost," says Dasari.
After the launch of the new variants, LCV sales are expected to increase by around 50 per cent as compared to 20 per cent for the industry in 2013-14.
Besides boosting its product portfolio, the company is strengthening its back-end operations and manpower resources as well.
