You are here » Home » Companies » Company Overview » Ashok Leyland Ltd

Ashok Leyland Ltd.

BSE: 500477 Sector: Auto
BSE LIVE 15:49 | 23 Jun 92.20 -1.00






NSE 15:53 | 23 Jun 92.35 -1.05






OPEN 93.20
VOLUME 383252
52-Week high 102.50
52-Week low 73.60
P/E 18.08
Mkt Cap.(Rs cr) 26,982
Buy Price 92.20
Buy Qty 2496.00
Sell Price 0.00
Sell Qty 0.00
OPEN 93.20
CLOSE 93.20
VOLUME 383252
52-Week high 102.50
52-Week low 73.60
P/E 18.08
Mkt Cap.(Rs cr) 26,982
Buy Price 92.20
Buy Qty 2496.00
Sell Price 0.00
Sell Qty 0.00

Ashok Leyland Ltd. (ASHOKLEY) - Director Report

Company director report


Your Directors have pleasure in presenting the annual report of the Company togetherwith the audited financial statements for the financial year ended March 31 2016.


2015-16 2014-15
Profit before tax 116920.18 44219.67
Less: Tax Expense 44742.60 10739.07
Profit after tax 72177.58 33480.60
Balance profit from last year 113612.06 115169.99
a) From Debenture Redemption Reserve to Statement of Profit and Loss 11625.00 -
b) From Statement of Profit and Loss to Debenture Redemption Reserve 19625.00
Profit available for appropriation 197414.64 129025.59
Proposed dividend 27035.83 12806.44
Corporate dividend tax thereon 5503.86 2607.09
Balance profit carried to Balance Sheet 164874.95 113612.06
Earnings Per Share (Face value Rs 1/-)
- Basic and Diluted (in Rs ) 2.54 1.20


After a period of recovery in the financial year 2014-15 the Medium & HeavyCommercial Vehicle (M&HCV) segment of the Commercial Vehicle industry has registered agrowth of 30% in the financial year 2015-16. Despite a subdued trend in the industrialactivity the pick-up in M&HCV sales was driven by replacement-led demand by largefleet operators pre-buying ahead of the implementation of BS-IV emission norms andgradual improvement in the viability of fleet operators due to declining diesel prices.

Your Company witnessed a 34% growth in sales (including LCV) during the financial year2015-16 with total sales of 140457 units as against 104902 units during the previousfinancial year.

Sales of M&HCV increased to 109762 units with a growth of 41.3% as compared to77660 units during the previous financial year. The market share in M&HCV grew from27.2% to 31.3% facilitated by optimal product mix in the growth segments a sustainedfocus on meeting customer requirements and network expansion.

Sales of Light Commercial Vehicle (LCV) have grown 13% to 30695 units in 2015-16 asagainst 27242 units during the previous financial year.

The Power Solution Business witnessed a growth of 11% over the previous year despitetepid demand on account of improved power availability and general slowdown in industrialand agriculture sectors. Revenue from Spare Parts saw a growth of approximately 5% ascompared to the previous financial year.

Highlights of performance are discussed in detail in the Management Discussion andAnalysis Report attached as Annexure E to this Report.


Your Directors are pleased to recommend a dividend of Rs 0.95 paise per equity share ofRs 1/- each for the financial year ended March 31 2016. Payment of dividend is subject tothe approval of shareholders at the forthcoming Annual General Meeting and would involve acash outflow of Rs 325.40 Crores including dividend distribution tax.


There are no material changes and commitments affecting the financial position of theCompany between the end of the financial year and the date of this Report.


Your Company does not propose to transfer amounts to the general reserve out of theamount available for appropriation and an amount of Rs 396.38 Crores is proposed to beretained in the profit and loss account.


During the year Non-Convertible Debentures (NCDs) Series AL 15 of Rs 70 Crores AL 17of Rs 200 Crores and AL 19 of Rs 150 Crores were fully redeemed and NCD Series AL 16 of Rs45 Crores was partly redeemed. No fresh NCDs were issued during the year. Your Companyrepaid secured rupee term loan availed from Banks to the tune of Rs 83.33 Crores beforethe due date during the year under review. No fresh term loans were availed during theyear. During the year under review your Company repaid ECB loan instalments that felldue equivalent to USD 33.33 million on the due dates. No fresh ECB loans were availedduring the year.

As at March 31 2016 long term borrowings stood at Rs 2659 Crores as against Rs 3325Crores as on March 31 2015.


Several key initiatives on the HR front were initiated during the financial year underreview. This includes a new strategy for Talent Acquisition from campuses of keyinstitutes aimed at better industry institute collaboration and building sustainedrelationships with them. Campus Ambassadors were identified as part of the process. Therevamped Emerging Leaders Program saw the first batch graduate in March 2016 aftercompleting a rigorous process and live project orientation. These Emerging Leaders wouldform critical part of the succession pipeline. Hays Job Evaluation used as the metric forelevation at all senior levels is now an integral part of the talent management process.Employee engagement gained sharper focus with initiatives such as quarterly LeadershipMeet Toastmasters Club "You Made My Day" - (An initiative to enhance thespirit of appreciation and camaraderie) "IGNITE" - (an innovation platform tounleash the innovative thinking abilities of employees) being launched and received wellacross the organisation. Further in our constant endeavour to enhance the levels ofengagement and energy across the organisation an Organisational Health Index survey"Expressions 16" in partnership with AON Hewitt was initiated and the resultsof the survey would result in action plans being put in place to address areas ofimprovement identified.

Going forward the financial year 2016-17 will see increased focus on - TalentTransformation through implementation of "SAP Success Factors" - a complete HRMSapplication suite which would help in empowering and enabling Managers to better handletheir teams. In addition it would enhance the quality of analytics available to help inenhancing the quality of decision making with regards to people and processes throughoutthe employee life cycle. Employee skill and capability building across the organisationwith increased focus on new skills emerging out of new regulatory frameworks emergingtechnologies and customer need would be another area of focus in the year ahead. Focus onright staffing and skilling in identified international markets would be given greateremphasis in line with the goal of spreading the organisation Rs s global footprint.


Your Company is in compliance with the Corporate Governance guidelines as laid out inthe Listing Agreements/Securities Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (SEBI Listing Regulations). All the Directorsand the Senior Management personnel have affirmed in writing their compliance with andadherence to the Code of Conduct adopted by the Company.

The annual report of the Company contains a certificate by the Chief Executive Officerand Managing Director in terms of SEBI Listing Regulations on the compliance declarationsreceived from the Directors and the Senior Management personnel.

The Statutory Auditors of the Company have examined the requirements of CorporateGovernance with reference to SEBI Listing Regulations and have certified the complianceas required under SEBI Listing Regulations. The Certificate in this regard is attached asAnnexure D to this Report.

The Chief Executive Officer and Managing Director/Chief Financial Officer (CEO/CFO)certification as required under the SEBI Listing Regulations is attached as Annexure F tothis Report.

Related Party disclosures/transactions are detailed in Note 3.5 of the Notes to thefinancial statements.


Your Directors have pleasure in attaching the Consolidated Financial Statementspursuant to Section 129(3) of the Companies Act 2013 (Act) and SEBI Listing Regulationsand prepared in accordance with the Accounting Standards prescribed by the Institute ofChartered Accountants of India in this regard.


During the year as a part of the divestment plans of the Company to sell non-corebusinesses your Company sold 232518140 equity shares of Rs 10/- each held in AshokLeyland John Deere Construction Equipment Company Private Limited to Gulf Ashley MotorLimited a subsidiary of the Company and thereafter the Company has infused committedcapital contributions.

Automotive Infotronics Limited joint venture and Ashley Airways Limited an associateof the Company are under liquidation.

A report on the performance and financial position of each of the subsidiariesassociates and joint venture companies is provided in the notes to the consolidatedfinancial statements. Pursuant to the provisions of Section 129(3) of the Act read withRule 5 of the Companies (Accounts) Rules 2014 a statement containing salient features ofthe financial statements of the Company Rs s subsidiaries Associates and Joint Venturesin Form AOC-1 is attached to the financial statements of the Company.

Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited financial statements in respect of the subsidiaries are available on the websiteof the Company.


During the year under review Mr. F Sahami non-executive Director stepped down fromthe Board with effect from August 12 2015. The Board wishes to place on record itsappreciation for the valuable contributions made by him to the Board and the Companyduring his long tenure as Director.

In accordance with the provisions of the Act and the Articles of Association of theCompany Mr. A K Das Director retires by rotation at the forthcoming Annual GeneralMeeting and being eligible offers himself for re-appointment.

Dr. Andrew C Palmer was appointed as an Additional Director (Independent) on the Boardwith effect from November 4 2015.

We seek your confirmation for appointment of Dr. Andrew C Palmer as an IndependentDirector for a term upto five consecutive years

i.e. with effect from November 4 2015 to November 3 2020.

Pursuant to the recommendation of the Nomination and Remuneration Committee Mr. VinodK Dasari was re-appointed by the Board of Directors subject to the approval of theshareholders as the Chief Executive Officer and Managing Director (CEO & MD) of theCompany for a period of five years with effect from April 1 2016 to March 31 2021.

The resolutions seeking approval of the members for the appointment of Mr. A K Das Dr.Andrew C Palmer Directors and re-appointment of Mr. Vinod K Dasari CEO & MD havebeen incorporated in the Notice of the Annual General Meeting of the Company along withbrief details about them.

The Independent Directors of the Company have submitted a declaration under Section149(7) of the Act that each of them meets the criteria of independence as provided inSection 149(6) of the Act and there has been no change in the circumstances which mayaffect their status as Independent Director during the year.

The terms and conditions of appointment of the Independent Directors are placed on thewebsite of the Company

The Company has also disclosed the Directors Rs familiarisation programme on itswebsite default/files/Familiarisation programme forIndependent Directors-update Mar2016.pdf.

During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than the sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theCompany.

Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel ofthe Company are - Mr. Vinod K Dasari CEO & MD Mr. Gopal Mahadevan Chief FinancialOfficer and Mr. N Ramanathan Company Secretary. There has been no change in the KeyManagerial Personnel during the year. AUDITORS

M S Krishnaswami & Rajan Chartered Accountants (Firm Registration No. 01554S) andDeloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No. 117366W/W-100018) Joint Statutory Auditors retire at the conclusion of this Annual GeneralMeeting and are eligible for appointment. They have confirmed their eligibility to theeffect that their appointment if made would be within the prescribed limits under theAct and that they are not disqualified for appointment.

The Audit Committee and the Board of Directors have recommended the appointment of theJoint Statutory Auditors for the financial year 2016-17. The necessary resolution is beingplaced before the shareholders for approval.

The Auditors Rs report to the shareholders on the standalone financials for the yearended March 31 2016 does not contain any qualification observation or adverse comment.

The Auditors Rs report to the shareholders on the consolidated financials for the yearended March 31 2016 (paragraph 7) contains a qualification as given below:

The Holding Company has consolidated the financial statements/ financial informationfor the year ended March 31 2016 of three joint venture companies which are unauditedand pending approval by the Board of Directors of the respective companies - Refer Note3.15 to the consolidated financial statements.

We are informed that these financial statements are as received from the respectivecompanies and reflect total assets (net) of Rs 55125.45 Lakhs total liabilities (net)of Rs 95020.47 Lakhs total revenue (net) of Rs 17272.56 Lakhs and total expenditure(net) of Rs 101307.78 Lakhs as considered in the consolidated financial statements.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the unaudited financial statements/financial information of thecompanies in respect of which we are unable to express any opinion the aforesaidconsolidated financial statements give the information required by the Act in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the consolidated state of affairs of the Group itsassociates and jointly controlled entities as at March 31 2016 and their consolidatedprofit and their consolidated cash flows for the year ended on that date.

Board Rs s Response:

The consolidated results of the Company for the year include unaudited financials ofthree joint venture companies as received reflecting total assets (net) of Rs 55125.45Lakhs total Liabilities (net) of Rs 95020.47 Lakhs total revenue (net) of Rs 17272.56Lakhs and total expenditure (net) of Rs 101307.78 Lakhs.

The said financials are pending approval by the Board of Directors of these companies.As the Company is required to submit its consolidated results within 60 days from the endof the financial year to the Stock Exchange it has considered the said financials asreceived from the joint venture companies for the purpose of such consolidation.


Pursuant to the provisions of Section 148(3) of the Act the Board of Directors hadappointed Geeyes & Co. (Firm Registration No.: 00044) as Cost Auditors of theCompany for conducting the audit of cost records for the financial year ended March 312016. The audit is in progress and report will be filed with the Ministry of CorporateAffairs within the prescribed period. A proposal for ratification of remuneration of theCost Auditors for the financial year 2015-16 is placed before the shareholders forratification/ approval.


Pursuant to provisions of Section 204 of the Act read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company engagedthe services of Ms. B Chandra (CP No. 7859) Company Secretary in Practice Chennai toconduct the Secretarial Audit of the Company for the financial year ended March 31 2016.The Secretarial Audit Report for the financial year ended March 31 2016 in Form No. MR-3is attached as Annexure H to this Report. The Secretarial Audit Report does not containany qualification reservation or adverse remark.


Pursuant to the provisions of Section 92(3) of the Act an extract of Annual Return inForm MGT - 9 as on March 31 2016 is attached as Annexure G to this Report.


As per the requirement of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and Rules made thereunder your Company hasconstituted an Internal Complaints Committee (ICC). During the year under review therewere no cases received/filed pursuant to the provisions of the Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013.


During the year six meetings of the Board of Directors were held. The details of themeetings are furnished in the Corporate Governance Report which is attached as Annexure Cto this Report.


Pursuant to the provisions of Section 134(5) of the Act the Board of Directors to thebest of their knowledge and ability confirm that:

a) in the preparation of the annual financial statements for the year ended March 312016 the applicable Accounting Standards had been followed along with proper explanationrelating to material departures;

b) for the financial year ended March 31 2016 such accounting policies as mentionedin the Notes to the financial statements have been applied consistently and judgments andestimates that are reasonable and prudent have been made so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theProfit of the Company for the financial year ended March 31 2016;

c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and were operating effectively;

f) that proper systems have been devised to ensure compliance with the provisions ofall applicable laws were in place and that such systems were adequate and operatingeffectively.


The objective of the Remuneration Policy is to attract motivate and retain qualifiedand expert individuals that the Company needs in order to achieve its strategic andoperational objectives whilst acknowledging the societal context around remuneration andrecognising the interests of Company Rs s stakeholders.

The Company Rs s policy on directors Rs appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate Governancereport which forms part of the Board Rs s Report.


Disclosure pertaining to the remuneration and other details as required under Section197(12) of the Act and the Rules framed thereunder is enclosed as Annexure B to the BoardRs s Report.


Your Company believes that equity based compensation schemes are an effective tool toreward the employees (including Directors) in the growth of the Company to create anemployee ownership to attract new talents to retain the key resources in theorganisation and for the benefit of the present and future employees of the Company. Inview of the above the Board of Directors of your Company has approved the formulation andimplementation of Ashok Leyland Employee Stock Option Plan 2016 (AL ESOP 2016) at theirmeeting held on May 25 2016. Resolution seeking approval of the members for AL ESOP 2016have been incorporated in the Notice of the AGM.


The particulars of loans guarantees and investments under Section 186 of the Act readwith the Companies (Meetings of Board and its Powers) Rules 2014 for the financial year2015-16 are given in Note 3.5 (f) of the Notes to the financial statements.


The Audit Committee and the Board of Directors have approved the Related PartyTransactions Policy and the same has been hosted on the Company Rs s website Leyland Limited-Policy on Related Party Transactions.pdf. ThePolicy intends to ensure that proper reporting approval and disclosure processes are inplace for all transactions between the Company and Related Parties.

There were no materially significant transactions with Related Parties during thefinancial year 2015-16 which were in conflict with the interest of the Company. Suitabledisclosures as required under AS-18 have been made in Note 3.5(d) of the Notes to thefinancial statements.

Details of transactions with related parties are given in Form AOC - 2 which isattached as Annexure I.


Your Company has a robust Risk Management policy.

The Company through a Steering Committee oversees the

Risk Management process including risk identification impact assessment effectiveimplementation of the mitigation plans and risk reporting. Your Company has an establishedEnterprise Risk Management (ERM) function that engages with all the business verticals forrisk assessment and ensures that the risk mitigation plans are in place and validates itsstatus regularly.

The details of Risk Management as practiced by the Company are provided as part ofManagement Discussion and Analysis Report attached as Annexure E to this Report.


The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities during the year are setout in Annexure J of this report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014. The policy is available on the website of theCompany.


Pursuant to the provisions of the Act and SEBI Listing Regulations IndependentDirectors at their meeting held during the year without the participation of theNon-Independent Directors and Management considered/evaluated the performance of theBoard of Directors the Chairman and other Non-Independent Directors.

The Board has undergone a formal review which comprised Board effectiveness survey 360degree and review of materials. This was delivered by an external specialist and resultedin a full Board effectiveness report and Directors Rs feedback. This is further supportedby the Chairman Rs s Annual Director Performance Review.

The Board subsequently evaluated its own performance the working of its Committees andIndependent Directors without participation of the relevant Director(s).

The criteria for performance evaluation have been detailed in the Corporate GovernanceReport which is attached as Annexure C to this Report.


Pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of theCompanies (Meetings of Board and its Powers)

Rules 2014 and Clause 49 of the Listing Agreement/SEBI Listing Regulations the Boardof Directors had approved the Policy on Vigil Mechanism/Whistle Blower and the same washosted on the website of the Company. This Policy inter-alia provides a direct access tothe Chairman of the Audit Committee.

Your Company hereby affirms that no Director/employee has been denied access to theChairman of the Audit Committee and that no complaints were received during the year.

Brief details about the policy are provided in the Corporate Governance Report attachedas Annexure C to this Report.


Your Company has not accepted any deposit within the meaning of provisions of Chapter Vof the Act read with the Companies (Acceptance of Deposits) Rules 2014 for the year endedMarch 31 2016.


There are no significant and material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company.


The Company has a proper and adequate internal control system to ensure that all theassets of the Company are safeguarded and protected against any loss and that all thetransactions are properly authorised and recorded. Information provided to management isreliable and timely and statutory obligations are adhered to. Details of the same areprovided in the Management Discussion and Analysis Report attached as Annexure E to thisReport.

The Company has an established Internal Financial Control framework including internalcontrols over financial reporting operating controls and anti-fraud framework. Theframework is reviewed regularly by the management and tested by internal audit team andpresented to the Audit Committee. Based on the periodical testing the framework isstrengthened from time to time to ensure adequacy and effectiveness of InternalFinancial Controls.


Your Company continues to focus on Research and Development activities with specificreference to emission conformance fuel efficiency vehicular performance and enhancementof safety aesthetics and ride comfort. Further development of the engine range and cabinis also a key result area. Expenditure incurred by way of capital and revenue on theseactivities is shown separately.

Information as required under Section 134(3)(m) of the Act read with Rule 8 (3) of theCompanies (Accounts) Rules 2014 relating to Conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo are furnished in Annexure A to thisReport.


The Directors wish to express their appreciation for the continued co-operation of theCentral and State Governments bankers financial institutions customers dealers andsuppliers and also the valuable assistance and advice received from the joint venturepartners Hinduja Automotive Limited the Hinduja Group and all the shareholders. TheDirectors also wish to thank all the employees for their contribution support andcontinued commitment throughout the year.

On behalf of the Board of Directors
Mumbai Dheeraj G Hinduja
May 25 2016 Chairman