Ashok Leyland starts 'Project Reset' to improve efficiency across the board

Company foresees demand picking up, asserts it has not laid off anyone

Commercial vehicle major Ashok Leyland, which implemented a cost-cutting programme called K54 II last year, said that it has saved over Rs 500 crore during 2019-2020. The company has now started a new initiative called 'Project Reset' which would look at the company's capabilities, cost optimisation, productivity among others.

"We have saved nearly Rs 520 crore through KB54 II during 2019-20, we are now implementing 'Project Reset', which will look at increasing capabilities, cost optimisation, productivity among others," said Vipin Sondhi, MD & CEO, Ashok Leyland.

Gopal Mahadevan, whole-time director and CFO, Ashok Leyland added that under Project Reset, the company will look at overall activities including revenue enhancement (including from international and LCV and other businesses) realisation, material costs, reduction in warrants, productivity improvement, and digitalisation among others.

While declining to share any numbers on outlook, he said, it is not about saving money alone, the company is looking at everything including operations, products and capabilities, and frugal discipline so that Ashok Leyland will emerge stronger when the market opens up.

On demand revival, Sondhi said quarter on quarter the demand will pick up. The greatest stimulus by the Centre and State governments would be opening up the economy.

On manufacturing, he said, company's factories have opened up, along with several of the company's suppliers, although a few suppliers remain shut due to lockdown in various parts of the country.

Sondhi denied reports that the company has gone for a massive layoff at its factories. "We did not lay off any permanent employees and did not go for a salary cut also," said Sondhi.

He said, company's LCV project 'Phoenix' was on track but due to Covid-19 the launch has been delayed. "In three months it will happen."

Company's existing LCV product 'Dost' currently falls in the 2-3 tonne category, while vehicles under Phoenix would be in the 5-7.5 tonne category.

On capex and investments, Mahadevan said in 2019-20 the company invested around Rs 1,257 crore, while at the beginning of the year it was projected at around Rs 2,000 crore.

Capex in the current fiscal will be lower than in 2019-20, as the major exercise in this space is already over, Mahadevan said, while declining to share numbers.

He added that Ashok Leyland was earlier planning to invest in assembly units in Africa and in other markets, but is now doing a rethink as is considering other such as appointing super distributors, and having asset-light models.

Commenting on the company's performance during an investors call, Sondhi said realisation was better thanks to the product mix, as there was a shift towards higher tonnage vehicles of around nine per cent. Margins were supported by the discounts given by the suppliers and raw materials. The company also did not have any inventory at plants or at dealers, which also contributed.

Hinduja Automotive Ltd is one of the major promoters of Ashok Leyland and holds 35.01 per cent stake in the firm as on March 31, 2020. Other Hinduja Group companies also hold some stake in Ashok Leyland.

Hinduja family dispute will not impact Ashok leyland

- Ashok Leyland MD & CEO Vipin Sondhi said his company will not be impacted by issues in the Hinduja Family.

- Reports stated that the legal battle within the Hinduja family could result in a partition of family assets.

- Sondhi said, "The business (Ashok Leyland) is managed independently by professionals. It (the legal battle) is a family matter and it will be addressed by family."