Ashok Leyland Making a Successful Comeback
Published On Feb 01, 2016
The leading commercial vehicle manufacturer, Ashok Leyland is under reforms to make a successful comeback after the hard times it has endured. Lately, the industry suffered huge debts and the company was heading nowhere.
After the Iveco and Ashok Leyland's split, which were teamed up in 1987, the investments rapidly grew to Rs.1200 crore annually on capacity and diversification. This went on for the next six years consecutively until the firm ran out of money.
Vinod Dasari, the Managing Director at Ashok Leyland says this type of investment jacks up the breakeven point as fixed costs increase. At one certain point, the investments funded through debts have increased to Rs. 6800 crore. Another major factor affecting it is the entry of more firms into the industry thus, leading to competition for share in the market.
As part of reforms, the prices were slashed down, and investments were made in new products and platforms. “We decided not to just cut costs but restructure Leyland for growth with new strategies to become lean and efficient,” said Mr. Dasari.
Setting up of service centers in large numbers and providing each outlet with easy access to spare parts was a strategic step in improving the network. “We created a company called Gulf Ashley with 17 dealer outlets all owned by us. All are profitable and I have given my dealers the option of buying any of them if they so wish,” added Dasari.
In addition to the 150 service centers, it also introduced 'TatkaAL' - a 24x7 helpline for seeking information or assistance. Dasari stated that, “If we cannot get your vehicle up and running within the stipulated time we cough up a penalty of Rs.1000 a day. It is a statement of my confidence in my network.” He further added “the idea is not to nail someone or pull him up but to know where we went wrong.”
Leyland is also emphasizing on improving business areas like trucks, buses, spare parts, power solutions, defense and commercial vehicles.