Ashok Leyland BPSM Final

7/28/2019 Ashok Leyland BPSM Final

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Submitted To: Submitted By:

Prof. Govinda Sharma INDRA SWETABH MANI (11022)

GUNDA V RAJYALAKSHMI (11079)

MANNE RAMYA RAVALI (11089)

GIRISH S D (11137)

HANIYA ERAM (11139)

KANISHKA SHARMA (11144)

BPSM Proje

ct on


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Agenda

Industry Overview

Company Overview

CPM

Porters Five Forces

SWOT

SPACE Matrix

Quantitative Strategy Planning Matrix


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About CompanyYear Historical Significance

1948 Birth of Ashok Motors

1949 First A40 Assembled

1950 Ashok Motors and Leyland (UK) collaboration

1954 Govt. approval for manufacture of commercial vehicles

1955 Ashok Motors becomes Ashok Leyland

1967 Nations first Double decker bus (Titan) rolls out from AL

1970 Special purpose Tipper vehicle (1,000 Nos.) delivered to Indian Army

1974 Rs. 1,000 million Turnover

1982 Nations first articulated bus introduced in Bangalore

1987 The Hinduja Group acquired Ashok Leyland1993 First Indian Auto company to receive ISO 9002 (QA in PIS) Certification

1997 All-Terrain logistic vehicle Stallion for Indian Army (Adv. during Kargil war)

2006 Acquisition of AVIA

2007-2008 Joint venture with Nissan, Continental AG, Alteams, John Deere

2010 - 2012 Hybrid CNG, U truck platform, controlling stake in Optare, DOST, Jan Bus


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Hinduja Group

Ashok Leyland

Ashok Leyland Defense Gulf Oil (Commercial explosives, Lubricants, Mining, Specialty

chemicals

IndusInd Bank(Switzerland)

Hinduja Global Solutions (formerly named HTMT Global Solutions) P. D. Hinduja National Hospital and Medical Research Centre

Hinduja Realty Ventures Limited

Impeccable Imagination (Design related Infrastructure)

IndusInd Media and Communications Ltd. Hinduja Foundries (Education, Arts & Culture, Social Welfare,

Sports)

Defiance Technologies Limited

British Metal Corporation (India) Pvt Ltd.


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Products

1. Buses (City, Sub-Urban, Inter-City, School, Special)

2. Trucks (Long haul, Mining & Construction, Distribution)

3. Light Vehicles (Dost)

4. Defense

1. Logistical (Fox, Stallion, Rhino)2. Tactical(MPV)

3. Special Purpose vehicles (Buses)

5. Power Solutions

1. Leypower (Diesel Generating Sets)2. Leymarine (Marine Engines and Aggregates)

3. Special Engines (Engines for Crane, Sprinkler)

4. Leygas (Generating sets running on Natural Gas)

5. Leyfire (Engines for Fire Fighting applications)


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CPM

Critical Success Factors Weights Ashok Leyland Tata Motors Eicher Motors

Rating Weighted

Score

Rating Weighted

Score

Rating Weighted

Score

Distribution channel 0.2 3.5 0.7 4 0.8 2.5 0.5

After Sales Service 0.2 2.5 0.5 3.5 0.7 2 0.4

Financial

Position

0.15 3 0.45 2 0.3 4 0.6

Product Quality 0.13 3.5 0.455 3 0.39 2 0.26

Brand Value 0.12 3.5 0.42 4 0.48 2 0.24

Market Share 0.1 3 0.3 4 0.4 1 0.1

Price Competitiveness 0.1 3 0.3 3 0.3 4 0.4

Total 1 3.125 3.37 2.5


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CPM Contd..

Distribution ChannelTATA:

1. 19 Distributors and approximately 1200 authorized retail outlets

2. Distribution agreement with Apex Greatest Industrial Co Ltd (AGI), Myanmar to sell

Commercial Vehicles

3. Integrated CRM-DMS, linking more than 1,200 dealers and tracking 25,000 customers

Ashok Leyland:

1. 220 dealer outlets and 410 service centers across the country

Eicher:

1. 381 dealers across the country

2. Presence in 40 countries


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CPM Contd.. After Sales Service

Tata Motors

1. Breakdown assistance in association with MyTVS (Repair and Towing service).

2. Response time within city limits 60 Mins, State/National Highways 90

Mins, Ghat roads 120 Mins

Ashok Leyland

1. Every major highway has a service centre every 75 Kms, reaching customer

within 4 hours and restoration of vehicle within 48 hours.

2. 19,000 mechanics and 5,800 retailers

Eicher Motors

1. Repairs within 48 hours in North-South and East-West corridors

2. Breakdown compensation if it fails to attend

3. Mobile service vans at all dealerships, to support running repairs


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CPM Contd.. Financial Position

Terms Ashok Leyland Tata Motors Eicher

2011 2010 2009 2011 2010 2009 2011 2010 2009

PBIT

990.73 646.63 365.75 3686.48 4219.82 1769.85 144.07 89.06 47.1

Invested

capital

6621.15 5936.75 5435.87 35912.05 31429.69 25559.83 557.1 474.14 413.3

ROIC

0.1496 0.1089 0.0672 0.1026 0.1342 0.0692 0.2586 0.1878 0.1139

ROIC %14.96 10.89 6.72 10.26 13.42 6.92 25.86 18.78 11.39


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CPM Contd.. Market Share

Company 2006 2007 2008 2009 2010 2011

Tata motors 62% 62.9% 60.5% 61.9% 63.3% 60.1%

Ashok

Leyland

27% 27.9% 27.5% 25.7% 23.3% 25.5%

Eicher

motors

7.4% 6.8% 8.2% 7.4% 8.6% 9.3%

Others 3.5% 2.4% 3.9% 5% 4.7% 5.15%


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Threat of Substitute

Products

Threat of new

Entrants

Industry Rivalry Bargaining Power of

Supplier

Bargaining Power of

Customers

1. Railway and

Aviation form the

substitutes

2. Railway

connectivity is still

poor, though the

freight cost might be

low.3. Air cargo has a

CAGR of 10.9%

(international cargo is

67%). Complexities in

expanding network.

1. Bharat Benz, SML

Isuzu, Kamaz Vectra,

Man Se, Volvo, and

Scania AB

2. Capital

requirements to start

the business are huge

3. Customers cannoteasily switch loyalty

4. Developing

technology suited to

Indian conditions

takes time

5. Developing sales

and service channel

takes time

1. CV Industry

expected to grow with

a CAGR of 15%, every

competitor wants a

share of the pie

2.Ashok Leyland JV

with John Deere to

distribute and marketconstruction

equipment in India

landed in court due to

Telcon (TATA

Subsidiary)

3. Exit barriers are

high, hence

competitors will stay

1. Number of

dedicated suppliers

2. Supplier an equal

partner in the process

3. Support to

improvise the supplier

process

1. 1st level - Fleet

owners (bulk buy)

2. 2nd level State

Road Transport

corporations (Price

conscious)

3. No drastic product

differentiation withcompetitor products

4. Cost of switching is

low

5. Too many

competitors, hence

customer has the final

say

Porters 5 Forces Model


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SWOTSTRENGTHS

1. Strong Brand Name

2. Standard, innovative, unique quality Products

3. Extensive Dealer Network400 full service outlets in the

country

4. Better supplier understanding

5. Long term relationship with customers

6. Own comprehensive R&D base - 1000 membered product

management team

WEAKNESS

1. Late entrant in LCV segment

2. Too much dependency on state road transport corporations

3. Failure to capitalize on new emerging African and Asian

markets

4. Undifferentiated Product

OPPURTUNITIES

1. Projects like JNURM are expected to boost the urbaninfrastructure which in turn is expected to drive demand

2. Expansion to Global Markets

3. Commercial vehicle Industry is expected to grow with a

compound annual growth rate of 15% by FY 2016-2017

(Young)

4. Delhi Mumbai Industrial Corridor is expected to drive the

demand.

5. Proposed 51% in FDI Retail is expected to improve the supply

chain system creating demand for commercial vehicles.

Indian Army needs:

o 1,500 light bullet-proof vehicles

o 4,500 light specialist vehicles

o 16,000 infantry combat vehicles

o 4,000 light armoured vehicles

o Heavier vehicles needed to tow Howitzers (Telegraph)

THREATS

1. Entry of new global competitors2. Weak Index of Industrial production

3. Tight monetary policy viz., Higher lending rate

4. Suspension of mining activities in many parts of the country

5. Deferment of capacity addition by fleet owners

6. Higher inflation Higher raw material costs

7. LCV demand from the rural sector dependent on monsoon

success.


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SPACE Matrix

Environmental stability

Criteria Remarks Score

Overall economic condition 100% dividend in the year ended March 2012 -2

GDP growth India is the 4th biggest commercial vehicle market in the world.30%

Average 24% Y-o-Y growth over last 3 fiscals

-2

Inflation High Inflation and Political Issues -4

Price elasticity Demand is price Inelastic in long run -2

Technology Headquartered in Chennai (Detroit of South India).Automobile hub of

India.1000 membered product management team

-1

Competitive pressures Now, manufacturers from China, India, and perhaps other emerging

nations will be significant sources of supply, and customers around the

world will demand new vehicles at ever-decreasing prices.

-4

Average -2.5


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SPACE Matrix

Industry Strength

(PR Web)


Industry growth

potential

India is expected to have the fastest-growing auto sales. since end of

the License Raj era gave local VMs time to develop, India has capable

manufacturers and suppliers, which provide talented partners for

foreign companies

6

Barriers to entry The barriers to enter the automotive industry are substantial. Although

the barriers to new companies are substantial, established companies

are entering new markets through strategic partnerships or through

buying out or merging with other companies

5

Global Market

Development

Asia-Pacific is forecast to emerge into the fastest growing market, great

future growth opportunities in African countries (Sub-Saharan AfricaTransport Policy Program, SSATP)

5

Average 5.3


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Financial strength

(Capitaline)


Return on assets Ashok Leyland ROA is 10.52% and Industry average is 6.30% 6

Leverage Ratio Ashok Leyland leverage ratio is 0.59 higher the industry's 0.52 3

Profitability Profit over sales for Ashok Leyland is is 5.53% that is higher than

industry average of 3.93%

5

Average 4.67

SPACE Matrix


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Competitive

Advantage


Market Share Ashok Leyland hold 25.50% market share which has increased by

9.44% over the year, Still far behind Tata Motors which hold

60.10%

-2

Global Presence Ashok Leyland is exporting pessenger vehicles to 30 countries.

Targeting Emerging markets of Asian and African Countries.

-2

Average -2

SPACE Matrix


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Point on X-axis (3.3)

Industry Strength (5.3) + Competitive Advantage (-2)Point on Y-axis (2.17)

Financial Strength (4.67) + Environmental stability (-2.5)

The Coordinate of X-axis and Y-axis will fall on 1st Quarter

SPACE Matrix


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QSPM

Strategy 1

Product Line extension of Bussegment to provide luxury Intercity

Coach (Bus)

Strategy 2

Marine engine product line extensionto provide sales and service to vessel

owners

Key Internal Factors Weight Attractive Score Total A Score Attractive Score Total A Score

Strengths

1. Strong Brand Name 0.12 4 0.48 3 0.36

2. Better supplierunderstanding

0.1 3 0.3 2 0.2

3. Long term relationship with

customers

0.12 4 0.48 2 0.14

4. Unique Product 0.08 2 0.16 4 0.32

5. Own comprehensive R&D

base

0.1 3 0.3 4 0.4

Weakness

Sensitive to globalization 0.14 2 0.18 3 0.42

Undifferentiated Product 0.13 2 0.3 3 0.45

Marketing 0.08 2 0.16 1 0.08

Service & Support 0.13 2 0.16 3 0.19

Sub Total 1.0 2.52 2.56


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QSPM Contd..

Strategy 1

Product Line extension of Bussegment to provide luxury Intercity

Coach (Bus)

Strategy 2

Marine engine product line extensionto provide sales and service to vessel

owners

Key Internal Factors Weight Attractive Score Total A Score Attractive Score Total A Score

Opportunities

Growth of market 0.15 3 0.45 2 0.3

Global alliance 0.15 3 0.45 4 0.6

Corridors between cities 0.15 3 0.45 2 0.3

Threats

Inc. market competition 0.1 2 0.2 4 0.4

Govt. Policy and Taxes 0.15 3 0.45 1 0.15Economy fluctuations 0.15 2 0.6 3 0.45

Dependency on Customer 0.15 2 0.3 3 0.45

Sub Total 1.0 2.9 2.65

Sum Total Attractiveness 5.42 5.21


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Pointers on Strategy 1


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Ashok Leyland BPSM Final

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