Ashok Leyland Limited

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Transcript of Ashok Leyland Limited


    From the Chair

    Ashok Leyland Limited Speech of the Chairman, Sir A Ramaswami Mudaliar

    THE fo l lowing is the Speech del i -vered by the Cha i rman , S i r A

    Ramaswami Muda l i a r , at the 11th A n n u a l General Mee t ing of the shareholders of Ashok Leyland L i m i t e d on June 1, 1960 :

    Gentlemen, I have great pleasure in extend-

    i n g to you a cord ia l welcome to the 11th A n n u a l General Meet ing of your Company.

    The Director ' s Report , A u d i t e d Balance Sheet and Profi t and Loss Account fo r the year ended 31st December 1959, has been circulated to you, and w i t h your permission, I shall take them as read.

    Y o u r Company has made steady progress in its manufac tu r ing pro-gramme d u r i n g the year under re-view. This progress has been in two directions, both of wh ich are essential. In accordance w i t h the understanding which we have w i t h the Government of I nd i a , the Com-pany has to main ta in progress in the development of indigenous manu-facture, so replacing the foreign and impor ted content of the vehicles manufactured. It has also an equal duty to increase its product ion so as to meet the g r o w i n g demands for the vehicles of your Company. These two aspects of manufacture require a continuous expansion of the p lant and machinery and of the bui ld ings w h i c h must bouse them. There is a further requirement w h i c h is as essential as either of the above, ' and that relates to the recrui tment and t r a i n i n g of skil led labour.


    The f i rs t phase of our b u i l d i n g programme was v i r tua l ly completed in 1958 and was referred to by me at our last meeting. But we could not afford to stand s t i l l and 1959 saw the ins ta l la t ion of addi t ional plant and machinery required to complete the machin ing of engine components, to provide to some ex-tent for the early p roduc t ion of the rear axle and gearbox and to enable us ful ly to equip our own tool room as a p re l imina ry to p roduc ing our own Jigs, Tools and Fixtures. A l l these activit ies necessarily involved

    an increase in the number of em-ployees f r o m 9 5 1 at the end of 1958 to 1473 at the end o f 1959. The increase in the p roduc t ion of the Leyland Comet chassis d u r i n g the year rellected the increase in the demand for the Comets and the popu la r i t y of this vehicle. In the year 1959, the. increase in the out-put of these vehicles has been 2 limes the output in .1956, but even this increase has been tota l ly inade-quate to meet the requirements of the demands as they stand in your order books. The Comet has esta-blished a reputa t ion fo r good per-formance at low cost per mile , which has enabled your Directors to plan wi th confidence for an output far in excess of your Company's o r i g i n a l conception. A l l motor manufac-turers in this country have, however, been faced w i t h difficulties which they had not ant icipated before and which to a certain extent have reac-ted on the enthusiasm w i t h which they have planned progress. The recent levy of excise duties on motor cars of a certain horse power, on tyres and on various other auxil ia-ries, however necessary they may be from the point of view of revenue to meet the demands of projects for the Five Year Plan, is I venture to state, a l i t t le a rb i t r a ry and militates against certain other aspects of Gov-ernment's policies and projects. The increasing awareness of the Govern-ment of the need for a larger out lay on the construction and maintenance of the Highways in the country , of strengthening the bridges on such Highways and of u t i l i s i n g roan! transport for passengers and for goods over long distances, has been welcomed in the country. In a vast country l ike Ind i a , i t is inconceiv-able that ra i l t ransport can be avail-able in every nook and corner, at any rate, unless a staggering amount of capital is invested in such ra i l expansion. It is. therefore, hoped that the incidence of the excise duties on the development of road transport , w i l l be carefully studied, and as a result of such study, a re-view of such incidence w i l l lead to the abol i t ion or at least the lower ing of the heavy excise duties now levied on motor vehicles.



    In spite of this adverse factor, your Directors have taken the view that expansion of the p roduc t ion of the number of vehicles in your Fac-tory is absolutely essential and that ear ly steps should be taken to i n -crease the capacity of the Factory for the product ion of this increased number. After discussion w i t h the Directors of Messrs Ley land Motors L t d , your Directors, in consultation w i t h that Company's Vice-Chairman who visited your Works last year, came to the conclusion that it w o u l d he advantageous to the Company to produce at least 5,000 Comet chassis per annum and at the same t ime to provide for a product ion of 1.000 heavy duty Leyland Engines of the 0.000 and 0.680 type, and at the same t ime consequentially to add at least 20 per cent to the total pro-ductive capacity for the manufacture of spare parts.


    The increased target requires addi t ional capi tal expenditure. The impor t of plant and machinery ne-cessary for the purpose; the addi-t ion of bui ldings to house such plant and machinery would involve a fair-ly substantial increase of capital ex-penditure. As a p r e l imina ry to the serious consideration of rais ing the necessary capital for this expansion programme, a call w i l l short ly be made on al l the recent issue of part-ly paid shares to make them f u l l y paid-up. Also the Directors ap-proached you recently for increasing the authorised capital of the Com-pany to Rs 10 Crores and your consent was readily given to the proposal. Hav ing regard to the ex-pansion programme, i t may be slated at once, that the capital which w i l l be issued w i l l be much less than the authorised capital arid is pro-posrd to be issued not a l l at once, but over a per iod . The problem, however, of ra is ing the necessary capital has been found to he more complex than it mav appear at first sight. The foreign exchange re-qui red for obta in ing the plant and machinery and accessories, was far greater than theforeign exchange resources that would be available by


    the increase of the issued capi ta l on the basis of issuing 51 per cent to local subscribers and 49 per cent to Ley land Motors, w h i c h is now the exis t ing relationship in capi ta l bet-ween the two sets of investors. I t has been calculated that to m e n all the requirements of foreign ex-change for the purpose, a basis of 60 per cent for Leyland Motors and 40 per cent for the local investors would be required unless the Gov-ernment of India was prepared to give the necessary addi t ional foreign exchange. Consultations have, there-fore, been held between your Direc-tors and the Directors of Leyland Motors L t d , on the one hand, and the Government of Ind ia , on the other. The in fo rmal consent of the Government of Ind ia has been obtained for the increase in the shareholding of Leyland Motors to 60 per cent for a period of 10 years by which t ime the foreign exchange position of the Country would enable the Govern-ment to restore the position of the two sets of shareholders to a 5 0 / 5 0 basis. Negotiations were then con-t inued w i th the Leyland Directors and you w i l l be glad to know that S i r Henry Spurr ier and his collea-gues have consented to meet the extra demand on foreign exchange, by agreeing to invest 60 per cent in the capital of the Company and by further agreeing to have the propor-t ion brought down to 50 per rent at the end of a 10 year period.

    I have given you a p re l imina ry indicat ion of the development that may be expected to take place and final proposals i n these matters w i l l be placed before the shareholders w i t h i n a few months, so that there-after, w i t h your approval , the, for-mal consent of the Government may be obtained to these proposals. These far reaching plans involv ing capital expenditure of a h igh order, and the new bu i l d ing programme, necessitated by the decision to im-plement the proposed expansion b r i n g in their wake addi t ional res-ponsibilit ies on those who are in eharge of the Factory and its ad-minis t ra t ion. This Factory w i l l then be equipped wi th plant and machi-nery necessary to make modern heavy commercial vehicles, which w i l l compare favourably w i t h simi-lar factories in Europe. Indeed, Sir Henry Spurrier , Managing Director of Leyland Motors L t d , in a recent speech, forecast a day not far dis-tant, when your Factory w i l l have

    an output of Ley land vehicles greater than that of L e y l a n d ' ' Lan-cashire Factories. I stated that this expansion would involve heavy res-ponsibil i t ies on al l connected w i t h the Company. An arduous task lies ahead in w h i c h everyone connected w i t h our project w i l l have to play their due par t and share the burden w i th the consolation that the Factory, a most modern one, has forged ahead wi th the production of one of the most essential types of vehicles re-quired in the Country.


    I have already referred to the e l imina t ion of the impor ted contents of our vehicles and we have pro-grammed to produce the rear axle by the end of 1960 and gearbox be-fore M a y 1961. Th is enlarged manufactur ing programme and the increase in our output require the recruitment of skilled labour a problem in facing which, we are met w i t h difficulties and anxieties. Your Directors have always been conscious that the rate of our pro-gress must u l t imately be governed by the rate at which we can train artisans. We have given our atten-tion to this problem for sometime and today about 170 men are re-ceiving t ra in ing in this Factory. These t ra in ing facil i t ies w i l l shortly be augmented to meet future re-quirements. In the years 1960 and 1961 your Directors plan to t ra in not less than 800 artisans in addi-t ion to those trained men we may be able to recruit .


    I must now refer to a subsidiary project which your Company has undertaken in collaboration w i th Leylands. I referred to this project last year 'when we were at the stage of consultation wi th Government over this project. The proposals were finally approved by Govern-ment and a licence for the establish-ment of a Foundry called The Ennore Foundries Private L t d , was issued on the 14th August 1959. This private company is a subsidiary of Leyland Motors L t d , and your Com-pany, the former having 75 per cent of the shares and your Company 25 per cent of the capital of the Com-pany. The Foundry w i l l have a management entirely separate from Ashok Leyland and the bui ldings for the Foundry are wel l in hand, the. installation of the plant and machi-nery having commenced. M e l t i n g for

    proto-type castings is expected ' to commence i n July, but f u l l s c a l e product ion of castings w i l l not take place u n t i l the f i rs t h a l f of 1961. Thereafter, it is expected that the new Foundry w i l l not on ly meet a l l the needs of your vehicle factory, but w i l l also have surplus capacity to enable it to sell castings to the automobile indust ry in general. This project w i l l , fur ther , progressively reduce the foreign exchange re-quired for the vehicle product ion , as the i m p o r t of castings w i l l be dis-continued.

    I must apologise for having taken so much of your t ime, but I felt you should have a f a i r ly complete pic-ture of accomplishments up to date, and of the programme of the f u -ture w i t h its hopes and. expectations on the one hand and w i t h the res-ponsibil i t ies and anxieties on the. other. But w i t h the assistance which has been so l ibera l ly given, and w i l l continue to be given by Messrs Leyland Motors, I feel con-fident that the progress we have, aimed at, w i l l be achieved. The Directors of Leyland Motors are ready and w i l l i n g to visit Ind ia and to see the set-up here and give assistance and advice in every way. D u r i n g the year under review, we have had two visits f rom Mr West, Vice-Chairman, and early in 1960, Mr M a r k l a n d , Works Director and Mr D G Stokes, Sales Director, visit-ed the Factory, and gave invaluable advice both w i t h regard to the work of the Factory and w i t h regard to the expansion forecast. I am sure it w i l l be your wish that I should convey to them And above al l to S i r Henry Spurrier , who has been an enthusiastic supporter of our plans of expansion, our thanks for their help and guidance.

    I must readily recognise also the enthusiastic help and co-operation that has been extended to your Directors by the Officers, Staff and W o r k people both on the factory side and on the adminis trat ive office side. This co-operation has been readily forthcoming as the workers and staff have seen the g rowth of the factory f rom time to time and our relations wi th a l l of them have been cordial . I should l ike to con-vev our thanks to all of them.

    N O T E : Th i s does not purpor t to be a record of the proceedings of the A n n u a l General Meet ing.



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