Ashok Leyland Limited
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THE ECONOMIC WEEKLY SPECIAL NUMBER JUNE 1960 From the Chair Ashok Leyland Limited Speech of the Chairman, Sir A Ramaswami Mudaliar THE following is the Speech deli- vered by the Chairman, Sir A Ramaswami Mudaliar, at the 11th Annual General Meeting of the shareholders of Ashok Leyland Limited on June 1, 1960 : Gentlemen, I have great pleasure in extend- ing to you a cordial welcome to the 11th Annual General Meeting of your Company. The Director's Report, Audited Balance Sheet and Profit and Loss Account for the year ended 31st December 1959, has been circulated to you, and with your permission, I shall take them as read. Your Company has made steady progress in its manufacturing pro- gramme during the year under re- view. This progress has been in two directions, both of which are essential. In accordance with the understanding which we have with the Government of India, the Com- pany has to maintain progress in the development of indigenous manu- facture, so replacing the foreign and imported content of the vehicles manufactured. It has also an equal duty to increase its production so as to meet the growing demands for the vehicles of your Company. These two aspects of manufacture require a continuous expansion of the plant and machinery and of the buildings which must bouse them. There is a further requirement which is as essential as either of the above, 'and that relates to the recruitment and training of skilled labour. EXPANSION OF PLANT The first phase of our building programme was virtually completed in 1958 and was referred to by me at our last meeting. But we could not afford to stand still and 1959 saw the installation of additional plant and machinery required to complete the machining of engine components, to provide to some ex- tent for the early production of the rear axle and gearbox and to enable us fully to equip our own tool room as a preliminary to producing our own Jigs, Tools and Fixtures. All these activities necessarily involved an increase in the number of em- ployees from 951 at the end of 1958 to 1473 at the end of 1959. The increase in the production of the Leyland Comet chassis during the year rellected the increase in the demand for the Comets and the popularity of this vehicle. In the year 1959, the. increase in the out- put of these vehicles has been 2½ limes the output in .1956, but even this increase has been totally inade- quate to meet the requirements of the demands as they stand in your order books. The Comet has esta- blished a reputation for good per- formance at low cost per mile, which has enabled your Directors to plan with confidence for an output far in excess of your Company's original conception. All motor manufac- turers in this country have, however, been faced with difficulties which they had not anticipated before and which to a certain extent have reac- ted on the enthusiasm with 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 auxilia- 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 little arbitrary 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 outlay on the construction and maintenance of the Highways in the country, of strengthening the bridges on such Highways and of utilising roan! transport for passengers and for goods over long distances, has been welcomed in the country. In a vast country like India, it is inconceiv- able that rail transport can be avail- able in every nook and corner, at any rate, unless a staggering amount of capital is invested in such rail expansion. It is. therefore, hoped that the incidence of the excise duties on the development of road transport, will be carefully studied, and as a result of such study, a re- view of such incidence will lead to the abolition or at least the lowering of the heavy excise duties now levied on motor vehicles. 1007 HIGHER PRODUCTION TARGET In spite of this adverse factor, your Directors have taken the view that expansion of the production of the number of vehicles in your Fac- tory is absolutely essential and that early steps should be taken to in- crease the capacity of the Factory for the production of this increased number. After discussion with the Directors of Messrs Leyland Motors Ltd, your Directors, in consultation with that Company's Vice-Chairman who visited your Works last year, came to the conclusion that it would he advantageous to the Company to produce at least 5,000 Comet chassis per annum and at the same time to provide for a production of 1.000 heavy duty Leyland Engines of the 0.000 and 0.680 type, and at the same time consequentially to add at least 20 per cent to the total pro- ductive capacity for the manufacture of spare parts. LARGER SHARE FOR LEYLAND The increased target requires additional capital expenditure. The import of plant and machinery ne- cessary for the purpose; the addi- tion of buildings to house such plant and machinery would involve a fair- ly substantial increase of capital ex- penditure. As a preliminary to the serious consideration of raising the necessary capital for this expansion programme, a call will shortly be made on all the recent issue of part- ly paid shares to make them fully 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. Having regard to the ex- pansion programme, it may be slated at once, that the capital which will be issued will be much less than the authorised capital arid is pro- posrd to be issued not all at once, but over a period. The problem, however, of raising the necessary capital has been found to he more complex than it mav appear at first sight. The foreign exchange re- quired for obtaining the plant and machinery and accessories, was far greater than theforeign exchange resources that would be available by
Transcript of Ashok Leyland Limited
T H E E C O N O M I C W E E K L Y SPECIAL NUMBER JUNE 1960
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 programme 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 Company has to main ta in progress in the development of indigenous manufacture, 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.
EXPANSION OF PLANT
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 extent 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 employees 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 output of these vehicles has been 2½ limes the output in .1956, but even this increase has been tota l ly inadequate to meet the requirements of the demands as they stand in your order books. The Comet has established a reputa t ion fo r good performance 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 manufacturers 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 reacted 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 iaries, 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 Government's policies and projects. The increasing awareness of the Government 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 inconceivable that ra i l t ransport can be available 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 review 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.
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HIGHER PRODUCTION TARGET
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 Factory 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 productive capacity for the manufacture of spare parts.
LARGER SHARE FOR LEYLAND
The increased target requires addi t ional capi tal expenditure. The impor t of plant and machinery necessary for the purpose; the addit ion of bui ldings to house such plant and machinery would involve a fairly substantial increase of capital expenditure. 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 partly paid shares to make them f u l l y paid-up. Also the Directors approached you recently for increasing the authorised capital of the Company to Rs 10 Crores and your consent was readily given to the proposal. Hav ing regard to the expansion 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 requi red for obta in ing the plant and machinery and accessories, was far greater than theforeign exchange resources that would be available by
SPECIAL NUMBER JUNE 1960 T H E E C O N O M I C W E E K L Y
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 between the two sets of investors. I t has been calculated that to m e n all the requirements of foreign exchange 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 Government of India was prepared to give the necessary addi t ional foreign exchange. Consultations have, therefore, been held between your Directors 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 Government to restore the position of the two sets of shareholders to a 5 0 / 5 0 basis. Negotiations were then cont 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 colleagues 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 proport 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 thereafter, w i t h your approval , the, formal 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 implement the proposed expansion b r i n g in their wake addi t ional responsibilit ies on those who are in eharge of the Factory and its adminis t ra t ion. This Factory w i l l then be equipped wi th plant and machinery necessary to make modern heavy commercial vehicles, which w i l l compare favourably w i t h similar factories in Europe. Indeed, Sir Henry Spurrier , Managing Director of Leyland Motors L t d , in a recent speech, forecast a day not far distant, 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 ' ' Lancashire Factories. I stated that this expansion would involve heavy responsibil 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 required in the Country.
SKILLED LABOUR
I have already referred to the e l imina t ion of the impor ted contents of our vehicles and we have programmed to produce the rear axle by the end of 1960 and gearbox before 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 progress must u l t imately be governed by the rate at which we can train artisans. We have given our attention to this problem for sometime and today about 170 men are receiving 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 requirements. In the years 1960 and 1961 your Directors plan to t ra in not less than 800 artisans in addit ion to those trained men we may be able to recruit .
NEW FOUNDRY PROJECT
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 Government and a licence for the establishment 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 Company, the former having 75 per cent of the shares and your Company 25 per cent of the capital of the Company. 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 machinery 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 required for the vehicle product ion , as the i m p o r t of castings w i l l be discontinued.
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 picture 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 responsibil 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 confident 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, visited 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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T H E E C O N O M I C W E E K L Y R e g d . N o . B 5 4 8 9
