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Placement Document - Ashok Leyland Limited

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TABLE OF CONTENTS Page

NOTICE TO INVESTORS ......................................................................................................................................................... 2 OFFSHORE DERIVATIVE INSTRUMENTS ........................................................................................................................... 8 AVAILABLE INFORMATION .................................................................................................................................................. 9 DISCLAIMER CLAUSE OF THE STOCK EXCHANGES ..................................................................................................... 10 CERTAIN CONVENTIONS, CURRENCY OF PRESENTATION AND FINANCIAL DATA............................................. 11 INDUSTRY AND MARKET DATA ........................................................................................................................................ 12 FORWARD-LOOKING STATEMENTS ................................................................................................................................. 13 ENFORCEMENT OF CIVIL LIABILITIES ............................................................................................................................ 15 EXCHANGE RATES ................................................................................................................................................................ 16 DEFINITIONS AND ABBREVIATIONS ................................................................................................................................ 17 DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES ACT, 2013 ......... 24 SUMMARY OF THE ISSUE .................................................................................................................................................... 26 SUMMARY OF BUSINESS ..................................................................................................................................................... 28 SUMMARY FINANCIAL INFORMATION ........................................................................................................................... 30 RISK FACTORS ....................................................................................................................................................................... 38 MARKET PRICE INFORMATION ......................................................................................................................................... 60 USE OF PROCEEDS ................................................................................................................................................................ 63 CAPITALIZATION AND INDEBTEDNESS .......................................................................................................................... 64 CAPITAL STRUCTURE .......................................................................................................................................................... 65 DIVIDEND POLICY ................................................................................................................................................................ 68 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS PER STANDALONE FINANCIAL STATEMENTS ......................................................................................................... 69 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS PER CONSOLIDATED FINANCIAL STATEMENTS ..................................................................................................... 90 INDUSTRY ............................................................................................................................................................................. 108 BUSINESS .............................................................................................................................................................................. 115 OVERVIEW OF THE INDIAN REGULATIONS AND POLICIES ..................................................................................... 141 BOARD OF DIRECTORS AND MANAGEMENT ............................................................................................................... 146 PRINCIPAL SHAREHOLDERS ............................................................................................................................................ 156 ISSUE PROCEDURE ............................................................................................................................................................. 159 PLACEMENT ......................................................................................................................................................................... 168 DISTRIBUTION AND SOLICITATION RESTRICTIONS .................................................................................................. 169 TRANSFER RESTRICTIONS ................................................................................................................................................ 175 INDIAN SECURITIES MARKET .......................................................................................................................................... 178 DESCRIPTION OF THE EQUITY SHARES ......................................................................................................................... 182 TAXATION ............................................................................................................................................................................. 188 LEGAL PROCEEDINGS ........................................................................................................................................................ 200 INDEPENDENT AUDITORS ................................................................................................................................................ 205 GENERAL INFORMATION .................................................................................................................................................. 206 FINANCIAL STATEMENTS ................................................................................................................................................. 207 DECLARATION ..................................................................................................................................................................... 208 DECLARATION IN ACCORDANCE WITH FORM PAS - 4 .............................................................................................. 209


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NOTICE TO INVESTORS Our Company has furnished and accepts full responsibility for all of the information contained in this Placement Document and confirms that to its best knowledge and belief, having made all reasonable enquiries, this Placement Document contains all information with respect to our Company, its subsidiaries, joint ventures and associates and the Equity Shares that is material in the context of the Issue. The statements contained in this Placement Document relating to our Company, its Subsidiaries, its Joint Ventures and the Equity Shares are, in all material respects, true and accurate and not misleading. The opinions and intentions expressed in this Placement Document with regard to our Company, its Subsidiaries, its Joint Ventures and the Equity Shares are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions and information presently available to our Company. There are no other facts in relation to our Company, its Subsidiaries, its Joint Ventures and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this Placement Document misleading in any material respect. Further, our Company has made all reasonable enquiries to ascertain such facts and to verify the accuracy of all such information and statements. The Joint Global Coordinators and Book Running Lead Managers have not separately verified the information contained in this Placement Document (financial, legal or otherwise). Accordingly, neither the Joint Global Coordinators and Book Running Lead Managers, or any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates make any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted by the Joint Global Coordinators and Book Running Lead Managers or any of their respective shareholders, employees, counsels, officers, directors, representatives, agents or affiliates, as to the accuracy or completeness of the information contained in this Placement Document or any other information supplied in connection with the Equity Shares. Each person receiving this Placement Document acknowledges that such person has not relied on either of the Joint Global Coordinators and Book Running Lead Managers or on any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of our Company, its Subsidiaries, its Joint Ventures and the merits and risks involved in investing in the Equity Shares. No person is authorized to give any information or to make any representation not contained in this Placement Document and any information or representation not so contained must not be relied upon as having been authorized by or on behalf of our Company or by or on behalf of the Joint Global Coordinators and Book Running Lead Managers. The delivery of this Placement Document at any time does not imply that the information contained in it is correct as of any time subsequent to its date. The Equity Shares to be issued pursuant to the Issue have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any other federal or state authorities in the United States or the securities authorities of any non-United States jurisdiction or any other United States or non-United States regulatory authority. No authority has passed on or endorsed the merits of the Issue or the accuracy or adequacy of this Placement Document. Any representation to the contrary is a criminal offense in the United States and may be a criminal offense in other jurisdictions. The distribution of this Placement Document and the Issue may be restricted by law in certain jurisdictions.The Equity Shares have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Within the United States, this Placement Document is being provided only to persons who are “qualified institutional buyers” as defined in Rule 144A. Distribution of this Placement Document to any person other than the offeree specified by the Joint Global Coordinators and Book Running Lead Managers or their representatives, and those persons, if any, retained to advise such offeree with respect thereto, is unauthorized and any disclosure of its contents, without the prior written consent of our Company, is prohibited. Any reproduction or distribution of this Placement Document in the United States, in whole or in part, and any disclosure of its contents to any other person is prohibited. The distribution of this Placement Document and the issue of the Equity Shares may be restricted in certain jurisdictions by law. As such, this Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by our Company and the Joint Global


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Coordinators and Book Running Lead Managers which would permit an offering of the Equity Shares or distribution of this Placement Document in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering material in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. In making an investment decision, prospective investors must rely on their own examination of our Company, its Subsidiaries, its Joint Ventures and the terms of the Issue, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In addition, neither our Company nor any of the Joint Global Coordinators and Book Running Lead Managers is making any representation to any offeree or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations. Each subscriber of the Equity Shares in the Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Indian law, including Chapter VIII of the ICDR Regulations and Section 42 of the Companies Act, 2013, and that it is not prohibited by SEBI or any other statutory authority from buying, selling or dealing in the securities including the Equity Shares. Each subscriber of the Equity Shares in the Issue also acknowledges that it has been afforded an opportunity to request from our Company and review information relating to our Company and the Equity Shares. The information on our Company’s website, any website directly or indirectly linked to our Company’s website or the respective websites of each of the Joint Global Coordinators and Book Running Lead Managers does not constitute or form part of this Placement Document. Prospective investors should not rely on the information contained in, or available through such websites. This Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such document. NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (“RSA 421-B”) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE SUBSCRIBER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. Representations by Investors References herein to “you” or “your” is to the prospective investors in the Issue. By subscribing to any Equity Shares in the Issue, you are deemed to have represented, warranted, acknowledged and agreed to our Company and the Joint Global Coordinators and Book Running Lead Managers, as follows: • You are a ‘QIB’ as defined in Regulation 2(1)(zd) of the ICDR Regulations and not excluded pursuant to Regulation

86(1)(b) of the ICDR Regulations, having a valid and existing registration under applicable laws and regulations of India, and undertake to acquire, hold, manage or dispose of any Equity Shares that are Allocated to you in accordance with Chapter VIII of the ICDR Regulations and undertake to comply with the ICDR Regulations, the Companies Act and all other applicable laws, including any reporting obligations;

• You are authorized to consummate the subscription of the Equity Shares in the Issue in compliance with all applicable

laws and regulations;


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• If you are not a resident of India, but a QIB, you are an Eligible FPI or an FII (including a sub-account other than a sub-account which is a foreign corporate or a foreign individual) having a valid and existing registration with SEBI under the applicable laws in India, and are eligible to invest in India under applicable law, including FEMA 20, and any notifications, circulars or clarifications issued thereunder, and have not been prohibited by SEBI or any other regulatory authority, from buying, selling or dealing in securities. You are investing in the Issue under the Portfolio Investment Scheme.

• You will make all necessary filings with appropriate regulatory authorities, including RBI, as required pursuant to

applicable laws; • If you are Allotted Equity Shares, you shall not, for a period of one year from the date of Allotment, sell the Equity Shares

so acquired except on the floor of the Stock Exchanges (additional requirements apply if you are within the United States or a U.S. Person, see the section “Transfer Restrictions” beginning on page 175;

• You have made, or been deemed to have made, as applicable, the representations set forth under the section “Transfer

Restrictions” and “Distribution and Solicitation Restrictions” beginning on page 175 and 169, respectively; • You are aware that the Equity Shares have not been and will not be registered through a prospectus under the Companies

Act, 2013, the ICDR Regulations or under any other law in force in India. This Placement Document has not been reviewed or affirmed by the RBI, SEBI, the Stock Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by QIBs;

• You are entitled to subscribe for, and acquire, the Equity Shares under the laws of all relevant jurisdictions that apply to

you and you have: (i) fully observed such laws; (ii) the necessary capacity, and (iii) obtained all necessary consents, governmental or otherwise, and authorizations and complied with all necessary formalities, to enable you to commit to participate in the Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorizations to agree to the terms set out or referred to in this Placement Document), and will honour such obligations;

• Neither our Company nor the Joint Global Coordinators and Book Running Lead Managers or any of their respective

shareholders, directors, officers, employees, counsel, representatives, agents or affiliates is making any recommendations to you or advising you regarding the suitability of any transactions you may enter into in connection with the Issue and your participation in the Issue is on the basis that you are not, and will not, up to the Allotment, be a client of any of the Joint Global Coordinators and Book Running Lead Managers. Neither the Joint Global Coordinators and Book Running Lead Managers nor any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates has any duties or responsibilities to you for providing the protection afforded to their clients or customers or for providing advice in relation to the Issue and are not in any way acting in any fiduciary capacity;

• You confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by our

Company or its agents (“Company Presentations”) with regard to our Company or the Issue; or (ii) if you have participated in or attended any Company Presentations: (a) you understand and acknowledge that the Joint Global Coordinators and Book Running Lead Managers may not have knowledge of the statements that our Company or its agents may have made at such Company Presentations and are therefore unable to determine whether the information provided to you at such Company Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the Joint Global Coordinators and Book Running Lead Managers have advised you not to rely in any way on any information that was provided to you at such Company Presentations, and (b) confirm that you have not been provided any material information relating to our Company and the Issue that was not publicly available;

• All statements other than statements of historical fact included in this Placement Document, including, without limitation,

those regarding our Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our Company’s business), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions


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regarding our Company’s present and future business strategies and environment in which our Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of this Placement Document. Our Company assumes no responsibility to update any of the forward-looking statements contained in this Placement Document;

• You are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to the

general public, and the Allotment of the same shall be on a discretionary basis at the discretion of the Company and the Joint Global Coordinators and Book Running Lead Managers;

• You are aware that if you are Allotted more than 5% of the Equity Shares in the Issue, our Company shall be required to

disclose your name and the number of the Equity Shares Allotted to you to the Stock Exchanges and the Stock Exchanges will make the same available on their websites and you consent to such disclosures. Also if you are a top 10 shareholder in our Company, our Company will be required to make a filing with the ROC within 15 days of the change, as per Section 93 of the Companies Act, 2013;

• You have been provided a serially numbered copy of this Placement Document and have read it in its entirety, including

in particular, the section “Risk Factors” beginning on page 38; • In making your investment decision, you have (i) relied on your own examination of our Company, its Subsidiaries, its

Joint Ventures and the terms of the Issue, including the merits and risks involved, (ii) made your own assessment of our Company, its Subsidiaries, its Joint Ventures the Equity Shares and the terms of the Issue based solely on the information contained in this Placement Document and no other disclosure or representation by our Company, its Directors, Promoters and affiliates or any other party, (iii) consulted your own independent counsel and advisors (including tax advisors) or otherwise have satisfied yourself concerning, without limitation, the effects of local laws and taxation matters, (iv) relied solely on the information contained in this Placement Document and no other disclosure or representation by our Company or any other party, (iv) received all information that you believe is necessary or appropriate in order to make an investment decision in respect of our Company and the Equity Shares, and (vi) relied upon your own investigation and resources in deciding to invest in the Issue;

• Neither the Joint Global Coordinators and Book Running Lead Managers nor any of their respective shareholders,

directors, officers, employees, counsel, representatives, agents or affiliates has provided you with any tax advice or otherwise made any representations regarding the tax consequences of purchase, ownership and disposal of the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You will obtain your own independent tax advice from a reputable service provider and will not rely on the Joint Global Coordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates when evaluating the tax consequences in relation to the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You waive, and agree not to assert any claim against our Company or the Joint Global Coordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates with respect to the tax aspects of the Equity Shares or as a result of any tax audits by tax authorities, wherever situated;

• You are a sophisticated investor and have such knowledge and experience in financial, business and investment matters as

to be capable of evaluating the merits and risks of an investment in the Equity Shares. You are experienced in investing in private placement transactions of securities of companies in a similar nature of business, similar stage of development and in similar jurisdictions. You and any accounts for which you are subscribing for the Equity Shares (i) are each able to bear the economic risk of your investment in the Equity Shares, (ii) will not look to our Company and/or the Joint Global Coordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates for all or part of any such loss or losses that may be suffered in connection with the Issue, including losses arising out of non-performance by our Company of any of its obligations or any breach of any representations and warranties by our Company, whether to you or otherwise, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative


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investment. You are seeking to subscribe to the Equity Shares in the Issue for your own investment and not with a view to resell or distribute;

• If you are acquiring the Equity Shares to be issued pursuant to the Issue, for one or more managed accounts, you represent

and warrant that you are authorised in writing, by each such managed account to acquire such Equity Shares for each managed account and to make (and you hereby make) the representations, warranties, acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “you” to include such accounts;

• You are not a ‘Promoter’ (as defined under the ICDR Regulations) of our Company or any of its affiliates and are not a

person related to the Promoter, either directly or indirectly, and your Bid does not directly or indirectly represent the ‘Promoter’, or ‘Promoter Group’, (as defined under the ICDR Regulations) of our Company or persons relating to the Promoter;

• You have no rights under a shareholders’ agreement or voting agreement with the Promoter or persons related to the

Promoter, no veto rights or right to appoint any nominee director on the Board of Directors of our Company other than the rights acquired, if any, in the capacity of a lender not holding any Equity Shares, which shall not be deemed to be a person related to the Promoter;

• You will have no right to withdraw your Bid after the Issue Closing Date; • You are eligible to apply for and hold the Equity Shares Allotted to you together with any Equity Shares held by you prior

to the Issue. Further, you confirm that your aggregate holding after the Allotment of the Equity Shares shall not exceed the level permissible as per any applicable regulation;

• The Bid made by you will not or would not eventually result in triggering a tender offer under the Securities and

Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the “Takeover Code”);

• To the best of your knowledge and belief, the number of Equity Shares Allotted to you pursuant to the Issue, together with

other Allottees that belong to the same group or are under common control as you, pursuant to the Allotment under the Issue, shall not exceed 50% of the Issue. For the purposes of this representation:

o The expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies under the same group’ as

provided in sub-section (11) of Section 372 of the Companies Act, 1956; and o ‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code; • You shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time that the final

listing and trading approvals for such Equity Shares are granted by the Stock Exchanges; • You are aware that (i) applications for in-principle approval, in terms of Clause 24(a) of the Listing Agreements, for

listing and admission of the Equity Shares and for trading on the Stock Exchanges, were made and an approval has been received from each of the Stock Exchanges, and (ii) the application for the in principle and final listing and trading approvals will be made only after Allotment. There can be no assurance that such approvals for listing and trading in the Equity Shares will be obtained in time or at all. Our Company shall not be responsible for any delay or non-receipt of such approvals or any loss arising from such delay or non-receipt;

• You are aware and understand that the Joint Global Coordinators and Book Running Lead Managers have entered into a placement agreement with our Company whereby the Joint Global Coordinators and Book Running Lead Managers have, subject to the satisfaction of certain conditions set out therein severally and not jointly, agreed to manage the Issue and use reasonable efforts to procure subscriptions for the Equity Shares;

• You understand that the contents of this Placement Document are exclusively the responsibility of our Company, and

neither the Joint Global Coordinators and Book Running Lead Managers nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Placement Document or any information previously published by or on behalf of our Company and will not be liable for your decision to participate in


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the Issue based on any information, representation or statement contained in this Placement Document or otherwise. By participating in the Issue, you agree to the same and confirm that the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire the Equity Shares is contained in this Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares, you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Joint Global Coordinators and Book Running Lead Managers (including any view, statement, opinion or representation expressed in any research published or distributed by any of the Joint Global Coordinators and Book Running Lead Managers or their respective affiliates or any view, statement, opinion or representation expressed by any staff (including research staff) of any of the Joint Global Coordinators and Book Running Lead Managers or their respective affiliates or our Company or any of their respective affiliates or any other person, and neither the Joint Global Coordinators and Book Running Lead Managers nor our Company nor any other person will be liable for your decision to participate in the Issue based on any other information, representation, warranty or statement that you may have obtained or received;

• You understand that the Joint Global Coordinators and Book Running Lead Managers do not have any obligation to

purchase or acquire all or any part of the Equity Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or incurred by you for any reason whatsoever in connection with the Issue, including non-performance by us or any of our respective obligations or any breach of any representations or warranties by us, whether to you or otherwise;

• You understand that the Equity Shares have not been and will not be registered under the U.S. Securities Act or with any

securities regulatory authority of any state of the United States and accordingly, may not be offered or sold within the United States, except in reliance on an exemption from the registration requirements of the U.S. Securities Act;

• If you are within the United States, you are a “qualified institutional buyer” as defined in Rule 144A under the U.S.

Securities Act, are acquiring the Equity Shares for your own account or for the account of an institutional investor who also meets the requirements of a “qualified institutional buyer”, for investment purposes only, and not with a view to, or for resale in connection with, the distribution (within the meaning of any United States securities laws) thereof, in whole or in part;

• You agree that any dispute arising in connection with the Issue will be governed by and construed in accordance with the laws of India, and the courts in Chennai, India shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Preliminary Placement Document and this Placement Document;

• Each of the representations, warranties, acknowledgements and agreements set out above shall continue to be true and accurate at all times up to and including the Allotment, listing and trading of the Equity Shares in the Issue;

• You acknowledge that if at any time your representations cease to be true, you agree to resell the Equity Shares at the Company’s request;

• You agree to indemnify and hold our Company and the Joint Global Coordinators and Book Running Lead Managers harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the foregoing representations, warranties, acknowledgements and undertakings made by you in this Placement Document. You agree that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares by, or on behalf of, the managed accounts; and

• Our Company, the Joint Global Coordinators and Book Running Lead Managers, their respective affiliates and others will rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings, which are given to the Joint Global Coordinators and Book Running Lead Managers on their own behalf and on behalf of our Company, and are irrevocable and agreed that, if any of such acknowledgments, representations or agreements is no longer accurate, you will promptly notify the Company and the Joint Global Coordinators and Book Running Lead Managers.


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OFFSHORE DERIVATIVE INSTRUMENTS

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of Regulation 22 of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014 (“SEBI FPI Regulations”), FPIs (which include FIIs) other than Category III Foreign Portfolio Investors (as defined hereinafter) and unregulated broad based funds, which are classified as Category II foreign portfolio investor (as defined under the SEBI FPI Regulations) by virtue of their investment manager being appropriately regulated, may issue, subscribe or otherwise deal in offshore derivative instruments (as defined under the SEBI FPI Regulations as any instrument, by whatever name called, which is issued overseas by an FPI against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, as its underlying) (all such offshore derivative instruments are referred to herein as “P-Notes”), for which they may receive compensation from the purchasers of such instruments. P-Notes may be issued only in favour of those entities which are regulated by any appropriate foreign regulatory authorities in the countries of their incorporation, subject to compliance with ‘know your client’ requirements. An FPI shall also ensure that no further issue or transfer of any instrument referred to above is made to any person other than such entities regulated by appropriate foreign regulatory authorities. P-Notes have not been, and are not being offered, or sold pursuant to this Placement Document. This Placement Document does not contain any information concerning P-Notes or the issuer(s) of any P-notes, including any information regarding any risk factors relating thereto. Any P-Notes that may be issued are not securities of our Company and do not constitute any obligation of, claims on or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any P-Notes that may be offered are issued by, and are the sole obligations of, third parties that are unrelated to our Company. Our Company and the Joint Global Coordinators and Book Running Lead Managers do not make any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of the Joint Global Coordinators and Book Running Lead Managers and do not constitute any obligations of or claims on the Joint Global Coordinators and Book Running Lead Managers. Affiliates of the Joint Global Coordinators and Book Running Lead Managers which are FPIs may purchase, to the extent permissible under law, the Equity Shares in the Issue, and may issue P-Notes in respect thereof. Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.


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AVAILABLE INFORMATION For so long as any Equity Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act, and our Company is neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, our Company will furnish to any holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, upon the request of such holder, beneficial owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the U.S. Securities Act, subject to compliance with the applicable provisions of Indian law.


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DISCLAIMER CLAUSE OF THE STOCK EXCHANGES As required, a copy of this Placement Document has been submitted to each of the Stock Exchanges. The Stock Exchanges do not in any manner: (1) warrant, certify or endorse the correctness or completeness of any the contents of this Placement Document;

(2) warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or

(3) take any responsibility for the financial or other soundness of our Company, its Promoters, its management or any

scheme or project of the Company,

The filing of this Placement Document should not for any reason be deemed or construed to mean that this Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquires any Equity Shares of the Company may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person consequent to or in connection with, such subscription or acquisition, whether by reason of anything stated or omitted to be stated herein, or for any other reason whatsoever.


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CERTAIN CONVENTIONS, CURRENCY OF PRESENTATION AND FINANCIAL DATA Certain Conventions In this Placement Document, unless the context otherwise indicates or implies, references to ‘you’, ‘your’, ‘offeree’, ‘purchaser’, ‘subscriber’, ‘recipient’, ‘investors’, ‘prospective investors’ and ‘potential investor’ are to the prospective investors of the Equity Shares to be issued pursuant to the Issue. References to ‘ALL’, the ‘Company’, or ‘our Company’ are to Ashok Leyland Limited, and references to ‘we’, ‘our’ or ‘us’ are to Ashok Leyland Limited and its Subsidiaries. All references in this Placement Document to “India” are to the Republic of India, to the “Government” or the “Central Government” are to the Government of India and to any “State Government” are to the relevant state government in India. All references herein to the “U.S.” or the “United States” are to the United States of America and its territories and possessions. Currency of Presentation In this Placement Document, all references to ‘US$’, ‘U.S. dollars’ “U.S. Dollar”, “dollars”, “US Dollars”, “USD” or “$” are to the legal currency of the United States of America. All references to ‘INR’, ‘Rs.’, ‘Re.’, ‘Indian Rupees’ and ‘Rupees’ are to the legal currency of India. All references to “Yen”, “Japanese Yen” and “Japanese YEN” is to the legal currency of Japan. All references to “euro”, “EUR” or “€” are to the single currency of the participating Member States in the Third Stage of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. All references to “British pounds-sterling” or “£” are to the lawful currency of the United Kingdom. Financial Data The audited standalone financial statements of the Company as of and for the years ended March 31, 2012, 2013 and 2014, and audited consolidated financial statements of the Company as of and for the year ended March 31, 2014 included in this Placement Document (collectively, the “Audited Financial Statements”), have been prepared and audited in accordance with accounting principles generally accepted in India, or Indian GAAP, and the requirements under the Listing Agreements with the Stock Exchanges. Indian GAAP differs in certain significant respects from International Financial Reporting Standards (“IFRS”) and United States Generally Accepted Accounting Principles (“U.S. GAAP”). Accordingly, the degree to which the financial statements prepared in accordance with Indian GAAP included in this Placement Document will provide meaningful information is entirely dependent on the reader’s level of familiarity with the respective accounting practices. In this Placement Document, certain monetary thresholds have been subjected to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. The financial year of the Company commences on April 1 of each calendar year and ends on March 31 of the succeeding calendar year, so, unless otherwise specified or if the context requires otherwise, all references to a particular ‘Financial Year’, ‘fiscal year’ or ‘Fiscal’ or ‘FY’ are to the twelve month period ended on March 31 of that year.


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INDUSTRY AND MARKET DATA Information regarding markets, market size, market share, market position, growth rates and other industry data pertaining to the Company’s businesses contained in this Placement Document consists of estimates based on data reports compiled by government bodies, professional organizations and analysts, data from other external sources and our knowledge of our revenues and the markets in which we compete. Unless stated otherwise, the statistical information included in this Placement Document relating to the industry in which we operate has been reproduced from various trade, industry and government publications and websites. Unless otherwise stated, comparative and empirical Indian automotive industry data in this Placement Document have been derived from the published reports of the Society of Indian Automobile Manufacturers, or SIAM. In addition, data on the sale of vehicles by the Company in all periods, included in this Placement Document, have also been derived from published reports of SIAM. This data is subject to change and cannot be verified with certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. Neither we nor any of the Joint Global Coordinators and Book Running Lead Managers have independently verified this data and do not make any representation regarding and take any responsibility for the accuracy and completeness of such data. In many cases, there is no readily available external information (whether from trade or industry associations, government bodies or other organizations) to validate market-related analysis and estimates, so we have relied on internally developed estimates. While we believe the Company’s internal estimates to be reasonable, such estimates have not been verified by any independent sources and neither we nor any of the Joint Global Coordinators and Book Running Lead Managers can assure potential investors as to their accuracy. Potential investors should not place undue reliance on such information forming a part of this Placement Document.


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FORWARD-LOOKING STATEMENTS Certain statements contained in this Placement Document that are not statements of historical fact constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or phrases of similar import. Similarly, statements that describe the Company’s strategies, objectives, plans or goals are also forward looking statements. All statements regarding the Company’s expected financial condition and results of operations; business plans, including potential acquisitions and prospects are forward-looking statements. These forward-looking statements include statements as to the Company’s liquidity, growth, business strategy, revenue, dividend policy and profitability, new business and other matters discussed in this Placement Document that are not historical facts. These forward-looking statements and any other projections contained in this Placement Document (whether made by the Company or any third party), are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results, performance or achievements to differ materially from any of the Company’s forward-looking statements include, among others: • General political, social and economic conditions, and the competitive environment in India, Sri Lanka, Bangladesh, and

other markets in which we operate and sell the products; • The Company’s substantial indebtedness, ability to meet debt service obligations and ability to maintain compliance with

covenants including financial covenants;

• Fluctuations in the currency exchange rate of the Indian Rupees, United States Dollar and other currencies in which the Company may deal with;

• The monetary and interest rate policies in India and/ or other countries, inflation, deflation; • Accidents and natural disasters; • Terms on which the Company’s working capital is financed, capital and product development expenditures and

investment requirements or on which we reduce the Company’s debt; • Implementation of new projects, including mergers and acquisitions and the subsequent integration, planned by the

management; • Contractual arrangements with suppliers; • Government policies and actions by courts in India, including those specifically regarding the automotive industry,

including industrial licensing, environmental regulations, safety regulations, import restrictions and duties, excise duties, sales taxes, value added taxes, goods and services taxes, product range restrictions, diesel and gasoline prices and road network enhancement projects;

• Significant movements in the prices of key inputs such as steel, aluminium, copper, zinc, rubber and plastics; • Significant movements in the price of crude oil that could adversely affect demand for the Company’s products; • Increasing competition in, or other factors affecting, the industry segments in which the Company operate;

• The Company’s ability to identify and understand industry trends and preferences and develop new products to meet its

customers’ demands; • The Company’s ability to attract and retain qualified personnel;


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• Changes in technology in the future; and • Other factors beyond the Company’s control. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under the sections titled “Management’s discussion and analysis of financial condition and results of operations as per standalone financial statements”, “Management’s discussion and analysis of financial condition and results of operations as per consolidated financial statements”, “Industry” and “Business” beginning on pages 69, 90, 108 and 115. The forward-looking statements contained in this Placement Document are based on the beliefs of management, as well as the assumptions made by, and information currently available to, the management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialize, or if any of the Company’s underlying assumptions prove to be incorrect, the Company’s actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.


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ENFORCEMENT OF CIVIL LIABILITIES Ashok Leyland Limited is a public company incorporated with limited liability under the laws of India. The majority of our Directors and key managerial personnel named herein are residents of India and all or a substantial portion of our assets are located in India. As a result, it may be difficult for investors outside India to effect service of process upon the Company or such persons in India, or to enforce judgments obtained against such parties outside India. Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil Procedure, 1908, as amended (the “Civil Procedure Code”). Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon between the same parties or parties litigating under the same title, except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; or (vi) where the judgment sustains a claim founded on a breach of any law then in force in India. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section 44A of the Civil Procedure Code provides that a foreign judgment rendered by a superior court, (within the meaning of that section) in any country or territory outside India which the GoI has by notification declared to be a reciprocating territory, may be enforced in India by proceedings in execution as if the judgment had been rendered by an appropriate court in India. However, Section 44A of the Civil Procedure Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalties and does not apply to arbitration awards. Each of the United Kingdom, Singapore and Hong Kong (among others) are some of the countries that have been declared by the GoI to be a reciprocating territory for the purposes of Section 44A of the Civil Procedure Code, but the United States of America has not been so declared. A judgment of a court of a country which is not a reciprocating territory may be enforced only by a suit upon the judgment and not by proceedings in execution. The suit must be brought in India within three years from the date of such foreign judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian public policy. A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the RBI to repatriate outside India any amount recovered pursuant to the execution of such a judgment, and any such amount may be subject to income tax in accordance with applicable laws. Further, any judgment or award in a foreign currency would be converted into Rupees on the date of such judgment or award and not on the date of payment.


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EXCHANGE RATES Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares. The following table sets forth information concerning exchange rates between the Rupee and the U.S. dollar for the periods indicated. Exchange rates are based on the reference rates released by the RBI. No representation is made that any Rupee amounts could have been, or could be, converted into U.S. dollars at any particular rate, the rates stated below or at all. On June 25, 2014 the exchange rate was Rs. 60.2785 to US$1.00. Period End Average(1) High LowFiscal Year: (Rs. Per US$1.00)

2012 .......................................................................... 51.16 47.95 54.24 43.95 2013 ......................................................................... 54.39 54.45 57.22 50.56 2014 ......................................................................... 60.10 60.50 68.36 53.74

Quarter Ended:

September 30, 2013 ................................................. 62.78 62.13 68.36 58.91 December 31, 2013 .................................................. 61.90 62.03 63.65 61.16 March 31, 2014 ........................................................ 60.10 61.79 62.99 60.10

Month ended: December 31, 2013 61.90 61.91 62.38 61.18 January 31, 2014 62.48 62.08 62.99 61.35 February 28, 2014 62.07 62.25 62.69 61.94 March 31, 2014 60.10 61.01 61.90 60.10 April 30, 2014 60.34 60.36 61.12 59.65 May 31, 2014 59.03 59.31 60.23 58.43 ________________ Source: www.rbi.org.in (1) Represents the average of the reference rates released by the RBI on every working day of the period for each year and quarter presented


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DEFINITIONS AND ABBREVIATIONS Unless otherwise defined or the context otherwise indicates or requires, certain capitalized terms used in this Placement Document have the meanings set forth below: Company Related Terms

Term Description Ashok Leyland Limited, ALL, the Issuer, Company, the Company

Ashok Leyland Limited, a company incorporated under the laws of India and whose registered office is at 1, Sardar Patel Road, Guindy, Chennai – 600 032, India.

Articles or Articles of Association

The articles of association of the Company, as amended.

Associates The associates of the Company, comprising: 1. Ashley Aviation Limited; 2. Ashok Leyland Defence Systems Limited; 3. Ashok Leyland (UAE) LLC; and 4. Lanka Ashok Leyland, Plc.

Auditors M/s. M. S. Krishnaswami & Rajan, Chartered Accountants and M/s. Deloitte Haskins & Sells LLP, Chartered Accountants the joint statutory auditors of the Company.

Bank of America Facility Agreement

Agreement with Syndicated term loan facility for Japanese Yen equivalent to USD 200,000,000 from Banc of America Securities Asia Limited, the Bank of Tokyo Mitsubishi UFJ Ltd, Citigroup Global Markets Singapore Pte Ltd, Export Development Canada, The Hongkong and Shanghai Banking Corporation Limited, Mizuho Corporate Bank, Ltd, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation as mandated lead arrangers and Banc of America Securities Asia Limited as facility agent.

Bank of Nova Scotia Facility Agreement

Facility agreement with the Bank of Nova Scotia Asia Limited for USD 20,000,000.

Bank of Tokyo-Mitsubishi Facility Agreement

Facility agreement with The Bank of Tokyo-Mitsubishi UFJ Ltd for USD 30,000,000.

Barclays Bank Facility Agreement

Term loan facility agreement with Barclays Bank, Plc for Japanese Yen equivalent to USD 25,000,000.

Board of Directors or Board The board of directors of the Company and any committee constituted thereof. Chairman The chairman of the Board of Directors. DBS Bank Facility Agreements

Term loan facility agreements with DBS Bank Ltd, Chennai (as Arranger) and DBS Bank Ltd., Singapore (as Agent) for Japanese Yen equivalent to USD 65,000,000 and for Japanese Yen equivalent to USD 50,000,000.

Director(s) The director(s) of the Company. Equity Shares or Shares Equity Shareholders

The equity shares of the Company of face value Re. 1 each. Equity Shareholders of our Company.

Global Depository Receipts The global depository receipts issued by the Company. Joint Ventures The joint ventures of the Company, comprising:

1. Ashley Alteams India Limited; 2. Ashok Leyland John Deere Construction Equipment Company Private Limited; 3. Automotive Infotronics Limited (presently under liquidation); 4. Nissan Ashok Leyland Powertrain Limited; and 5. Nissan Ashok Leyland Technologies Limited.

Managing Director The managing director of our Company. Memorandum or Memorandum of Association

The memorandum of association of the Company, as amended.

Mizuho Corporate Bank Facility Agreement

Facility agreement with Mizuho Corporate Bank Ltd for Japanese Yen equivalent to USD75,000,000

Non- Executive Vice Chairman

The non-executive vice chairman of our Company.


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Term Description Promoter Hinduja Automotive Limited. Promoter Group Promoter group of our Company as per the definition provided in Regulation 2(1)(zb) of

the ICDR Regulations Registered Office The registered office of the Company located at 1, Sardar Patel Road, Guindy, Chennai

– 600 032, India. Registrar of Companies or RoC

The Registrar of Companies, Tamil Nadu, Chennai.

Subsidiaries Defiance Technologies Limited and its subsidiaries, Hinduja Leyland Finance Limited Ashok Leyland Nissan Vehicles Limited, Irizar - TVS Limited, Ashok Leyland Wind Energy Limited, Gulf Ashley Motor Limited, Optare Plc UK and its subsidiaries, Ashok Leyland (UK) Limited, Ashok Leyland (Nigeria) Limited, Ashok Leyland (Chile), Mangalam Retail Services Limited and HLF Services Limited

Subsidiaries Held for Sale / "held for sale" subsidiaries

Albonair GmbH, Albonair India Private Limited and Avia Ashok Leyland Motors s.r.o. and its subsidiaries.

Issue related Terms

Term Description Allocated or Allocation The allocation of Equity Shares following the determination of the Issue Price to QIBs

on the basis of Application Forms submitted by such QIBs, in consultation with the Joint Global Coordinators and Book Running Lead Managers and in compliance with Chapter VIII of the ICDR Regulations.

Allottees Successful Bidders to whom Equity Shares are issued and Allotted pursuant to the Issue.

Allotment The issue and allotment of Equity Shares pursuant to this Issue. Application or Bid Indication of interest from a QIB to subscribe for a specified number of Equity Shares in

this Issue on the terms set out in the Application Form to the Company. Application Form or Bid cum Application Form

The form, including all revisions and modifications thereto, pursuant to which a QIB submits an Application.

BSE BSE Limited. Bidder

Any prospective investor, being a QIB, who makes a Bid pursuant to the terms of the Preliminary Placement Document and the Application Form.

Bidding / Issue Period The period between the Bid/Issue Opening Date and Bid/Issue Closing Date, inclusive of both dates, during which prospective Bidders can submit Bids.

CAN or Confirmation of Allocation Note

Note or advice or intimation to successful Bidders confirming Allocation of Equity Shares to such successful Bidders after determination of the Issue Price and requesting payment for the entire applicable Issue Price for all Equity Shares Allocated to such successful Bidders.

CDSL Central Depository Services (India) Limited. Closing Date On or about July 4, 2014, the date on which the Allotment is expected to be made. Cut-off Price The Issue Price of the Equity Shares, which shall be determined by the Company, in

consultation with the Joint Global Coordinators and Book Running Lead Managers. Escrow Bank Citibank N.A. Escrow Cash Account The non-interest bearing, no-lien, escrow bank account without any cheque or overdraft

facilities opened by the Company with the Escrow Bank under the arrangement between the Company and the Escrow Bank.

Floor Price The floor price of Rs. 34.30 per Equity Share, calculated in accordance with Regulation 85 of the ICDR Regulations.

ICDR Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended.

Issue The offer and sale of the Equity Shares to QIBs, pursuant to Chapter VIII of the ICDR Regulations and the provisions of Companies Act, 2013.

Issue Closing Date or Bid Closing Date

July 2, 2014, the date on which the Company (or the Joint Global Coordinators and Book Running Lead Managers on behalf of the Company) shall cease acceptance of


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Term Description Application Forms.

Issue Opening Date or Bid Opening Date

June 26, 2014, the date on which the Company (or the Joint Global Coordinators and Book Running Lead Managers on behalf of the Company) shall commence acceptance of Application Forms.

Issue Price The price per Equity Share of Rs. 36.00. Issue Size The issue of 18,52,00,000 Equity Shares aggregating Rs. 66,672.00 lakhs. Joint Global Coordinators and Book Running Lead Managers / JGCBRLMs

Citigroup Global Markets India Private Limited, Axis Capital Limited, Kotak Mahindra Capital Company Limited and Ambit Corporate Finance Private Limited.

Listing Agreement The agreement entered into between our Company and each of the Stock Exchanges in relation to listing of the Equity Shares on each of the Stock Exchanges.

MSE The Madras Stock Exchange Limited. NSDL The National Securities Depository Limited. NSE The National Stock Exchange of India Limited. Pay-in Date The last date specified in the CAN for payment of application monies by the QIBs. Placement Agreement The Placement Agreement, dated June 26, 2014, among the Company and the Joint

Global Coordinators and Book Running Lead Managers. Placement Document This placement document dated July 2, 2014 issued by our Company in accordance with

Chapter VIII of the ICDR Regulations and Section 42 of the Companies Act, 2013. Preliminary Placement Document

The preliminary placement document dated June 26, 2014 issued in accordance with Chapter VIII of the ICDR Regulations and Section 42 of the Companies Act, 2013.

QIB or Qualified Institutional Buyer

Any Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of Chapter VIII of the ICDR Regulations.

QIP Private placement to QIBs under Chapter VIII of the ICDR Regulations and Section 42 of the Companies Act, 2013 and the Rules made thereunder.

Regulation S Regulation S, as defined under the U.S. Securities Act. Relevant Date June 26, 2014 being the date on which the Fund Raising Committee of the Board of

Directors decided to open the Issue. SEBI The Securities and Exchange Board of India. SEBI Act The Securities and Exchange Board of India Act, 1992, as amended. SEBI FPI Regulations Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014. Stock Exchanges The BSE, the NSE and the MSE. U.S. Securities Act The U.S. Securities Act of 1933, as amended. Industry related Terms

Term Description CNG Compressed Natural Gas CO2 Carbon Di-oxide CV Commercial Vehicles DICOR Direct Injection Common Rail EMS Environment Management System GVW Gross Vehicle Weight HCV Heavy commercial vehicles HPDC High-Pressure Die Casting ICV Intermediate Commercial Vehicle LCV Light Commercial Vehicle MHCV Medium and Heavy Commercial Vehicle non Dost LCV’s LCV’s manufactured and sold directly by the Company NHDP National Highway Development Program NPI New Product Introduction OEMs Original equipment manufacturers


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Term Description SIAM Society of Indian Automobile Manufacturers STU State Transport Undertakings TIV Total industry volume General Terms / Abbreviations

Term Description ADR American depositary receipts AGM Annual General Meeting AIFs Alternative investment funds (as defined under Regulation 2(1)(b) of the Securities and

Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended) registered with the SEBI under applicable laws in India.

AS Accounting Standards issued by ICAI ASEAN Association of Southeast Asian Nations Act or Companies Act The Companies Act, 1956 or the Companies Act, 2013, as applicable. British pounds-sterling Legal currency of United Kingdom CARE Credit Analysis and Research Limited Category III Foreign Portfolio Investors

An FPI registered as a category III foreign portfolio investor under the SEBI FPI Regulations.

Companies Act, 1956 The Companies Act, 1956 and the rules made thereunder (without reference to the provisions thereof that have ceased to have effect upon the notification of the Notified Sections)

Companies Act, 2013 The Companies Act, 2013 and the rules made thereunder to the extent in force pursuant to the notification of the Notified Sections.

CENVAT Central Value Added Tax. Civil Procedure Code The Code of Civil Procedure, 1908, as amended. Competition Act The Competition Act, 2002, as amended Control It shall have the same meaning as is assigned to it under Regulation 2(1)(e) of the Takeover

Code. CRISIL CRISIL Limited. Crore 10 million. CESTAT Customs, Excise and Service Tax Appellate Tribunal. CSTAA Central Sales Tax Appellate Authority, New Delhi. Delisting Regulations The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations,

2009, as amended. Depositories Act The Depositories Act, 1996, as amended. Depository Any depository registered with the SEBI under the Securities and Exchange Board of India

(Depositories and Participants) Regulations, 1996, as amended. Depository Participant Any depository participant, as defined under the Depositories Act, as amended. DIN Director Identification Number DTC Direct Tax Code, 2013, proposed by the Ministry of Finance, Government of India Eligible FPIs FPIs that are eligible to participate in the Issue and does not include qualified foreign

investors and Category III Foreign Portfolio Investors (who are not eligible to participate in the Issue)

EBITA Earnings before interest, tax and amortization expenses EBITDA Earnings before interest, taxes, depreciation and amortization EC Act Employees’ Compensation Act, 1923, as amended. ECBs External Commercial Borrowings EEPC Engineering Export Promotion Council of India EPF Act The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, as amended. EPS Earnings per Share. ERISA The Employee Retirement Income Security Act of 1974, as amended ESI Act The Employees’ State Insurance Act, 1948, as amended.


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Term Description Euro Single currency of the participating member states in the third stage of European Economic

and Monitory Union of the Treaty establishing the European Community, as amended from time to time.

Factories Act Factories Act, 1948, as amended. FCCN Foreign Currency Convertible Notes. FDI Foreign Direct Investment. FDI Policy Consolidated Foreign Direct Investment Policy notified under Circular No. 1 of 2014,

effective from April 17, 2014, as amended from time to time FEMA The Foreign Exchange Management Act, 1999, as amended. FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident

Outside India) Regulations, 2000, as amended. FI Financial Institution. FIIs Foreign institutional investors as defined under the SEBI FPI Regulations. FII Regulations The Securities and Exchange Board of India (Foreign Institutional Investors) Regulations,

1995, as amended. FIPB Foreign Investment Promotion Board. FPI(s)

Foreign portfolio investors as defined under the SEBI FPI Regulations and includes a person who has been registered under the SEBI FPI Regulations. Any foreign institutional investor or qualified foreign investor who holds a valid certificate of registration is deemed to be a foreign portfolio investor till the expiry of the block of three years for which fees have been paid as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995

Form PAS-4 Form PAS-4 as prescribed under the Companies (Prospectus and Allotment of Securities) Rules, 2014

FSMA The U.K. Financial Services and Markets Act, 2000, as amended. FVCI Any foreign venture capital investor (as defined under the Securities and Exchange Board

of India (Foreign Venture Capital Investors) Regulations, 2000, as amended) registered with the SEBI under applicable laws in India.

GAAP Generally Accepted Accounting Principles. GDP Gross Domestic Product. GDRs Global Depository Receipts. GoI/Government Government/ Government of India/ Central Government. Gratuity Act The Payment of Gratuity Act, 1972, as amended. GST Goods and services tax IAS International Accounting Standards. ICAI The Institute of Chartered Accountants of India. ICRA ICRA Limited. IFRS International Financial Reporting Standards of the International Accounting Standards

Board. Ind(AS) IFRS synchronized Accounting Standards in India India Ratings and Research India Ratings and Research Private Limited (formerly known as Fitch Ratings India Private

Limited), a part of the Fitch Group. Indian GAAP Generally accepted accounting principles followed in India. Insider Trading Regulations The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,

1992, as amended. IT Act or the Income Tax Act The Income Tax Act, 1961, as amended. KRA Key Result Areas. KYC Know Your Customer. Lakh One hundred thousand. LIBOR London Interbank Offered Rate. MAT Minimum alternative tax. MCA Ministry of Corporate Affairs, Government of India


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Term Description Minimum Wages Act Minimum Wages Act, 1948, as amended. MoEF Ministry of Environment and Forests, Government of India. MOF Ministry of Finance, Government of India. MORTH Ministry of Road Transport and Highways, Government of India. Motor Vehicles Act Motor Vehicles Act, 1988, as amended. Motor Vehicles Rules Central Motor Vehicles Rules, 1989, as amended. MoU Memorandum of Understanding. Mutual Fund Any mutual fund registered with the SEBI under the Securities and Exchange Board of

India (Mutual Funds) Regulations, 1996, as amended. NHAI National Highway Authority of India. Notified Sections Sections of Companies Act, 2013 that have been notified by the Government of India NRI Non-Resident Indian. OFAC Office of Foreign Assets Control Old Schedule VI Schedule VI to the Companies Act, as existing prior to a notification dated February 28,

2011 issued by the MCA p.a. Per annum. P/E Ratio Price/earnings ratio. PAN Permanent Account Number. Payment of Bonus Act Payment of Bonus Act, 1965, as amended. Payment of Wages Act Payment of Wages Act, 1936, as amended. PCB Pollution Control Board of the relevant states of the republic of India. Plan 2006-16 Automotive Mission Plan 2006-16, formulated by the Ministry of Heavy Industries and

Public Enterprises, Government of India. Portfolio Investment Scheme The portfolio investment scheme of RBI specified in Schedule 2 of the Foreign Exchange

Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended.

Private Placement Regulations Section 42 of the Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014

RBI The Reserve Bank of India. Re. or Rs. or Rupees or INR Indian Rupees. Revised Schedule VI Schedule VI to the Companies Act, as amended pursuant to a notification dated February

28, 2011 issued by the MCA Rule 144A Rule 144 A under the U.S. Securities Act SCR (SECC) Rules Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations)

Regulations, 2012, notified by the SEBI, as amended. SCRA The Securities Contracts (Regulation) Act, 1956, as amended. SCRR The Securities Contracts (Regulation) Rules, 1957, as amended. SDR Singapore depositary receipts Securities shall have the meaning given to such term under the SCRA. SICA The Sick Industrial Companies (Special Provisions) Act, 1985, as amended. Copyright SIAM Report 2013 Copyright SIAM Report 2013 dated April 10, 2013 Copyright SIAM Report 2014 Copyright SIAM Report 2014 dated April 11, 2014 SRE Standard on Review Engagement. STAT Sales Tax Appellate Tribunal. STT Securities transaction tax. Takeover Code The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011, as amended. TDS Tax Deducted at Source. U.K. United Kingdom. U.S. or U.S.A. United States of America, its territories and its possessions and the District of Columbia. UAE United Arab Emirates USD or US Dollar or U.S. Dollar

United States Dollar


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Term Description U.S. GAAP Generally accepted accounting principles followed in the United States. VAT Value Added Tax VCF A venture capital fund as defined under the erstwhile Securities and Exchange Board of

India (Venture Capital Funds) Regulations, 1996 YEN Legal currency of Japan


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DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES ACT, 2013 The table below sets out the disclosure requirements as provided in Form PAS-4 and the relevant pages in this Placement Document where these disclosures, to the extent applicable, have been provided.

Sr. No.

Disclosure Requirements Relevant Page of this Placement Document

1. GENERAL INFORMATION a. Name, address, website and other contact details of the Company indicating both Registered

Office and corporate office 210

b. Date of incorporation of the Company 206 c. Business carried on by the Company and its subsidiaries with the details of branches or units,

if any. 115 to 140

d. Brief particulars of the management of the Company. 146 to 155 e. Names, addresses, DIN and occupations of the Directors. 146 to 149 f. Management’s perception of risk factors 38 to 59 g. Details of default, if any, including therein the amount involved, duration of default and

present status, in repayment of:

(i) Statutory dues; Not applicable (ii) Debentures and interest thereon; Not applicable (iii) Deposits and interest thereon; and Not applicable (iv) Loan from any bank or financial institution and interest thereon. Not applicable

h. Names, designation, address and phone number, email ID of the nodal/ compliance officer of the company, if any, for the private placement offer process.

210

2. PARTICULARS OF THE OFFER a. Date of passing of board resolution. 206 b. Date of passing of resolution in the general meeting, authorising the offer of securities. 206 c. Kinds of securities offered (i.e. whether share or debenture) and class of security. 26 d. Price at which the security is being offered including the premium, if any, along with

justification of the price. 26

e. Name and address of the valuer who performed valuation of the security offered. Not applicable f. Amount which the Company intends to raise by way of securities. 63 g. Terms of raising of securities:

(i) Duration, if applicable; Not applicable (ii) Rate of dividend; 68 (iii) Rate of interest; Not applicable (iv) Mode of payment; and Not applicable (v) Repayment. Not applicable

h. Proposed time schedule for which the offer letter is valid. 18 i. Purposes and objects of the offer. 63 j. Contribution being made by the promoters or directors either as part of the offer or separately

in furtherance of such objects. 63

k. Principle terms of assets charged as security, if applicable. Not applicable 3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION

ETC

a. Any financial or other material interest of the directors, promoters or key managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons.

155

b. Details of any litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of the offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action shall be disclosed.

203


25

Sr. No.

Disclosure Requirements Relevant Page of this Placement Document

c. Remuneration of Directors (during the current year and last three financial years). 151-153 d. Related party transactions entered during the last three financial years immediately preceding

the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided.

154

e. Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark.

89

f. Details of any inquiry, inspections or investigations initiated or conducted under the Companies Act or any previous company law in the last three years immediately preceding the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of the offer letter and if so, section-wise details thereof for the company and all of its subsidiaries.

203

g. Details of acts of material frauds committed against the Company in the last three years, if any, and if so, the action taken by the company.

203

4. FINANCIAL POSITION OF THE COMPANY a. The capital structure of the Company in the following manner in a tabular form: (i)(a) The authorised, issued, subscribed and paid up capital (number of securities, description and

aggregate nominal value); 65

(b) Size of the present offer; and 26 (c) Paid up capital: 65 (A) After the offer; and 65 (B) After conversion of convertible instruments (if applicable); Not applicable (d) Share premium account (before and after the offer). 65 (ii) The details of the existing share capital of the issuer company in a tabular form, indicating

therein with regard to each allotment, the date of allotment, the number of shares allotted, the face value of the shares allotted, the price and the form of consideration.

65 to 67

Provided that the issuer company shall also disclose the number and price at which each of the allotments were made in the last one year preceding the date of the offer letter separately indicating the allotments made for considerations other than cash and the details of the consideration in each case.

Not applicable

b. Profits of the Company, before and after making provision for tax, for the three financial years immediately preceding the date of circulation of offer letter.

F-1 to F-125

c. Dividends declared by the Company in respect of the said three financial years; interest coverage ratio for last three years (Cash profit after tax plus interest paid/interest paid).

68, 87 and 106

d. A summary of the financial position of the company as in the three audited balance sheets immediately preceding the date of circulation of offer letter.

30 to 37

e. Audited Cash Flow Statement for the three years immediately preceding the date of circulation of offer letter.

32 and 33

f. Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company.

89 and 106

5. A DECLARATION BY THE DIRECTORS THAT a. The Company has complied with the provisions of the Act and the rules made thereunder.

209 b. The compliance with the Act and the rules does not imply that payment of dividend or interest

or repayment of debentures, if applicable, is guaranteed by the Central Government. c. The monies received under the offer shall be used only for the purposes and objects indicated

in the Offer letter.


26

SUMMARY OF THE ISSUE The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information appearing elsewhere in this Placement Document, including under the sections “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue Procedure” and “Description of the Equity Shares”.

Issuer Ashok Leyland Limited. Issue Price per Equity Share Rs. 36.00. Issue Size The issue of 18,52,00,000 Equity Shares aggregating Rs. 66,672.00 lakhs.

A minimum of 10 % of the Issue Size i.e. 1,85,20,000 Equity Shares shall be available for Allocation to Mutual Funds only, and 16,66,80,000 Equity Shares shall be available for Allocation to all QIBs, including Mutual Funds. If no Mutual Fund is agreeable to take up the minimum portion mentioned above, such minimum portion or part thereof may be Allotted to other eligible QIBs.

Date of Board Resolution May 10, 2013 Date of Shareholders’ Resolution July 16, 2013 Equity Shares subscribed and fully paid up and outstanding immediately prior to the Issue

2,66,06,76,634 Equity Shares at a face value of Rs.1 per share.

Equity Shares subscribed and fully paid up and outstanding immediately after the Issue

Immediately after the Issue, 2,84,58,76,634 Equity Shares will be issued and outstanding.

Eligible Investors QIBs as defined in regulation 2(1)(zd) of the ICDR Regulations and Chapter VIII of the ICDR Regulations. Only QIBs which are FIIs and Eligible FPIs are permitted to participate in this Issue. For further details, see the sections “Issue Procedure – Qualified Institutional Buyers” and “Transfer Restrictions” beginning on pages 162 and 175.

Floor Price Rs. 34.30 per Equity Share, calculated in accordance with Regulation 85 of the ICDR Regulations. Under the ICDR Regulations, the Issue Price cannot be lower than the Floor Price subject to discount of not more than 5% on the Floor Price which may be considered by our Company.

Listing (i) Applications for approval, in terms of Clause 24(a) of the listing agreements with the Stock Exchanges were made and approval has been received from each of the Stock Exchanges, and (ii) the application for the in-principle and final listing and trading approval, for listing and admission of the Equity Shares and for trading on the Stock Exchanges, will be made only after Allotment of the Equity Shares in the Issue.

Transferability Restrictions The Equity Shares being allotted pursuant to this Issue cannot be sold for a period of one year from the date of Allotment, except if sold on the floor of the Stock Exchanges. For further details, see the section “Transfer Restrictions” beginning on page 175

Closing The Allotment of the Equity Shares offered pursuant to the Issue is expected to be made on or about July 4, 2014 (the “Closing Date”).

Ranking The Equity Shares being issued in the Issue are subject to the provisions of our Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares, including with respect to dividend rights. Shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by us after the Closing Date, in compliance with the Companies Act, 2013. Shareholders may attend and vote in shareholders’ meetings in accordance with the provisions of the Companies Act, 2013. Please see the section “Description of the Equity Shares” beginning on page 182.

Use of Proceeds The gross proceeds of the Issue are expected to be approximately Rs. 66,672.00 lakhs. The net proceeds from the Issue, after deducting fees, commissions and


27

expenses of the Issue, will be approximately Rs. 65,072.00 lakhs. For further details, please see the section “Use of Proceeds” beginning on page 63.

Lock-up The Company has agreed that it will not, without the prior written consent of the Joint Global Coordinators and Book Running Lead Managers (which such consent shall not be unreasonably withheld), for the period commencing from the date of the Placement Agreement and ending 90 days from the Closing Date, directly or indirectly: (a) issue, offer, lend, sell, pledge, contract to sell or issue, sell any option or contract to purchase, purchase any option or contract to sell or issue, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing; (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares; or (c) publicly announce any intention to enter into any transaction whether any such transaction described in (a) or (b) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise. Our Promoter has agreed that without the prior written consent of the Joint Global Coordinators and Book Running Lead Managers (which such consent shall not be unreasonably withheld), it will not, during the period commencing on the date of the Placement Agreement and ending 90 days after the date of allotment of the Issue Shares, directly or indirectly: (a) sell, lend, pledge, contract to sell, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing; (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares; or (c) publicly announce any intention to enter into any transaction whether any such transaction described in (a) or (b) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise; provided however that the foregoing restrictions will (i) not be applicable to any pledge or mortgage of the Equity Shares already existing on the date of the Placement Agreement or transfer of such existing pledge or mortgage; and (ii) not restrict the existing shareholders of the Company from acquiring or purchasing any Equity Shares in the Company, directly or indirectly, in accordance with and subject to applicable laws.

Risk Factors For a discussion of certain risks in connection with an investment in the Equity Shares, please see the section “Risk Factors” beginning on page 38.

Security codes: ISIN: INE208A01029 BSE Code: 500477 NSE Code: ASHOKLEY MSE Code: ALL


28

SUMMARY OF BUSINESS In Fiscal 2014, the Company was the second largest manufacturer of medium and heavy commercial vehicles in India (Source: Copyright SIAM Report 2014). Our principal business is the design, development, manufacture and sale of a comprehensive portfolio of commercial vehicle products with varying capacities and applications to cater to different customer segments. The Company manufactures and sells a complete range of goods vehicles spanning medium and heavy duty trucks with capacities ranging from 10 tons GVW to 49 tons GVW and also manufactures engines, gensets (DG sets) and spare parts and various special application vehicles which are used to provide logistics support to the Indian defence sector. Through a strategic partnership with Nissan, we manufacture and sell light commercial vehicles (ranging from 2.5 tons GVW to 7.2 tons GVW) and a passenger carrier. We also manufacture a comprehensive range of city, inter-city, special purpose buses and coaches, ranging from 16 to 80 seats in capacity. In Fiscal 2014, our products were sold in 34 jurisdictions globally.

In Fiscal 2012, 2013 and 2014 the Company's revenue from the sales of products were Rs.13,91,287.43 lakhs, Rs.13,53,160.43 lakhs and Rs.10,60,812.88 lakhs respectively. The Company's revenue from sales of products comprises revenue from the sale of commercial vehicles manufactured, traded vehicles, engines, gensets, spare parts and others.

In Fiscal 2012, 2013 and 2014 revenue from sale of commercial vehicles manufactured accounted for 86.34%, 77.59% and 75.17% respectively of the Company's total revenue from operations. Revenue from sales of traded vehicles in Fiscal 2012, 2013 and 2014 accounted for 1.19%, 6.88% and 9.84% respectively of the Company's total revenue from operations. The sale of traded vehicles refers to the sale of vehicles purchased by the Company from its joint venture company. For details on trade sales, please see section “Business - Strategic Relationships” beginning on page 139. Revenue from sales of spare parts and others in Fiscal 2012, 2013 and 2014, accounted for 11.33%, 13.64% and 11.48%, respectively of the Company's total revenue from operations (gross). Revenue from sales of spare parts and others comprises revenue generated primarily from the sale of spare parts and from the supply of vehicle kits to the Indian Government which are used by the Indian defence for logistics support.

The Company's market share in India in Fiscal 2013 and 2014 in the overall Medium and Heavy Commercial Vehicles ("MHCV") segment (passenger carrier and goods carriers) was 26.4% and 25.8% respectively, making it the second largest in this segment. In Fiscal 2013 and 2014 the Company's domestic market share in the MHCV (goods carrier) segment was 23.4% and 22.8% respectively and the market share in the MHCV (passenger carrier .i.e. the bus segment) segment was 40.5% and 38.6% respectively. In Fiscal 2013 and 2014 the Company had a market share of 6.6% and 6.3% respectively in the Light Commercial Vehicles ("LCVs") segment (passenger and goods carriers) (Source: Copyright SIAM Report 2014).

In May 2008, we entered into three separate joint ventures with Nissan Motor Co. Ltd. to manufacture LCVs with a GVW of less than 7.5 tons, to collaborate and provide technology to the LCV manufacturing entity and manufacture powertrain engines.

The Company has also entered into joint venture arrangements with John Deere to manufacture construction equipment and with Alteams Oy to manufacture high-pressure die-casting (“HPDC”) aluminum components. For further information, see “Business - Strategic Relationships – Joint Ventures” beginning on page 139.

The Company operates seven manufacturing facilities in India located across Tamil Nadu, Maharashtra, Rajasthan and Uttarakhand with an aggregate production capacity as at March 31, 2014 of 150,500 vehicles per annum (based on operating two production shifts per day). Key components and spare parts for vehicles, including engines, gear boxes and front axles are also manufactured at these facilities.

We also operate manufacturing facilities in the UAE and the UK through our associate and subsidiary companies respectively. In the UAE, we operate through Ashok Leyland UAE, LLC which owns a bus manufacturing facility in Ras Al Khaimah with a production capacity of 2,000 vehicles per annum. In the UK we operate through our subsidiary, Optare Plc which owns a bus manufacturing facility in Leeds.

As at March 31, 2014, the Company's distribution network across India comprised 264 dealer branches, a network of 159 Authorized Service Centers (“ASCs”), 64 containerized workshops and 152 retail stores which sell spare parts. In aggregate the Company had 639 customer touch-points across India as at March 31, 2014.


29

Our research and development capabilities are focused on innovating, developing and improving engine and vehicle technologies for our vehicles. The Company's center for product research and development near Chennai provides design, development and testing services for new products, as well as for upgrading of existing products. In addition to a modern testing laboratory, the research and development center also provides comprehensive test tracks for testing prototypes under demanding conditions. For example, the six-poster road simulation laboratory is a track simulator for multi-axle vehicles which significantly reduces testing time. In Fiscal 2013 and 2014, the Company incurred Rs.30,386.17 lakhs and Rs.25,623.91 lakhs respectively for research and development in the year in-house R & D facilities. As at March 31, 2014, the Company had 850 employees in its research and development team.

We are a part of the Hinduja Group, which is a diversified business group with operations across several verticals including chemicals, manufacturing, banking and finance, information technology, power, media, real estate, healthcare and trading.

The Company was established in 1948 and its equity shares are listed on the MSE, the BSE and the NSE. In Fiscal 2014, the Company undertook certain corporate restructuring processes resulting in certain of its associate companies being consolidated and merged. As a consequence of such corporate restructuring and consolidation, the Company's corporate group structure in Fiscal 2014 is not comparable to its corporate group structure in Fiscal 2013. Further the Company has prepared consolidated financial statements for the first time in Fiscal 2014 and consequently has no comparable consolidated financial statements for prior years. Pursuant to the corporate restructuring, the Company's standalone financial statements for Fiscal 2014 may not be directly comparable to its standalone financial statements in Fiscal 2013 or earlier. For further information, see "Business - Corporate Restructuring" beginning on page 137 and "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Consolidated Financial Statements - Restructuring of the Group and Presentation of Financial Information" beginning on page 90.


30

SUMMARY FINANCIAL INFORMATION The following selected financial information is extracted from and should be read in conjunction with, the audited consolidated financial statements and notes thereto of our Company as at, and for the, fiscal year ended March 31, 2014 and audited standalone financial statements and notes thereto of our Company as at, and for the, fiscal years ended March 31, 2012, 2013 and 2014 prepared in accordance with Indian GAAP, each included elsewhere in this Placement Document. You should refer to “Management’s discussion and analysis of financial condition and results of operations as per standalone financial statements”, “Management’s discussion and analysis of financial condition and results of operations as per consolidated financial statements”, for further discussion and analysis of the financial statements of our Company. The financial information included in this Placement Document does not reflect our Company’s results of operations, financial position and cash flows for the future and its past operating results are no guarantee of its future operating performance. SUMMARY STANDALONE BALANCE SHEETS

Particulars As at March 31, 2012

Rs. Lakhs As at March 31, 2013

Rs. Lakhs As at March 31, 2014

Rs. Lakhs EQUITY AND LIABILITIES Shareholders’ funds Share capital 26,606.80 26,606.80 26,606.80 Reserves and surplus 394,625.82 418,903.66 418,181.63 421,232.62 445,510.46 444,788.43 Non-current liabilities Long-term borrowings 229,335.11 273,784.18 329,650.51 Deferred tax liabilities (Net) 49,036.69 52,736.69 40,676.69 Other long-term liabilities - 177.85 237.12 Long-term provisions 7,656.30 7,851.26 6,786.62 286,028.10 334,549.98 377,350.94 Current liabilities Short-term borrowings 10,175.00 76,698.25 58,740.81 Trade payables 257,096.72 248,536.85 221,415.37 Other current liabilities 175,004.83 173,506.34 169,691.35 Short-term provisions 42,037.44 30,868.33 8,812.67 484,313.99 529,609.77 458,660.20 TOTAL 1,191,574.71 1,309,670.21 1,280,799.57 ASSETS Non-current assets Fixed assets Tangible assets 456,571.25 491,843.42 522,192.70 Intangible assets 34,778.16 36,344.86 43,794.02 Capital work-in-progress 43,519.06 56,261.83 15,513.03 Intangible assets under development 11,303.03 12,630.91 2,639.69 546,171.50 597,081.02 584,139.44 Non-current investments 153,447.89 233,763.19 240,531.11 Long-term loans and advances 60,823.95 49,933.41 67,276.53 Other non-current assets 742.74 1,203.21 3,308.99 761,186.08 881,980.83 895,256.07 Current assets Current investments - - 38,437.48 Inventories 223,062.52 189,602.08 118,870.31


31

Trade receivables 123,076.42 141,941.13 129,901.05 Cash and bank balances 3,255.58 1,394.24 1,169.06 Short-term loans and advances 72,657.43 87,134.18 80,071.10 Other current assets 8,336.68 7,617.75 17,094.50 430,388.63 427,689.38 385,543.50 TOTAL 1,191,574.71 1,309,670.21 1,280,799.57 SUMMARY STANDALONE STATEMENTS OF PROFIT AND LOSS

Particulars Year ended March

31, 2012 Rs. Lakhs

Year ended March 31, 2013

Rs. Lakhs


Rs. Lakhs Income Revenue from operations 1,372,080.50 1,329,855.89 1,056,084.53 Less: Excise Duty 81,647.85 81,735.89 61,741.86 Revenue from operations (Net) 1,290,432.65 1,248,120.00 994,342.67 Other income 4,035.03 6,235.15 6,652.07 Total Revenue 1,294,467.68 1,254,355.15 1,000,994.74 Expenses Cost of materials consumed 912,148.33 753,941.64 590,969.47 Purchases of Stock-in-Trade - Traded goods 50,737.37 131,173.94 126,902.76 Changes in inventories of finished goods, work-in-progress and Stock-in-Trade (16,701.30) 27,197.69 42,387.10 946,184.40 912,313.27 760,259.33 Employee benefits expense 102,039.42 107,551.34 99,967.23 Finance costs 25,525.32 37,688.57 45,292.48 Depreciation and amortisation expense 35,281.32 38,078.35 37,703.60 Other expenses 116,599.34 140,608.56 117,459.88 Total Expenses 1,225,629.80 1,236,240.09 1,060,682.52 Profit / (Loss) before exceptional items and tax 68,837.88 18,115.06 (59,687.78) Exceptional items 159.78 28,955.61 50,565.89 Profit / (Loss) before tax 68,997.66 47,070.67 (9,121.89) Tax expense: Current tax (Refer Note 3.13 to the Financial Statements) 7,752.00 - - Deferred tax 4,648.00 3,700.00 (12,060.00) 12,400.00 3,700.00 (12,060.00) Profit for the year from continuing operations 56,597.66 43,370.67 2,938.11 Earnings per share (Face value Re.1) – Basic and Diluted (in Rs.) (Refer Note 3.3 to the Financial Statements) 2.13 1.63 0.11


32

SUMMARY STANDALONE CASH FLOW STATEMENTS


Rs. Lakhs

Year endedMarch 31, 2013

Rs. Lakhs


Rs. Lakhs Cash flow from operating activities Profit / (Loss) before tax 68,997.66 47,070.67 (9,121.89) Adjustments for :

Depreciation, amortisation and impairment - net of capitalisation 35,281.32 38,078.35 37,703.60 Other amortisations (569.83) 571.31 189.04 Bad and doubtful debts / advances provided / written-off (net of recovery) - - 524.85 Foreign exchange (gains) / losses 1,072.60 (1,277.41) 733.26 Loss / (Profit) on disposal of tangible assets (348.03) (417.26) (20,266.16) Loss / (Profit) on sale of long-term investments (159.78) (32,971.92) (36,870.91) Provision for diminution in value of long-term investments 26.55 4,016.31 957.32 Voluntary Retirement Scheme expense - - 4,674.94 Finance costs - net of capitalisation 25,525.32 37,688.57 45,292.48 Interest income (1,373.33) (3,324.34) (1,733.54) Dividend income (906.06) (756.27) (470.52)

Operating profit before working capital changes 127,546.42 88,678.01 21,612.47

Adjustments for changes in : Liabilities and provisions 42,441.92 (16,994.37) (33,756.72) Trade receivables (5,971.05) (19,089.74) 11,680.51 Inventories (2,172.18) 33,460.44 70,731.77 Loans and Advances (33,550.09) (3,110.52) (8,448.02) Other non-current and current assets 1,434.97 882.69 1,472.01 Voluntary Retirement Compensation paid - Exceptional item - - (4,674.94) Cash generated from operations 129,729.99 83,826.51 58,617.08 Income tax paid (14,998.63) (10,996.55) (2,974.07)

Net cash flow from operating activities [A] 114,731.36 72,829.96 55,643.01 Cash flow from investing activities

Payments for acquisition of assets (69,783.90) (64,916.21) (21,975.40) Proceeds on sale of fixed assets 720.74 532.39 1,269.65 Proceeds on sale of immovable properties - Exceptional item - - 9,733.47 Proceeds from sale of long-term investments - Exceptional item 25,114.30 41,464.58 50,965.55 Purchase of long-term investments (55,429.27) (92,824.28) (53,792.90) Inter Corporate Deposits – given - - (5,000.00) Inter Corporate Deposits - repaid - - 2,000.00


33

Year ended March 31,

2012 Rs. Lakhs


2013 Rs. Lakhs


2014 Rs. Lakhs

Interest received 775.98 1,880.76 1,436.40 Dividend received 906.06 756.27 470.52

Changes in Advances / Related Party Loans and advances given / repaid (Net) (8,055.94) (3,325.54) 4,082.67 Taxes paid - - (204.06)

Net cash flow (used in) investing activities [B] (105,752.03) (116,432.03) (11,014.10)

Cash flow from financing activities

Proceeds from long-term borrowings 57,731.54 117,138.48 120,094.11 Repayments of long-term borrowings (34,878.46) (73,470.92) (85,060.82) Proceeds from short-term borrowings 117,832.98 1,026,932.92 1,367,178.54 Repayments of short-term borrowings (108,291.85) (960,561.17) (1,383,939.80) Debenture / Loan raising expenses paid (896.44) (1,135.29) (880.38) Interest paid (24,686.96) (36,282.97) (43,578.14) Dividend paid and tax thereon (30,923.05) (30,923.05) (18,677.15)

Net cash flow (used in) / from financing activities[C] (24,112.24) 41,698.00 (44,863.64)

Net cash (outflow) [A+B+C] (15,132.91) (1,904.07) (234.73)

Opening cash and cash equivalents 17,537.27 2,746.31 781.09 Add: Pursuant to amalgamation [Refer Note 3.16 to the Financial Statements]

- - 28.04

Exchange fluctuation on foreign currency bank balances 341.95 (61.15) (68.50) Closing cash and cash equivalents [Refer Note 1.19 a. to the Financial Statements]

2,746.31 781.09 505.90

Note: FY 2014

Share Application money aggregating Rs. 3,192.17 lakhs has been converted into share capital during the period.


34

SUMMARY CONSOLIDATED BALANCE SHEET As at March 31, 2014

Consolidated Balance Sheet as at March 31, 2014 Rs. Lakhs

Particulars

EQUITY AND LIABILITIES

Shareholders’ funds

Share capital 26,606.80

Reserves and surplus 372,316.16

398,922.96

Minority interest 65,211.15

Non-current liabilities

Long-term borrowings 549,118.41

Deferred tax liabilities (Net) 41,141.98

Other long-term liabilities 962.54

Long-term provisions 12,671.94

603,894.87

Current liabilities

Short-term borrowings 126,448.80

Trade payables 259,243.96

Other current liabilities 286,735.29

Short-term provisions 12,973.96

685,402.01

TOTAL 1,753,430.99

ASSETS

Non-current assets

Fixed assets

Tangible assets 626,235.34

Intangible assets 52,856.63

Capital work-in-progress 27,015.17

Intangible assets under development 2,639.69

Goodwill (on consolidation) 78,173.00

Non-current investments 69,018.46

Deferred tax assets (Net) 1,000.97

Long-term loans and advances 238,481.76

Other non-current assets 26,216.91

1,121,637.93

Current assets

Current Investments 47,438.06

Inventories 154,404.95

Trade receivables 138,108.69

Cash and bank balances 11,341.53

Short-term loans and advances 247,675.12


35

Other current assets 32,824.71

631,793.06

TOTAL 1,753,430.99

SUMMARY CONSOLIDATED STATEMENT OF PROFIT AND LOSS

Year Ended March

31, 2014 Consolidated Statement of Profit and Loss for the year ended March 31, 2014 Rs. Lakhs

Particulars

Income

Revenue from operations 1,211,437.89

Less: Excise Duty 62,765.93

Revenue from operations (Net) 1,148,671.96

Other income 9,244.94

Total Revenue 1,157,916.90 Expenses

Cost of materials consumed 703,011.90

Cost of services availed 1,278.52

Purchases of Stock-in-Trade - Traded goods 73,250.47

Changes in inventories of finished goods, work-in-progress and Stock-in-Trade 36,306.25

813,847.14

Employee benefits expense 134,558.33

Finance costs 80,548.82

Depreciation and amortization expense 52,996.51

Other expenses 158,064.13

Total Expenses 1,240,014.93 Loss before exceptional and extraordinary items and tax

(82,098.03)

Exceptional items 52,077.41

Loss before tax (30,020.62)

Tax expense:

Current tax 5,465.50

Deferred tax (12,315.34)

Loss after tax from continuing operations (23,170.78)

Share of profit of associates (net) 992.43

Minority interest (5,766.11)

Loss for the year (16,412.24)Earnings per share (Face value Re.1) - Basic and Diluted (in Rs.) (Refer Note 3.3 to the Financial Statements) (0.62)


36

SUMMARY CONSOLIDATED CASH FLOW STATEMENTS

March 31, 2014

Consolidated Cash Flow Statement for the year ended March 31, 2014 Rs. Lakhs

Cash flow from operating activities

(Loss) before tax (30,020.62)Adjustments for :

Depreciation, amortisation and impairment - net of capitalization 52,996.51

Other amortisations 189.04

Bad and doubtful debts / advances provided / written-off (net of recovery) 982.07

Provisions relating to vehicle financing 1,248.45

Foreign exchange (gains) / losses 18.83

Loss / (Profit) on disposal of tangible assets (20,248.62)

Loss / (Profit) on sale of long-term investments (37,965.10)

Diminution in value of long-term investments 487.66

Stock compensation expenses 2.80

Voluntary Retirement Scheme expense 4,694.42

Finance costs - net of capitalisation 51,827.00

Interest income (4,121.99)

Dividend income (590.40)

Operating profit before working capital changes 19,500.05

Adjustments for changes in :

Liabilities and provisions (59,784.45)



Loans and Advances (40,331.21)

Other non-current and current assets (7,373.20)

Voluntary Retirement Compensation paid - Exceptional item (4,694.42)

Cash (used in) operations (737.73)Income tax paid (9,662.61)

Net cash flow (used in) operating activities (10,400.34)

Cash flow from investing activities

Payments for acquisition of assets (40,805.06)

Proceeds on sale of fixed assets 1,789.59

Proceeds on sale of tangible assets - Exceptional item 9,733.47

Proceeds from sale of long-term investments - Exceptional item 52,059.74

Purchase of long-term investments (53,479.32)

Purchase of interest in a subsidiary (919.76)

Debenture application money given (8,800.00)


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Inter Corporate Deposits – given (5,000.00)

Inter Corporate Deposits – repaid 2,000.00

Interest received 4,229.51

Dividend received 590.40

March 31, 2014

Rs. Lakhs

Related Party Loans and advances given / repaid (Net) 1,079.50

Taxes paid (204.06)

Net cash flow (used in) investing activities (37,725.99) Cash flow from financing activities Issues of shares to minority shareholders 33,411.79 Proceeds from long-term borrowings 256,763.51 Repayments of long-term borrowings (158,643.53) Repayments of short-term borrowings (net) (15,948.76) Debenture / Loan raising expenses paid (893.00) Interest paid (49,883.40) Dividend paid and tax thereon (18,677.15) Net cash flow from financing activities 46,129.46 Net cash (outflow) (1,996.87) Opening cash and cash equivalents 12,674.64Add: Pursuant to amalgamation [Refer Note 3.13] 28.04 Exchange fluctuation on foreign currency bank balances (68.50) Closing cash and cash equivalents [Refer Note 1.19 a.] 10,637.31


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RISK FACTORS This section describes the risks that we currently believe may materially affect our business and operations. You should carefully consider the following, in addition to any forward-looking statements and the cautionary statements in this Placement Document and the other information contained in this Placement Document, before making any investment decision relating to the Equity Shares. Prospective investors should read this section in conjunction with the sections "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations as per Standalone Financial Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations as per Consolidated Financial Statements", as well as other financial and statistical information contained in this Placement Document. The risks described below are not the only ones relevant to us or the Equity Shares. Additional risks may be unknown to us and some risks that we do not currently believe to be material could later turn out to be material. Although we will seek to mitigate or minimize these risks, one or more of a combination of these risks could materially and adversely impact our business, financial condition and results of operations. Investors should pay particular attention to the fact that the Company is an Indian company and is subject to a legal and regulatory regime which in some respects may be different from that applicable in other countries. Investors should consult tax, financial and legal advisors about the particular consequences of an investment in the Offering. In this section, any reference to “we”, “us” or “our” refers to Ashok Leyland, its subsidiaries, joint ventures and associate companies on a consolidated basis, as the context requires, and any reference to "Company" refers to Ashok Leyland Limited. Unless otherwise indicated, all financial information presented herein is on a standalone basis. General economic conditions in India and the markets where we operate could have a significant adverse effect on our sales and results of operations. Demand for commercial vehicles in the Indian market is influenced by various factors, including, among others, the levels of activity in the manufacturing and infrastructure sectors, the resultant demand for transportation of freight goods from the steel, iron ore, mining, cement, coal and other industries and agricultural produce, import and export activities, implementation of new emission standards and diesel prices. For example, a decrease in GoI's investment in road infrastructure could lead to a corresponding decrease in demand for commercial vehicles. Economic slowdowns in the past have affected the demand for our products and delayed or shortened the periods of growth. Deterioration in key economic factors such as growth rate and an increase in inflation, together with reduced availability of financing for vehicles at competitive rates, may adversely affect the demand for our products. Due to the economic conditions prevailing between Fiscal 2012 and Fiscal 2014, the total industry volume (“TIV”) of MHCVs reduced at an aggregate of 42.5% between Fiscal year 2012 and Fiscal 2014. During the last two Fiscal years, passenger MHCV TIV registered a drop of approximately 22.4% primarily driven by a 38.0% drop in the 12 to 16.2 tons bus segment (Source: Copyright SIAM Report 2014) and also due to decrease in purchases by State Transport Undertakings (STUs). The truck segment declined by 45.9% (Source: Copyright SIAM Report 2014) during the same period due to a continued economic slowdown and the ban on mining imposed by certain State governments in India. Our products are also sold outside India and any deterioration in the economies in which we sell our products will have an impact on the demand for our products. The global economy and financial markets have experienced extreme levels of instability, and there is substantial volatility in markets, including, without limitation, stock markets, foreign exchange markets, commodity markets, fixed income markets and credit markets, which in turn has adversely affected the economy in India. Our financial indebtedness may have significant adverse consequences on our future business performance. As at March 31, 2014, the Company had total long-term borrowings of Rs.3,29,650.51 lakhs (excluding current maturities of long term debt), which includes external commercial borrowings of Rs.1,55,779.00 lakhs (excluding current maturities), Indian Rupee term loans of Rs. 58,333.33 lakhs (excluding current maturities), and debentures of Rs.1,07,500.00 lakhs (excluding current maturities) on a standalone basis. As at March 31, 2014, total long-term borrowings including current maturities represented 32.03% of total equity and liabilities on a standalone basis.

As at March 31, 2014, we had total long-term borrowings of Rs.5,49,118.41 lakhs (excluding current maturities), which includes of external commercial borrowings of Rs. 1,78,613.91 lakhs (excluding current maturities), Indian Rupee term loans


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of Rs. 2,50,879.47 lakhs (excluding current maturities), and debentures of Rs. 1,11,000.00 lakhs (excluding current maturities) on a consolidated basis. As at March 31, 2014 total long term borrowings including current maturities represented 41.26% of total equity and liabilities on a consolidated basis.

The level of indebtedness may affect the Company in several ways, including: requiring us to dedicate a substantial portion of the cash flow from operations for payments towards loan repayments,

thereby reducing the availability of cash flow to fund working capital, research and development, capital expenditure, acquisitions and other general corporate purposes;

affecting our ability to generate sufficient cash for principal and interest payments and other amounts due in respect of these borrowings;

imposing constraints on our business operations and growth plans as a result of the need to take into account the covenants in our debt financing agreements when executing those business operations and growth plans;

limiting our ability to pay dividends; and risking future downgrades of our credit rating by international and domestic rating agencies, thereby adversely impacting

the interest rates and commercial terms of all future financing.

Although we aim to deleverage our balance sheet, such efforts may be adversely impacted by, among other things, adverse market conditions, foreign currency fluctuations, failure to receive the necessary regulatory or corporate approvals; and failure of our growth and expansion plans.

Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition. Restrictive financial and other covenants may limit our operations and financial flexibility. Some of the Company's financing agreements and debt arrangements set limits on and/or require prior approval of lenders before, among other things, pledging assets as security, making investments and other restricted payments, selling assets, effecting any consolidations or mergers, making acquisitions, hedging, undergoing a change of control and making substantial changes to the nature of the business. In addition, certain covenants may limit the Company's ability to borrow additional funds or to incur additional liens. Such restrictions or limitations may adversely limit the Company's operations and financial flexibility, and adversely affect its business, results of operations and financial condition.

The Company may use part of the proceeds from this Issue to repay a part of our debt. Some of the facility agreements entered into by the Company require the consent of lenders for any such prepayment. The Company may be unable to obtain the consent of certain of its lenders for such early repayment on favorable terms, or at all. Certain facilities also impose a prepayment penalty on such early repayment, which would have an effect on the Company's financial conditions and business.

The Company has breached certain covenants under some of its financing arrangements. The lenders may declare a default and enforce their remedies under these financing documents, and lenders under our other financing agreements that contain cross-default provisions could take similar actions. If such remedies are exercised, our financial condition and results of operations could be adversely affected The Company has in the past failed to comply with certain covenants under some of its financing documents. Following is a summary of the breach of financial covenants by the Company in relation to Fiscal 2012, 2013 and 2014: (1) Bank of America Facility Agreement: The Company had breached the financial covenant on total gross borrowings to

tangible net worth for the testing period ended March 31, 2012, the financial covenants on total gross borrowings to tangible net worth and debt service coverage ratio for the testing period ended September 30, 2012 and the financial covenants on total borrowings to EBITDA, EBITDA to interest expense, total gross borrowings to tangible net worth and debt service coverage ratio for each of the testing periods ended March 31, 2013, September 30, 2013 and March 31, 2014;

(2) DBS Bank Facility Agreement: The Company had breached the financial covenants being total debt to EBITDA and EBITDA to interest expense for the testing period ended March 31, 2014;


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(3) Mizuho Corporate Bank Facility Agreement: The Company had breached the financial covenants on total debt to

EBITDA (on consolidated basis) and EBITDA to interest expense (on consolidated basis) for the testing period ended March 31, 2014;

(4) Barclays Bank Facility Agreement: The Company had breached the financial covenant on debt service coverage ratio for the testing period ended September 30, 2012, the financial covenants on the ratio of total outstanding liabilities to tangible net worth, total debt to EBITDA and minimum total net worth for the testing period ended March 31, 2013 and the financial covenants on total debt to EBITDA and EBITDA to interest expense for the testing periods ended September 30, 2013 and March 31, 2014;

(5) Nova Scotia Asia Facility Agreement: The Company had breached the financial covenants being debt to EBITDA (on

consolidated basis) and EBITDA to interest expense (on consolidated basis) for the testing period ended March 31, 2014; and

(6) Bank of Tokyo Facility Agreement: The Company had breached the financial covenants being total borrowings to

EBITDA, EBITDA to interest expense and debt service coverage ratio for the testing period ended March 31, 2014. See "Management's Discussion and Analysis of Financial Condition and Results of Operations as per Standalone Financial Statements – Indebtedness" beginning on page 83, for a detailed discussion of the financial covenants that were breached. A breach of these and other covenants may result in the lenders declaring an event of default, and enforcing the remedies under the terms of the financing documents, which include acceleration of the repayment of the amounts outstanding under the financing documents, enforcement of any security interests created under the financing documents, the imposition of penalty interest and taking possession of assets given as security in respect of the financing documents, including any pledge of Equity Shares provided as security by any of the Promoters or members of the Promoter Group subject to statutory approvals and the imposition of penalty interest.

The Company has been granted a waiver for the breach of the relevant financial covenants for the testing periods ended September 30, 2012, September 30, 2013 and March 31, 2013 under the Barclays Bank Facility Agreement. Since the due date for filing compliance certificate is July 29, 2014, the Company has not submitted the compliance certificates to the respective lenders for the testing period ended March 31, 2014 and has not applied for waivers from the lenders for the breach of the financial covenants for this period. In relation to the Bank of America Facility, the last instalment of the loan has been repaid on June 30, 2014. Since the last instalment has been repaid before the due date for filing the compliance certificate, the need for filing the compliance certificate does not arise. There is no assurance that the Company will be able to obtain a waiver in relation to our obligations from the lenders and, absent such waiver, non-compliance will continue to constitute an event of default under the terms of such financing documents. A number of the Company's financing documents contain cross-default or cross acceleration provisions, including some without any thresholds. The occurrence of an event of default, notwithstanding a subsequent waiver, may result in an event of default occurring under each of the financing documents which contain such cross-default provisions. As a result, a lender declaring an event of default under one financing document may cause the acceleration of repayment of not only such debt but also other debt, or result in an event of default under our other financing documents. A number of the Company's outstanding financing documents contain cross-default provisions. Any acceleration of repayment or cross acceleration as a result of a declaration of an event of default or cross default, by lenders will require the approval of the RBI for payments to persons who are not resident in India. There is no assurance that an event of default will not be declared by the lenders or that repayments will not be accelerated.

There can be no assurance that the Company will not in future breach any covenants, including financial covenants, under any of its existing or future financing arrangements. As such, the Company could also be subject to financial and operational sanctions, including payment of penalty interest, as well as certain other restrictions on the Company's business and operational activities. If all or a material part of the Company's outstanding indebtedness is accelerated, the Company may not have sufficient cash flow to repay such indebtedness, which could adversely impact the Company's ability to operate as a going-concern. In addition, the perception that the Company's lenders might accelerate some or all of the Company's outstanding indebtedness could negatively impact our ability to obtain alternative financing (on terms that are favorable or acceptable to us, or at all), the Company's credit ratings, the trading price of the Equity Shares, or could have an adverse impact on our ability to execute other commercial agreements with joint venture partners, customers or suppliers or to raise


41

or borrow capital, which could adversely impact our business, reputation, cash, results of operations and financial condition.

Our business is seasonal and cyclical in nature and a substantial decrease in sales during certain quarters could have a material adverse impact on financial performance. The sales volumes and prices for commercial vehicles and in particular trucks are influenced by cyclicality and seasonality of demand. In relation to the MHCVs, demand is generally lower in the first half of a Fiscal and higher in the second half of a Fiscal due to the harvest season and increased movement of agricultural products, as well as the desire of customers to take advantage of certain tax benefits before the year end. In addition, it is observed that consumer demand for vehicles is generally depressed towards the end of a calendar year, and particularly in December, as customers seek to avoid vehicles purchased being classified as older models based on the year of manufacture. As a result, consumers prefer to delay the acquisition of a vehicle to January of the next calendar year. See "Management's Discussions and Analysis of Financial Condition and Results of Operations as per Standalone Financial Statements – Seasonality and Cyclicality" beginning on page 107. This seasonality and cyclicality of the demand for our products may cause a substantial decrease in sales during certain periods, thereby adversely affecting our results of operations and financial condition. Due to the seasonality of our business, our quarterly financial results may not be comparable on a quarter to quarter basis. Increases in interest rates may materially impact our results of operations. As our business is capital intensive, we are exposed to interest rate risks. Interest rates for borrowings have been volatile in India in recent periods. Some of our current debt facilities carry interest at variable rates as well as fixed rates with periodic resets of interest rates. Although we may decide to engage in interest rate hedging transactions or exercise any right available to us under our financing arrangements to terminate the existing debt financing arrangement on the respective interest rate reset dates and enter into new financing arrangements, there can be no assurance that we will be able to do so on commercially reasonable terms, that our counterparties in hedging transactions will perform their obligations, or that such agreements, if entered into, will protect us adequately against interest rate risks. Accordingly, the increase of our interest expense may have an adverse effect on the cost of our debt funding and our results operations and financial condition may be adversely affected. Increased competition in the commercial vehicle industry in India may adversely affect our results of operations and financial condition. We face strong competition in India across our product lines from other domestic and international commercial vehicle manufacturers. We expect to face increased competition from international manufacturers who seek to penetrate the Indian commercial vehicle market through technology transfers, joint ventures or direct investments. There is a risk that competitors will set up or actively target the same geographical regions and product segments as us. Increased competition may result in greater price competition and reduced demand for our products, thereby adversely affecting our results of operations and financial condition. These factors may in turn adversely affect our results of operations and financial condition. We have recently completed the restructuring of our business operations and group structure and the impact of such group restructuring on our business, financial condition and results of operations is uncertain.

In Fiscal 2014, pursuant to a scheme of amalgamation certain of the Company's associate companies were consolidated and merged with the Company. As a consequence of the scheme of amalgamation, (i) our group structure in Fiscal 2014 is not comparable to our group structure in Fiscal 2013; (ii) we have prepared consolidated financial statements for the first time in Fiscal 2014 and consequently no comparable consolidated financial statements for prior years are available; and (iii) as a result of the restructuring, the Company's Standalone Financial Statements for Fiscal 2014 is not directly comparable to its Standalone Financial Statements in Fiscal 2013 or earlier. For further information see "Business - Corporate Restructuring" beginning on page 137 and "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Consolidated Financial Statements - Restructuring of the Group and Presentation of Financial Information" beginning on page 90.


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This may make it difficult to compare our past performance and financial condition or to estimate our financial performance in the future. Therefore the impact of such restructuring on our business, financial condition and results of operations is uncertain and may be adverse. We are subject to risks associated with product liability, warranty and recall due to defects in our products or related after-sales services, which could generate adverse publicity and adversely affect our business, results of operations and financial condition. Defects, if any, in our products could require us to undertake service actions or vehicle recalls. These actions could require us to expend considerable resources in correcting these problems and could materially and adversely affect demand of our products. We are not covered by insurance for product liability claims for commercial vehicles sold in India. Defects in our products that arise from defective components or spare parts supplied to us may be covered under warranties provided by our suppliers. An unusual number or amount of warranty claims against a supplier, however, could affect our relationship with that supplier. Repeated warranty claims may also result in a rise in our cost of obtaining insurance. Further, if a supplier fails to meet quality standards, they could expose us to the risk of product liability claims, the costs and expenses of which we may not be able to recover from our suppliers. Any defects in our products or after-sales services could also result in customer claims for damages. In defending such claims, we could incur substantial costs and receive adverse publicity. Management resources could be diverted away from our ordinary business towards defending such claims. As a result, our business, results of operations and financial condition could be adversely affected. Sales of our commercial vehicles is dependent on the availability of financing to the ultimate buyers of such vehicle. A large number of vehicle purchasers finance their purchases through third party financing. The recent economic downturn has led to a decline in the availability of consumer credit, increased consumer borrowing costs and increased default rates as a result of the financial crisis. Such factors have negatively affected global automotive sales and the continuation or worsening of these difficulties may lead to lower production volumes beyond the reductions we have anticipated in our planning and budgeting process. Further, volatility in interest rates affects the ability and willingness of prospective vehicle purchasers to obtain financing for the purchase of vehicles manufactured by us. These factors may adversely affect our business and results of operations. The Company's business is dependent on certain principal customers who are dealers of its commercial vehicles and the loss of, or a significant reduction in purchases by such customers could adversely affect its business. Delay in payment by some of the Company's customers may affect its business and financial condition. The Company is dependent on certain principal customers. The Company's principal customers include commercial vehicle dealers and STUs. The loss of a significant customer could have an adverse effect on our business. Since we are significantly dependent on certain key customers, the loss of any one of such customers or a significant reduction in demand from some of our customers could have an adverse effect on our business and financial results. Also some of our customers may delay in making payments due to us and this may affect the results of our operations and financial conditions. We are dependent on our distribution channels, the underperformance of which may adversely affect our sales and results of operations. We rely on a network of authorised dealers, consignment stockists, service centres and distributors for the marketing, sale and distribution of our products, payment collection and maintaining day-to-day contact with our customers and providing after-sales services. Any failure of our dealers, stockists or distributors to perform their functions and adhere to high quality standards of service or continue their relationship with us could adversely affect our brand and products and as a result also adversely affect our results of operations. There can be no assurance that they will meet the desired standards of service levels. Any failure of our distribution channels may have an adverse effect on our business, operations and financial condition.


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We are dependent on our supply chains, the underperformance of which may adversely affect our sales and results of operations.

We depend on external suppliers for the supply of raw materials, components and certain spare parts for our products. In India some of our suppliers are our affiliates and some of the suppliers may be our sole supplier of such parts or components in India. For example, we are reliant on Hinduja Foundries Limited, as our major supplier of castings. Any failure on the part of these suppliers to supply raw materials, components and certain spare parts could have a significant adverse impact on our manufacturing process. We may not have any formal agreements with some of these suppliers in connection with the supply of such parts. All these factors may have an adverse effect on our operations and business. See "Business – Raw Materials and Suppliers" beginning on page 132. Any failure by any of our suppliers to adhere to our technical specifications, quality requirements and production and delivery schedules could disrupt our manufacturing process, which could have a material adverse effect on our results of operations and financial condition. The Company has presently given a continuing, irrevocable and unconditional undertaking in relation to the subscription of shares of its subsidiary HLFL by a third party and may in the future provide similar undertakings in relation to its other subsidiaries, joint ventures or associate companies to other third parties. In relation to an agreement relating to the subscription of the shares of its subsidiary HLFL, the Company has given an undertaking pursuant to which, the Company is required to provide the counter-party an exit option within 54 months from the date of subscription by the counter-party to the shares of HLFL, at a particular price in accordance with the terms agreed between the parties. In the event the Company is unable to provide such exit option to the counter-party, the counter-party is entitled to either sell the shares held by it in HLFL to any third party or require the Company to purchase the shares held by the counter-party in HLFL at a pre-determined price. The Company has also provided an indemnity in relation to any losses or damages arising out of its inability to fulfil its undertaking to the counter-party. If the Company is unable to provide an exit option to the counter-party, it may be required to purchase the shares of HLFL which may cause an adverse impact on the financial condition of the Company. The Company may enter into similar arrangements with other parties in relation to its interests in its joint ventures, associate companies or subsidiaries. In such arrangements the Company may be required to provide similar indemnity undertakings to other counter-parties. In the event these undertakings are acted upon, the Company may be required to expend its resources and this may have an adverse impact on the business and financial condition of the Company. Increases in the cost of raw materials, commercial vehicle components and diesel fuel prices may have a material adverse impact on our results of operations and financial position. In Fiscal 2012, 2013 and 2014, cost of materials consumed, purchases of stock-in-trade – traded goods and changes in inventories of finished goods, work-in-process and stock-in-trade constituted approximately 73.09%, 72.74% and 75.95% respectively, of the Company's total revenues. Prices of commodities are determined by the prices of the underlying raw materials. The prices of commodity items used in manufacturing automobiles, including steel, aluminium, copper, zinc and rubber have become increasingly volatile over the past few years. While we continue to pursue global sourcing and cost-reduction initiatives, any further increase in the prices of raw materials, to the extent that such increases cannot be passed on to our customers through vehicle price increases, could severely impact demand and affect our financial condition. Further crude oil prices are vulnerable to amongst other things global political events (for e.g the recent escalation of violence in Iraq has resulted in an increase in crude oil prices). An increase in crude oil prices will increase fuel costs, which poses a significant challenge to automobile manufacturers worldwide, including us, especially in the commercial vehicle segments where fuel costs represent a significant portion of the operating costs of such vehicles. Our commercial vehicles are primarily powered by diesel fuel engines. Retail prices for diesel fuel in India have historically been subject to governmental regulation and control. A substantial increase in diesel prices could adversely affect the competitiveness of diesel fuel-powered vehicles as compared to other vehicles or other modes of transportation, which could result in a shift in demand away from diesel fuel-powered vehicles in India, and thereby adversely affecting our sales, results of operations and financial condition. Therefore, continued or increased high prices for fuel could materially and adversely impact the results of our operations.


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Some of our subsidiaries have been "Held for Sale" and therefore were not considered during the preparation of our Consolidated Financial Statements. Further, the Company's auditors when preparing the Consolidated Financial Statements did not audit the financial statement of some of its subsidiaries and jointly controlled entities. From Fiscal 2014, our Company has consolidated its 13 subsidiaries excluding the Subsidiaries Held for Sale (on line by line basis) and 5 joint ventures on a proportionate consolidation basis and the Company has taken into consideration the share of its profits/losses in 4 of its associates. In doing so, three of the Company's subsidiaries viz., Avia Ashok Leyland Motors s.r.o, Albonair GmbH and Albonair India Private Limited have been excluded from the consolidation as these entities are “held for sale". The decision of the Board of Directors to sell these subsidiaries was to achieve (i) ease of management; (ii) efficiency in fund raising; (iii) reduction in the number of companies; (iv) ease of management; (v) streamlining the holding in various operating companies and (vi) consolidate the talent pool. These subsidiaries were classified as "held for sale" since it was intended that they would be sold within 12 months. The "held for sale" subsidiaries are classified as a current investment in accordance with Accounting Standard (AS 13) for which its carrying amount would be the lower of cost and fair value. It would be possible for the "held for sale" subsidiaries to be reclassified should the Board of Directors consider that that the reasons for the such subsidiaries to be classified as a current investment in the "held for sale" category no longer exists, and the effect of the consolidation of such "held for sale" entities on our consolidated financial statements could be materially adverse, particularly since two of these "held for sale" companies incurred significant losses in Fiscal 2014 and there can be no assurance that these entities will not incur losses in the future. Our Company may not be able to sell one or more of these subsidiaries at the expected consideration or at all. In addition, the Company has issued an undertaking to a customer of Albonair GmbH under which, the Company has undertaken to indemnify the customer against all costs, losses and damages which the customer may suffer or incur due to a default or delay by Albonair GmbH in performing its obligations towards the customer, due to the financial inadequacy of Albonair GmbH. However, the Company’s absolute cumulative aggregate liability under this undertaking for whatever reasons is limited to the amount of EUR 7 million or 100% of the current yearly turnover of Albonair GmbH to the customer under the agreement, whichever is higher. For further details see "Management's Discussion and Analysis of Financial Condition and Results of Operations as per Consolidated Financial Statements – Basis of Consolidation" beginning on page 92.

Additionally the Company's auditors did not audit the financial statements of some of its subsidiaries and jointly controlled entities and their opinion in so far as it relates to these subsidiaries, jointly controlled entities and associates is based solely on the report of the other auditors. The Consolidated Financial Statements prepared by the Company's auditors also includes the unaudited financial statements and consolidated financial statements of some of its subsidiaries and a jointly controlled entity and their opinion in so far as it related to these subsidiaries and jointly controlled entity is based solely on such unaudited financial statements and consolidated financial statements.

Some of our subsidiaries have incurred losses and it may not be possible to predict if they would return to profitability. Some of these subsidiaries also have a negative net worth.

As of the previous financial year, our subsidiaries Optare Plc UK, Ashok Leyland Nissan Vehicles Limited, Defiance Technologies Limited, Irizar-TVS Limited, Ashok Leyland (UK) Limited, Albonair GmbH and Avia Ashok Leyland Motors s.r.o, incurred losses. Of these loss making subsidiaries, Avia Ashok Leyland Motors s.r.o. and Albonair GmbH are being "held for sale", and therefore the significant losses incurred in these entities in Fiscal 2014 are not reflected in our consolidated financial statements for Fiscal 2014. Additionally our subsidiaries Optare Plc UK and Defiance Technologies Limited have a negative net worth. Further, certain of the subsidiaries of Optare Plc UK and Avia Ashok Leyland s.r.o., are dormant and do not conduct any business. These subsidiaries have incurred losses in the past and may not have requisite and valid statutory and regulatory permits, licenses and approvals to operate their respective business. We cannot assure that in future the business of these subsidiaries will revive or will be in line with those estimated or that there has not been any material adverse change in their financial condition or results of operations. Any breach or contravention by these companies of financial covenants or licences or any applicable laws may adversely affect our results of operations and financial condition. There can be no assurance that the business of these subsidiaries will grow or will be in line with those estimated or historically achieved or that there has not been any material adverse change in their financial condition or results of operations, or that the entities that have incurred significant losses in Fiscal 2014 or historically will not continue to incur significant losses in the future. For further information, see “Management's Discussion and Analysis of Financial Condition and Results of Operations as per Consolidated Financial Statements - Certain Subsidiaries" beginning on page 105.


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Currency exchange rate fluctuations could adversely affect our results of operations and financial condition. Our historical financial information is presented in Indian Rupees. Any depreciation of the value of the Indian Rupee can adversely affect the cost of our borrowings and transactions outside of India denominated in currencies other than the Indian Rupee. We have outstanding un-hedged foreign currency denominated debt and are sensitive to fluctuations in foreign currency exchange rates. In particular, our operations are subject to risks arising from fluctuations in exchange rates with respect to our US Dollar denominated ECB loans in relation to the Indian Rupee.

We import capital equipment, raw materials and components, and also sell vehicles in various countries outside of India. These transactions are denominated primarily in US Dollars, Japanese Yen, Euro and British Pound-Sterling. To manage our foreign exchange exposure, we have entered into forward contracts and currency swaps. However, there is no guarantee that such derivative contracts will mitigate exchange exposures in full, if at all, at all times. As such, the fluctuation in the value of the Indian Rupee against the US Dollar that have occurred in the first half of Fiscal 2014 and that may occur in future years which may adversely impact our revenues, borrowing costs and import costs, consequently affecting our results of operations and financial condition.

We have entered into, and in the future may enter into joint ventures and other arrangements which may not always be successful and the performance of our joint ventures may adversely affect our results of operations.

We have entered into and in the future may enter into joint ventures and other arrangements with certain entities in connection with our business and operations. We may also as part of our business operations decide to sell, dilute, or acquire a further interest in a joint venture or a subsidiary or a similar arrangement or may decide to organise the joint venture into a separate subsidiary. Investments through joint ventures or our associates may, under certain circumstances, involve risks as, joint venture partners or associates may fail to meet their financial, commercial or other obligations in respect of the joint venture or other arrangement. Further the results of operations and financial conditions of our joint venture partners or associates may have an effect on our operations. One of our associates, Ashley Airways Limited and one of our joint ventures, Automotive Infotronics Limited are in the process of being liquidated. In addition, some of our joint ventures or associates generated losses during the past few years. In addition, the continued investment in such associates and joint ventures may have a negative effect on our long-term debt ratings. See "Risk Factors - Any downgrading of the Company's debt ratings or of India’s sovereign debt rating could adversely affect the Company's business" beginning on page 53. Our joint venture partners or associates may have business interests or goals that differ from our business interests or goals. In addition, although there are generally non-compete and exclusivity clauses in our joint venture agreements, one or more of our joint venture partners may enter into arrangements with other parties or may by themselves decide to set up rival and competitive entities which could compete with our products in India and other international markets. In addition, such non-compete and exclusivity clauses may be potentially unenforceable under the applicable laws governing the joint venture agreements to which they relate to. Further, any disputes that may arise between us and our joint venture partners may cause delays, suspension or abandonment of our projects. We have made and may continue to make capital commitments to our associates and joint ventures, and if the business and operations of associates and joint ventures to which the capital commitments are made deteriorate, the value of the investments may be adversely affected or lost in full. Further the integration of various subsidiaries, divisions and properties of our business presents significant challenges including integrating geographically dispersed operations, developing and improving internal administrative infrastructure, including financial, operational, communications and other internal systems, and developing and preserving a uniform culture, values and work environment. There can be no assurance that we will be able to effectively integrate our businesses, which could adversely impact our results of operations. Our continued success depends on our ability to offer quality products on a timely basis and at competitive prices, which meet technological advances, satisfy changing customer demands and achieve market acceptance. Delays in the launch of new models and lower than anticipated market acceptance of new models may adversely affect our results of operation. The quality, supply stability and timely delivery of our products at competitive prices are essential to customer satisfaction and retention. Unanticipated delays or cost overruns in implementing a new project, failure to launch a new product or failure in expanding our capacity to meet customer requirements could materially and adversely impact our results of operations and


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financial condition. Launching new models ahead of or in competition with our competitors is necessary in order for us to operate successfully in the highly competitive automotive vehicle industry. The launch of a new model generally requires substantial capital investment and generally, high initial production costs. The capital investment in plant and machinery, in addition to product development costs, associated with the launch of a new model may result in higher levels of depreciation and amortization, and may have an adverse impact on the profitability of the Company especially if the new model does not perform according to expectations in the market. Therefore, any delay in the introduction of new models or lower than expected market acceptance of our new models, may adversely affect our results or operations. In addition, the automotive industry is characterised by technological advances, evolving industry standards, changing customer preferences and the introduction of new products. Our future success will depend in part on our ability to develop and introduce new products that keep pace with changes in these standards and preferences, our ability to enhance our existing range of products, and our ability to achieve market acceptance. There can be no assurance that we will be successful in developing new products or incorporating evolving technologies into our products on a timely or cost-effective basis or at all, or if these products, services and solutions will be developed by us at our own research and development facilities, or that we will be successful in marketing and selling them and achieving market acceptance for such products. Compliance with safety or emission standards relating to our products or our manufacturing facilities, or other environmental regulation, may adversely affect our business and results of operations. As an automotive manufacturing company, we are subject to extensive governmental regulations regarding vehicle emission levels, noise and safety of automotive products, as well as on levels of pollutants generated by the plants that produce automotive vehicles, that may increase our manufacturing costs and delay operations. To comply with applicable regulatory requirements, we incur substantial capital expenditure and research and development costs to upgrade our products and manufacturing facilities. This may increase our production costs and thereby adversely affect the competitiveness of our products. In addition, any change in such legislation or regulatory requirements could require us to invest substantial additional capital to develop products that comply with such new legislation or regulatory requirements. Also, there is significant potential that consumer demands will take increasing account of fuel efficiency and emissions. Further our operations may be significantly impacted if there is a delay in complying with the applicable laws. Such delays could adversely impact operations, resulting in delays in delivering products to customers, and in turn could materially and adversely affect our results of operations and financial condition. The loss, shutdown or slowdown of operations at any of our facilities, or the failure of information technology systems, could have a material adverse effect on our results of operations and financial condition. Our facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply interruptions, facility obsolescence or disrepair, labour disputes, natural disasters and industrial accidents. The occurrence of any of these risks could affect our operations by causing production at one or more facilities to shut down or slow down. No assurance can be given that one or more of the factors mentioned above will not occur, and this could have a material adverse effect on our results of operations and financial condition. Our information technology systems are a critical part of our business and help us manage key business processes such as product design and development, customer and dealer relationship management and transaction processing, together with our management information system. Any delays in implementing critical upgrades to our information management systems or technical failures associated with our information technology systems, including those caused by power failures, computer viruses or unauthorized tampering of our information technology systems, may adversely impact our ability to manufacture our products, manage our vendors and dealers and provide services to our customers. In addition, we may be subject to claims as a result of any theft or misuse of personal information of customers stored on our systems, all of which could adversely affect our results of operations and financial condition.


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Any inability to manage our export business may adversely affect our results of operations. Further we are also subject to risks associated with expansion into new segments and geographies.

Our growth strategy relies on the expansion of our operations by introducing certain automotive products in other parts of the world, including in the Middle East, Russia, Africa, Latin America and other parts of Asia. In Fiscal 2014, our revenue from export of goods - FOB value was Rs.124,229.51 lakhs. The costs associated with entering into and establishing in new markets, and expanding such operations, may be higher than expected, and we may face significant competition in these regions. Our products may not be accepted or we may not be successful in capturing market share in any of the new product segments that we enter into which could adversely impact our results of operations. In addition, our international business is subject to many actual and potential risks, including language barriers, cultural differences and other difficulties in staffing and managing overseas operations. Further, there are inherent difficulties and delays in contract enforcement and the collection of receivables under the legal systems of some foreign countries, the risk of non-tariff barriers, other restrictions on foreign trade or investment sanctions, and the burdens of complying with a wide variety of foreign laws and regulations. If we are unable to manage risks related to our expansion and growth, our business, returns on investment, results of operations and financial condition could be adversely affected. For instance in Fiscal 2014, our revenue from export of goods - FOB value reduced by 12.85% as compared to Fiscal 2013, due to a variety of factors some of which are beyond our control. Our products are exported to a number of geographical markets and we plan to expand our international operations further in the future. Consequently, we are subject to various risks associated with conducting our business outside domestic markets and our operations may be subject to political instability, wars, terrorism, regional and/or multinational conflicts, natural disasters, fuel shortages, epidemics and labor strikes in international markets. Any significant or prolonged disruptions or delays in the operations due to these risks could adversely impact our results of operations and financial condition. Our employees are members of unions and we may be subject to industrial unrest, slowdown or increased manpower costs, which may adversely affect our results of operations and financial condition. India has stringent labour legislation that protects the interests of workers, including legislation that sets forth detailed procedures for the establishment of unions, dispute resolution, employee removal and legislation that imposes certain financial obligations on employers upon retrenchment. A majority of our permanent employees, other than officers and managers, are members of labour unions and are covered by wage agreements, where applicable, with the labour unions. It may therefore be difficult for us to maintain flexible labour policies, and we may face the threat of labour unrest, work stoppages and diversion of management's attention to union intervention. Also each wage agreement may have a different tenure, depending on its location. For further information, see "Business – Employees" beginning on page 133. The memorandum of settlements executed by the Company with various trade unions in relation to the Company's various manufacturing facilities may expire in the future and this may have an adverse effect on the Company's financial condition (for e.g. some of the wage agreements require the employees to comply with certain productivity levels). We have, in the past, had labour stoppages and other industrial unrest and may in the future be subject to labour unrest, which may delay or disrupt our operations in the affected regions, including the acquisition of raw materials and parts, the manufacture, sales and distribution of products and the provision of services. If work stoppages or lock-outs at our facilities or at the facilities of our major suppliers occur or continue for a long period of time, our business, results of operations and financial condition may be adversely affected. We may be unable to adequately protect our intellectual property. We may also be subject to claims alleging breach of third-party intellectual property rights. The Company has applied for the registration of certain patents and trademarks, including in respect of some of our products and services. As of May 31, 2014, the Company had 90 patent applications pending before the Indian Patent Office. There can be no assurance that the Company will be able to register the patents or trademarks or that third parties will not infringe our intellectual property or misuse our name or logo, which may adversely affect our business, prospects and reputation. Further, we may become subject to claims by third parties if we use slogans, names, designs, software or other such subjects in breach of any intellectual property rights registered by such third party. Any legal proceedings pursuant to such claims, or settlements thereunder, may divert management attention and require us to pay financial compensation to such third parties,


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as well as compel us to change our marketing strategies or brand names of our products and services, which could adversely affect our business, prospects, results of operation and financial condition.

Statistical and industry data in this Placement Document may be incomplete or unreliable

Statistical and industry data used throughout this Placement Document has been obtained from various government and industry publications. We believe the information contained herein has been obtained from sources that are reliable, but we have not independently verified it and the accuracy and completeness of this information is not guaranteed and its reliability cannot be assured. The market and industry data used from these sources may have been reclassified by us for purposes of presentation. In addition, market and industry data relating to India, its economy or its industries may be produced on different bases from those used in other countries. As a result data from other market sources may not be comparable. The extent to which the market and industry data presented in this Placement Document is meaningful will depend upon the reader's familiarity with and understanding of the methodologies used in compiling such data.

Further, this market and industry data has not been prepared or independently verified by us or the Joint Global Coordinators and the Book Running Lead Managers or any of their respective affiliates or advisors. Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various factors. Accordingly, investment decisions should not be based on such information.

We are highly dependent on our senior management to manage our current operations and meet future business challenges.

Our future success is highly dependent on our senior management to maintain strategic direction, manage current operations and risk profile and meet future business challenges, including the planned expansion and the addition of new businesses. Although the Company has a director's and officer's insurance policy, it does not maintain key man insurance and the loss of, or inability to attract or retain, such persons could adversely affect our business and results of operations. For example, the expertise, experience and services of the Company's current Managing Director and other members of the senior management team are integral to the business. the Company's employment agreements with the senior management personnel do not obligate them to work for the Company for any specified period. Certain of these agreements contain non-compete and non-solicitation clauses for a period of two years following termination of employment. If one or more of these key personnel are unwilling or unable to continue in their present positions, we may not be able to replace them with persons of comparable skill and expertise promptly or at all, and we may not be able to further augment our management team appropriately and this could have a material adverse effect on our business, results of operations and financial condition.

We rely on technology transfers from third parties to continue improvement of our products. We rely on and require technology transfers from third parties to manufacture and continue improvement of our products. We also depend on third parties for technology transfers and improvement of our products. We can provide no assurance that we will continue to be able to license these and other technologies, or otherwise obtain transfers of technology to continue to improve our products, on terms favourable to us or at all. The Company receives certain tax benefits under the provisions of the Income Tax Act, 1961, and exemption from payment of excise duty in respect of its manufacturing facility at Pantnagar, Uttarakhand and is entitled to certain incentives from the State Government of Tamil Nadu, which, if withdrawn, may adversely affect its results of operations and financial condition. The Company is exempted from paying excise duty for commercial vehicles manufactured in its Pantnagar manufacturing facility, in the state of Uttarakhand for a period of 10 years, until March 2020. Further the facility's profits were fully exempted until Fiscal 2014 and a further exemption from tax upto 30% will be applicable between Fiscal 2015 and 2019. The Company is also entitled to other incentives in Tamil Nadu either in the form of subsidies or interest free loans. In the event that these or similar benefits are no longer available to the Company due to any change in law or a change in the nature of the Pantnagar facility, the effective tax rates payable by the Company will increase and consequently our financial condition and result of operations may be adversely affected. For further details of the tax benefits enjoyed by the Company, see "Overview of the Indian Regulations and Policies" beginning on page 141.


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Stringent fiscal and other governmental regulations may adversely affect the results of our operations. We are subject to taxes and other levies imposed by the central or state governments in India, including customs duties, central sales tax, state sales tax, service tax, income tax, value added tax and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. The central and state tax scheme in India is extensive and subject to change from time to time. The imposition of any additional taxes or levies designed to limit the use of commercial vehicles could adversely affect demand for our products, as well as the results of our operations. Changes in corporate and other taxation policies, as well as changes in export policies and other incentives given by the various governments, could also adversely affect results of our operations. The GoI has proposed a comprehensive national goods and services tax ("GST"). This will combine taxes and levies currently imposed by the central and state governments into one unified rate structure. We are unable to provide any assurance on the implementation schedule and impact of the GST or any other aspect of the tax regime following the implementation of the GST. The implementation of this rationalized tax structure might be affected by any disagreement between certain state governments, which could create additional uncertainty. The Direct Tax Code ("DTC") Bill has been proposed to replace the existing Income Tax Act, 1961 and other direct tax laws, with a view to simplifying and rationalizing the tax provisions into one unified code. The DTC Bill, which was placed before the Indian parliament for debate and discussion, has now been deferred. The various proposals included in DTC Bill are subject to review by Indian Parliament and any such impact if any, is not quantifiable at this stage. Regulations in the areas of investments, taxes and levies may also have an impact on Indian securities, including the Equity Shares. Regulations impacting sectors that drive the demand for the transportation of goods by road may also impact the results of our operations and financial condition. For example, in February 2012, the Supreme Court of India, in a writ petition in connection with the unrestricted mining of sand, ordered that henceforth, all mining of minor minerals, irrespective of the size of the land, would require clearance from the Ministry of Environment and Forests of the GoI. This order is believed to have reduced such mining activity, and consequentially, the demand for road transportation generated by such activity. The Company has given corporate guarantees which, if claimed on, may require it to pay the guaranteed amounts. The Company has also given undertakings which if acted upon may affect its business and results of operations. As of March 31, 2014, the Company has given certain corporate guarantees aggregating to Rs.18,272.15 lakhs, in favour of certain parties, in order to further its business interests in the commercial vehicle industry. For more details see "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Standalone Financial Statements" beginning on page 69. In the event that the parties whose obligations the Company has guaranteed do not perform their obligations under any of the guarantees, the lenders for such facilities may require alternate guarantees or the acceleration or repayment of the amounts guaranteed. The Company may not be successful in procuring alternate guarantees satisfactory to the lenders, and as a result may need to repay outstanding amounts under such guarantees, which could adversely affect its business, cash flows, results of operations and financial condition. Further, the Company is sometimes required to provide undertakings either on behalf of itself or on behalf of its subsidiaries, joint ventures or associate companies in relation to transactions which it enters into as part of its business operations. In the event these undertakings are acted upon the Company may be required to expend its resources and this may have an adverse effect on our financial condition, results of operations and business. In our joint ventures we may be jointly and severally liable for the performance of obligations by our joint venture partners or co-sponsors.

Delay or failure on the part of a joint venture partner to timely perform its obligations could result in delayed payments to us, additional liabilities, or termination of a contract. Also, lenders to our joint venture partners may require joint and several


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undertakings and guarantees by us and the other co-sponsors of the project of, among others, the following:

unpaid equity capital contributions; a shortfall in funds necessary to complete the project and/or project cost overruns; shortfalls from time to time in operation and maintenance expenses; shortfalls in the debt service reserve accounts or shortfalls in interest payments; shortfalls between the outstanding debt and a project termination payment on the occurrence of a termination event;

and performances of work divided among joint venture partners.

All these factors may have an adverse effect on our business operations and financial condition. We are subject to risks associated with growing the business through mergers and acquisitions. We believe that mergers and acquisitions may in future provide us with opportunities to grow significantly in the global automobile markets by offering superior brands and products. Any such acquisitions may provide us with access to products, brands, technology, services and additional capabilities while also offering potential synergies. However, the scale, scope and nature of the integration that may be required in connection with mergers or acquisitions might pose significant challenges. We may not be able to integrate the merged or acquired entities effectively. The merger or acquisition may not meet expectations and the realization of the anticipated benefits may be blocked, delayed or reduced as a result of numerous factors, some of which may be outside our control. We will continue to evaluate growth opportunities through suitable mergers and acquisitions in the future. However growth through mergers and acquisitions involves business risks, including unforeseen contingent risks or latent business liabilities, that may only become apparent after the merger or acquisition is completed. Some of the key factors will be the integration and management of the merged or acquired entity with us, as well as the retention of key personnel and utilisation of synergies in design engineering, sourcing, sales and marketing. If any of these factors fails to materialize, our results of operations and financial condition could be adversely affected. Some of the Company’s records relating to certain filings made with the registrar of companies by the Company for the period between 1948 – 1981 are not traceable. The Company is unable to locate certain corporate records which include copies of certain filings made by the Company with the registrar of companies in India. These filings include, inter alia, certain filings made with the registrar of companies in relation to certain changes to its authorized share capital, allotments of equity shares, etc. since incorporation of our Company until December, 1981. While the Company believes that these forms were duly filed with the registrar of companies, it has been unable to obtain copies of these documents, including from the registrar of companies. The Company can provide no assurance that all such filings were in fact made or that these filings will be available in the future or that it will not be subject to any penalty imposed by the competent regulatory authority in connection with these filing requirements. We engage contract labour for carrying out certain of our operations and we may be held responsible for paying the wages of such workers, if the independent contractors through whom such workers are hired default on their obligations, and such obligations could have an adverse effect on our results of operations and financial condition. We appoint independent contractors who in turn engage on-site contract labour for performance of certain of our operations in India. Although we do not engage these labourers directly, we may be held responsible for any wage payments to be made to such labourers in the event of default by such independent contractors. Any requirement to fund their wage requirements or other such difficulties in managing contract labour may have an adverse impact on our results of operations and financial condition.


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Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject, and this may have a material adverse effect on our business and financial condition. We maintain insurance for a variety of risks, including risks relating to fire, special perils, burglary, etc., and other similar risks. While we believe that the insurance coverage which we maintain directly or through our contractors, would be reasonably adequate to cover the normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time, nor that we have taken out sufficient insurance to cover all material losses. Any liability in excess of our insurance limits could result in additional costs, which would reduce our profits and adversely affect our business and results of operations. For details, see the section titled “Our Business - Insurance” beginning on page 136. Hinduja Automotive Limited, our Promoter, as at March 31, 2014, holds 53.89 % of our equity and may be in a position to influence the result of shareholders’ voting. Our Promoter, Hinduja Automotive Limited which, as at March 31, 2014, beneficially owned approximately 53.89% of our Equity Shares. Under Indian law, certain major corporate actions such as mergers, issuance of further ordinary shares, remuneration of directors and the winding up , requires the approval of 75% of the voting power of our shares. Consequently, our Promoter may be in a position to influence the result of shareholders voting in such instances. Further, under the Listing Agreements and regulations issued by the SEBI, our Promoter is required to intimate the Company in case of any change in the number of shares held by the Promoter in the Company or creation of pledge on the shares held by the promoter in the Company. The Company had submitted the initial disclosure to the stock exchanges regarding the equity shares of the Company pledged by the Promoter in February 2009. Thereafter, the Promoter had pledged additional shares of the Company, in 2011, but inadvertently failed to inform the Company about the change in the number of shares of the Company pledged by the Promoter. Upon receipt of this information, the Company reported the correct number of pledged shares to the Stock Exchanges in 2013. The Company has not received any communication from the Stock Exchanges in this regard, however we cannot assure you that the Company will not be subject to further investigation by competent regulatory authorities in this regard and that no penalties will be imposed on the Company Our ability to reduce our cost of production and thereby increase our operational efficiency is an essential part of our business strategy and we cannot assure you that our cost reduction measures will achieve the planned operational efficiencies we seek. Reducing our cost of production is essential to our business strategy in a highly competitive market environment. Our cost reduction efforts focus on a combination of measures such as the effective management of our supply chain, the use of third party logistic providers, value engineering, process and productivity improvements, and establishing a strategic sourcing group to consolidate, strategize and monitor our supply chain activities with respect to major items of purchase. Our measures to increase our operational efficiency may not yield similar results in the future, which may adversely affect our results of operations. We have yet to receive or renew certain approvals or licenses required in the ordinary course of business, and the failure to obtain them in a timely manner or at all may adversely affect our operations. We require certain statutory and regulatory permits, licenses and approvals to operate our business. We have made renewal applications for certain approvals or licenses that have expired or that are required for our business but have not yet received these approvals or licenses. If we fail to obtain the necessary approvals required by us to undertake our business, or if there is any delay in getting the necessary approvals, our business and our financial condition may be materially and adversely impacted. Changes in policies of the GoI could adversely impact our results of operations and financial condition. A significant proportion of our production facilities are located in India, and a significant portion of our revenue is derived from sales of our products in the Indian market. Consequently, we, and the market price and liquidity of our shares, may be


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affected by policy changes in India. For example, the imposition of foreign exchange controls, rising interest rates, increases in taxation or the creation of new regulations could have a detrimental effect on the Indian economy generally and our Company in particular. Political instability or a change in economic liberalization and deregulation policies could seriously harm business and economic conditions in India generally and our business in particular. The government of India has in recent years sought to implement economic reforms. The role of the GoI and the State Governments in the Indian economy as producers, consumers and regulators have remained significant and there can be no assurance that liberalization policies will continue in the future. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our results of operations and financial condition in particular. Furthermore, we are also impacted by political instability in the states where we operate. Furthermore, India’s obligation under its World Trade Organisation agreement could lower the present level of tariffs on imports of components and vehicles which could adversely affect our sales and results of operations. We are involved in certain legal and, regulatory proceedings that, if determined against us, may have an adverse impact on our financial condition. There are certain outstanding legal proceedings, including criminal proceedings against us and our officers pending at various levels of adjudication before various courts, tribunals, authorities and appellate bodies in India. Should any new development arise, such as, change in applicable laws or rulings against us by the appellate courts or tribunals, we may need to make additional provisions in our financial statements, which may increase our expenses and current liabilities. We cannot give you any assurance that these legal proceedings will be decided in our favour. Any adverse decision may have a significant effect on our business including our financial condition, delay in implementation of our current or future project and results of operations. There can be no assurance that the results of such legal proceedings will not materially harm our business, reputation or standing in the marketplace or that we will be able to recover any losses incurred from third parties, regardless of whether we are at fault. There can be no assurance that losses relating to litigation will be covered by insurance, that any such losses would not have a material adverse effect on the results of our operations or financial condition, or that provisions made for litigation related losses will be sufficient to cover our ultimate loss or expenditure. Details of the proceedings that have been initiated against our Company and the amounts claimed against us in these proceedings, to the extent ascertainable, are set forth below: A charge sheet has been filed by the Central Bureau of Investigation (the "CBI") against five employees of the Company, accusing such employees of conspiring with a laboratory to fabricate certain quality standard reports in connection with the supply of buses to the Delhi Transport Corporation. If such employees are found to be guilty, they could face penal sanctions, which may affect the reputation and business of the Company. Further, there is one proceeding pending before the Chief Judicial Magistrate, Thiruvallur against Mr. Vinod Dasari, in his capacity as the Occupier and Mr. K. Sridharan Balaji, in his capacity as the manager of the factory of the Company, at Ennore in relation to charges under section 7A, Section 41 and section 92 of the Factories Act read with Rule 61 (f) with regard to the death of a contract employee working in the factory of the Company, at Ennore. Any adverse decision in any of these cases may adversely affect the Company's business and reputation. The Company is also involved in disputes with respect to tax assessments for various years. If any such dispute results in an adverse determination, the Company will be required to provide for the resulting liability as a charge in its income statement, which may adversely affect its profitability. For further information, see “Legal Proceedings” beginning on page 200. Our operations may be adversely affected if our land at Bhandara, Maharashtra is classified as Forest Land. A portion of our manufacturing facility located at Bhandara, Maharashtra, is built on land, the title of which is yet to be transferred to us. Pursuant to two lease deeds dated March 22, 1982 and August 3, 1982, respectively, approximately 231 acres of land was transferred by the MIDC to us. A portion of the surrounding land remained classified as “forest land” in revenue records (“Forest Land”). In 1985, we constructed a building on approximately 16 acres of such Forest Land. On February 19, 1997 we received an order from the local revenue authorities ordering us to remove constructions from the Forest Land (“Revenue Order”). Pursuant to an order of the Bombay High Court on October 21, 1994, we were granted an injunction against the Revenue Order. Pursuant to an order dated June 26, 2006, the Bombay High Court directed that the state government forward the Companies’ application for the conversion of the Forest Land to the central government. In the interim, the Bombay High Court ordered that the injunction granted against the Revenue Order pursuant to the order dated October 21, 1994 would remain in force. Though, the order dated June 26, 2006 of the Bombay High Court has not been


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challenged by the State or the Central Government and the order remains in force as of the date of this Placement Document, such land has not be duly converted or leased to us. If such land is not duly converted and leased us, we could be forced to relocate a portion of our Bhandara plant which may have an adverse effect on the business, financial condition and results of our operations. We have had and continue to have, some limited operations in countries subject to U.S. and other international trade restrictions, economic embargoes and sanctions and may become subject to investigations by the relevant regulatory body in the United States and other jurisdictions, which may adversely affect our business and reputation. We sold automotive components to customers in Cote' D'Ivoire, Zimbabwe, Liberia and Iran in the period between 2011 to 2014. The United States currently imposes extensive economic sanctions, which are administered by the U.S. Treasury Department’s Office of Foreign Assets Control. Our business and reputation could be adversely affected if the U.S. government or other governments were to determine that such activities violated these sanctions. Any downgrading of the Company's debt ratings or of India’s sovereign debt rating could adversely affect the Company's business. The Company's long-term debt is currently reaffirmed by ICRA as ICRA A+ (Outlook: Stable). The Company's short-term debt is currently rated ICRA A1+ by ICRA. Further, the Company's long term debt is currently rated as CARE A+ and short term debt rating is CARE A1+ by CARE. There is no certainty that in the future, the Company's ratings would not be downgraded and any downgrading in its credit ratings may increase interest rates for refinancing its outstanding debt, which would increase the Company's financing costs, and adversely affect its future issuances of debt and ability to raise new capital on a competitive basis, which may adversely affect the Company's profitability and future growth. In addition, any adverse revisions to India’s credit ratings for domestic and international debt by rating agencies may adversely impact our ability to raise additional financing and the interest rates and other commercial terms at which such financing is available. This could have an adverse effect on our business and future financial performance and ability to fund our growth. The Company's transactions with related parties may have an adverse effect on the results of its operations and financial condition. The Company has entered into transactions with certain related parties. For further details see "Financial Statements" beginning on page F-1. These transactions and any future transactions with our related parties, have involved or could potentially involve conflicts of interest and this could have an adverse effect on our results of operations and financial conditions. For more information regarding the Company's related party transaction, see "Financial Statements" beginning on page F-1 The Companies Act, 2013 has effected significant changes to the existing Indian company law framework and the SEBI has introduced changes to the listing agreement, which are effective from October 1, 2014, which may subject us to greater compliance requirements and increase our compliance costs A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and have come into effect from the date of their respective notification, resulting in the corresponding provisions of the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect significant changes to the Indian company law framework, such as in the provisions related to issue of capital (including provisions in relation to issue of securities on a private placement basis), disclosures in offer document, corporate governance norms, accounting policies and audit matters, related party transactions, introduction of a provision allowing the initiation of class action suits in India against companies by shareholders or depositors, a restriction on investment by an Indian company through more than two layers of subsidiary investment companies (subject to certain permitted exceptions), prohibitions on loans to directors, insider trading and restrictions on directors and key managerial personnel from engaging in forward dealing. We may also need to spend, in each financial year, at least 2.0% of our average net profits during the three immediately preceding financial years towards


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corporate social responsibility activities and disclose our corporate social responsibility policies and activities on our website. As a result of the changes brought about by the Companies Act, 2013 to the provisions relating to accounting policies, going forward, we may also be required to apply a different rate of depreciation. Further, the Companies Act, 2013 imposes greater monetary and other liability on our Company and Directors for any non-compliance. To ensure compliance with the requirements of the Companies Act, 2013, we may need to allocate additional resources, which may increase our regulatory compliance costs and divert management attention. The Companies Act, 2013 has introduced certain additional requirements which do not have corresponding provisions under the Companies Act, 1956. Accordingly, we may face challenges in interpreting and complying with such requirements due to limited jurisprudence in respect of the relevant provisions. In the event our interpretation of such provisions of the Companies Act, 2013 differs from, or contradicts with, any judicial pronouncements or clarifications issued by the Government in the future, we may face regulatory actions or we may be required to undertake remedial steps. Additionally, some of the provisions of the Companies Act, 2013 overlap with other existing laws and regulations (such as the corporate governance norms and insider trading regulations issued by the SEBI). Recently, the SEBI issued revised corporate governance guidelines which are effective from October 1, 2014. Pursuant to the revised guidelines, we will be required to, inter alia, appoint at least one woman director on our Board, establish a vigilance mechanism for directors and employees and reconstitute certain committees in accordance with the revised guidelines. We may face difficulties in complying with any such overlapping requirements. Further, we cannot currently determine the impact of the provisions of the Companies Act, 2013 or the revised SEBI corporate governance norms, which are yet to come in force. Any increase in our compliance requirements or in our compliance costs may have an adverse effect on our business and results of operations.

Terrorist attacks, civil disturbances, wars, regional and communal conflicts, natural disasters, fuel shortages, epidemics and labour strikes in India and elsewhere in Asia may have a material adverse effect on the Company's business and on the market for securities in India. India has experienced civil and social unrest, terrorist attacks such as the attacks in November 2008 and July 2011 in the city of Mumbai, and other acts of violence. If such tensions occur in places where we operate or in other parts of the country, leading to overall political and economic instability, it could adversely affect our business, future financial performance, cash flows and the market price of our Equity Shares. Southern Asia has also, from time to time, experienced instances of civil unrest, political tensions and hostilities among neighbouring countries. Additionally, any of these events could lower confidence in India’s economy and create a perception that investments in companies with Indian operations involve a high degree of risk, which could have a material adverse effect on the price of the Equity Shares. Any discontinuation of business or loss of profits due to such extraneous factors may affect our operations. Further, our operations are dependent on our ability to protect our facilities and infrastructure from fire, explosions, floods, typhoons, earthquakes, power failures and other similar events. India has experienced natural disasters such as earthquakes, a tsunami, floods and droughts in the past few years.

In addition, we can give no assurance that the insurance coverage we maintains for such risks will adequately compensate it for all damage and economic losses from natural or man-made catastrophes. The occurrence of a natural disaster of a significant scale could cause interruptions in our operations. The extent and severity of these natural disasters determines our impact on the Indian economy and infrastructure.

Compliance with fresh and changing corporate governance and public disclosure requirements adds uncertainty to our compliance abilities and increases compliance cost. Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure, SEBI regulations and Indian stock market listing regulations have increased the complexity of our compliance obligations. These new or changed laws, regulations and standards may be subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. Ongoing revisions to such governance standards could result in continuing uncertainty regarding compliance matters and higher costs of compliance. Our efforts to comply with evolving laws, regulations and standards in this regard may result in increased general and administrative expenses and cause a diversion of management resources and time. If we fail to comply with new or changed laws, regulations or standards, our reputation and business may be harmed.


55

Our business and activities are regulated by the Competition Act, 2002. The Competition Act, 2002, as amended (the “Competition Act”) seeks to prevent practices that could have an appreciable adverse effect on competition. Under the Competition Act, any arrangement, understanding or action in concert between enterprises, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition in India is void and may attract substantial penalties. Any agreement among competitors, or practice or decision in relation to, enterprises or persons engaged in identical or similar trade of goods or provision of services which directly or indirectly determines purchase or sale prices, limits or controls production, supply, markets, technical development, investment or provision of services, shares markets or source of production or provision of services by way of allocation of geographical area, types of goods or services or number of customers in the relevant market or directly or indirectly results in bod rigging or collusive bidding is presumed to have an appreciable adverse effect on competition. The Competition Act also prohibits the abuse of a dominant position by any enterprise. Provisions of the Competition Act relating to acquisitions, mergers or amalgamations of enterprises that meet certain asset or turnover thresholds and regulations issued by the Competition Commission of India with respect to notification requirements for such combinations became effective in June 2011. Further our acquisitions, mergers or amalgamations may require the prior approval of the Competition Commission of India, which may not be obtained in a timely manner or at all. If we are affected, directly or indirectly, by the application or interpretation of any provision of the Competition Act, any enforcement proceedings initiated by the Competition Commission of India, any other relevant authority under the Competition Act, any claim by any party under the Competition Act or any adverse publicity that may be generated due to scrutiny or prosecution by the Competition Commission of India, our business and financial performance may be materially and adversely affected. Further the Competition Commission of India has extra-territorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if such agreement, conduct or combination has an appreciable adverse effect on competition in India. However, we cannot predict the impact of the provisions of the Competition Act on the agreements entered into by us at this stage. Investors in the Equity Shares may not be able to enforce a judgment of a foreign court against the Company, its directors or executive officers. Most of our directors and key managerial personnel are residents of India and all or substantial portion of our assets are located in India. As a result, it may be difficult for investors outside India to: effect service of process upon us, our directors, executive officers or such experts in countries outside India, including

the United States, or enforce, in Indian courts, judgments obtained in foreign courts, against us or such persons or entities.

See “Enforcement of Civil Liabilities” beginning on page 15. Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions. Our Articles of Association, which include regulations applicable to our Board of Directors, and Indian law govern our corporate affairs. Legal principles relating to these matters and the validity of corporate procedures, directors' fiduciary duties and liabilities, and shareholders' rights may differ from those that would apply to a company incorporated in another jurisdiction. Shareholders' rights under Indian law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights as our shareholders than as shareholders of a corporation in another jurisdiction. Conditions in Indian stock exchanges may affect the price or liquidity of the Equity Shares. The Indian stock exchanges have, in the past, experienced substantial fluctuations in the prices of their listed securities. The Indian stock exchanges have experienced problems that, if they continue or recur, could affect the market price and liquidity of the securities of Indian companies, including the Equity Shares. Problems in the past included temporary exchange closures to manage extreme market volatility, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed restrictions on the trading of certain securities and limitations on price movements and margin requirements. Furthermore, disputes have occurred from time to


56

time between listed companies, stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment. There may be less company information available in Indian securities markets than in securities markets in certain other countries. There is a difference between the level of regulation, disclosure and monitoring of the Indian securities markets and the activities of investors, brokers and other participants in markets in the United Kingdom, the United States and certain other economies. The SEBI is responsible for monitoring, ensuring and improving disclosure and other regulatory standards for the Indian securities markets and has issued regulations and guidelines on disclosure requirements, insider trading and other matters. Investors may, however, have access to less information about our business, results of operations and financial conditions, on an on-going basis, than investors would have in the case of companies subject to reporting requirements of certain other countries. The trading price of the Equity Shares may be subject to volatility and investors may not be able to sell the Equity Shares at or above the Issue Price. The trading prices of publicly traded securities may be highly volatile. Factors affecting the trading price of the Equity Shares include:

variations in our operating results; announcements of new products, joint ventures, strategic alliances or agreements by us or by our competitors; the financial and operational performance of our joint ventures and its investments in associates; increases and decreases in our customer base; recruitment or departure of key personnel; favourable or unfavourable reports by a section of the media concerning the automotive industry in general, or in

relation to our business and operations; changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect

to research and report on the Equity Shares; the adoption or modification of regulations, policies, procedures or programs applicable to the business; and market conditions affecting the automobile sector generally and the economy as a whole.

In addition, if the stock markets experience a loss of investor confidence, the trading price of the Equity Shares could decline for reasons unrelated to our business, results of operations or financial condition. The trading price of the Equity Shares might also decline in reaction to events that affect other companies in our industry, even if these events do not directly affect us. Any of these factors, among others, could materially and adversely affect the price of the Equity Shares. Significant differences exist between Indian GAAP and other accounting principles, such as U.S. GAAP and IFRS, which may be material to the financial statements prepared and presented in accordance with Indian GAAP contained in this Placement Document. Our audited financial statements contained in this Placement Document have been prepared and presented in accordance with Indian GAAP and no attempt has been made to reconcile any of the information given in this Placement Document to any other principles or to base it on any other standards. Indian GAAP differs from accounting principles and auditing standards with which prospective investors may be familiar in other countries, such as U.S. GAAP and IFRS. Significant differences exist between Indian GAAP and U.S. GAAP and IFRS, which may be material to the financial information prepared and presented in accordance with Indian GAAP contained in this Placement Document. Accordingly, the degree to which the financial information included in this Placement Document will provide meaningful information is dependent on your familiarity with Indian GAAP and the Companies Act. Any reliance by persons not familiar with Indian GAAP on the financial disclosures presented in this Placement Document should accordingly be limited.


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There is no guarantee that the Equity Shares issued pursuant to this Issue will be listed on the Stock Exchanges in a timely manner, or at all. In accordance with Indian law and regulations and the requirements of the Stock Exchanges, in principle and final approvals for listing and trading of the Equity Shares issued pursuant to this Issue will not be applied for or granted until after the Equity Shares have been issued and allotted. Approval for listing and trading will require all relevant documents authorising the issuing of Equity Shares to be submitted. Accordingly, there could be a failure or delay in listing the Equity Shares on the Stock Exchanges. If there is a failure or a delay in obtaining such approvals, we may not be able to credit the Equity Shares allotted to the investors to their depository participant accounts or assure ownership of such Equity Shares by the investors in any manner promptly after the Closing Date or at all. In any such event, the ownership of the investors over Equity Shares allotted to them and their ability to dispose of any such Equity Shares may be restricted. For further information on issue procedure, see “Issue Procedure” beginning on page 159. An investor will not be able to sell any of the Equity Shares subscribed in this Issue other than across a recognised Indian stock exchange for a period of 12 months from the date of issue of the Equity Shares. Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of the Equity Shares under this Issue, QIBs subscribing to the Equity Shares may only sell their Equity Shares on the Stock Exchanges and may not enter into any off market trading in respect of these Equity Shares. These restrictions may have an adverse impact on the price of the Equity Shares. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares. Under current Indian tax laws and regulations, capital gains arising from the sale of equity shares in an Indian company are generally taxable in India. Any gain realised on the sale of listed Equity Shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax ("STT") has been paid on the transaction. STT will be levied and collected by the domestic stock exchange on which the Equity Shares are sold. Any gain realised on the sale of Equity Shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain realised on the sale of listed Equity Shares held for a period of 12 months or less will be subject to short term capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in cases where such exemption is provided under a treaty between India and the country of which the seller is resident. Generally, Indian tax treaties do not limit India's ability to impose tax on capital gains. As a result, residents of other countries may be liable for tax on a gain upon the sale of the Equity Shares in India as well as in their own jurisdiction. For further information see "Taxation" beginning on page 188. A third party could be prevented from acquiring control of us because of the anti-takeover provisions under Indian law. There are provisions in Indian law that may discourage a third party from attempting to take control of us, even if a change in control would result in the purchase of our Equity Shares at a premium to the market price or would otherwise be beneficial to our shareholders. Indian takeover regulations contain certain provisions that may delay, deter or prevent a future takeover or change in control of us. Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the specific regulations in relation to substantial acquisition of shares and takeover under the Takeover Code. Since we are an Indian listed company, the provisions of the Takeover Code apply to us. We and our investors resident outside India are subject to foreign investment restrictions under Indian law which may adversely affect the Company's operations and its ability to freely sell the Equity Shares. Securities Exchange Board of India has notified the SEBI (Foreign Portfolio Investors) Regulations, 2014 on January 7, 2014, repealing the SEBI (Foreign Institutional Investors) Regulations 1995. SEBI notified the SEBI FPI Regulations pursuant to which the existing classes of portfolio investors namely ‘foreign institutional investors’ and ‘qualified foreign investors’ will be subsumed under a new category namely ‘foreign portfolio investors’ or ‘FPIs’. RBI on March 13, 2014 amended the FEMA Regulations and laid down conditions and requirements with respect to investment by FPIs in Indian companies.


58

An FII who holds a valid certificate of registration from the SEBI shall be deemed to be an FPI until the expiry of the block of three years for which fees have been paid as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995. An FII or a sub-account may participate in the Issue, until expiry of its registration as an FII or sub-account or until it obtains a certificate of registration as an FPI, whichever is earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may, subject to payment of conversion fees as applicable under the SEBI FPI Regulations, participate in the Issue. An FII or sub-account shall not be eligible to invest as an FII after registering as an FPI under the SEBI FPI Regulations. SEBI operates an index-based market-wide circuit breaker. Any operation of a circuit breaker may adversely affect a shareholder's ability to sell, or the price at which it can sell, the Equity Shares at a particular point in time. We are subject to an index-based market-wide circuit breaker generally imposed by the SEBI on Indian stock exchanges. This may be triggered by an extremely high degree of volatility in the market activity (among other things). Due to the existence of this circuit breaker, there can be no assurance that shareholders will be able to sell the Equity Shares at their preferred price or at all at any particular point in time. This may have an adverse effect on our operations and business. Any future issuance of Equity Shares may dilute the shareholding of investors and any future sales of Equity Shares by our major shareholders may adversely affect the trading price of the Equity Shares. The future issuance of Equity Shares by us, or the disposal of Equity Shares by any of our major shareholders, including by the Promoters, lenders that have received a pledge of our Equity Shares as security and are seeking to enforce such security, or the perception that such issuance or sales may occur, may significantly affect the trading price of the Equity Shares. Except for the restrictions described in the sections “Placement” and “Description of the Shares”, there is no restriction on our ability to issue Equity Shares or the ability of any of our shareholders to dispose of, pledge or otherwise encumber their Equity Shares, and there can be no assurance that we will not issue Equity Shares or that our shareholders will not dispose of, pledge or otherwise encumber their Equity Shares. Future issuances of Equity Shares may dilute the shareholding of the investors and may adversely affect the trading price of the Equity Shares. Subject to applicable law, such securities may also be issued at prices below the then market price of the Equity Shares. Holders of Equity Shares could be restricted in their ability to exercise pre-emptive rights under Indian law and could thereby suffer future dilution of their ownership position. Under the Companies Act, 2013 any company incorporated in India must offer its holders of equity shares pre-emptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares, unless the pre-emptive rights have been waived. However, if the law of the jurisdiction that the investor is in does not permit the exercise of such pre-emptive rights without us filing an offering document or registration statement with the applicable authority in such jurisdiction, the investor may be unable to exercise such pre-emptive rights unless we make such a filing. We may elect not to file a registration statement in relation to pre-emptive rights otherwise available under Indian law to the investor. To the extent that the investor is unable to exercise pre-emptive rights granted in respect of the Equity Shares, the investor’s proportional interests in us would be reduced. Financial instability in other countries could disrupt our business and cause the trading price of the shares to decrease. The Indian automotive market and the Indian economy are influenced by economic and market conditions in other countries. Although economic conditions are different in each country, investors' reactions to developments in one country can have adverse effects on the securities of companies and the economy as a whole, in other countries, including India. A loss of investor confidence in the financial systems of other emerging markets may cause volatility in Indian financial markets and indirectly, in the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy, including the movement of exchange rates and interest rates in India. In the event that the current difficult conditions in the global credit markets continue or if the recovery is slower than expected or if there are any significant financial disruption, this could have an adverse effect on our cost of funding, loan portfolio, business, prospects, results of operations, financial condition and the trading price of the shares.


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The market value of an investor’s investment may fluctuate due to the volatility of the Indian securities markets. Indian securities markets are more volatile than the securities markets in certain countries which are members of the OECD. Stock Exchanges in India have in the past experienced substantial fluctuations in the prices of listed securities. For example, in May 2006, Indian stock exchanges witnessed substantial volatility as the BSE and the NSE, India’s main stock exchanges, halted trading for one hour on May 22, 2006 after their respective indices fell more than 10%. The market price of our Ordinary Shares could fluctuate significantly as a result of market volatility. The Indian Stock Exchanges have experienced problems which, if they were to continue or recur, could affect the market price and liquidity of the securities of Indian companies, including the equity shares. These problems have included temporary exchange closures, broker defaults, settlement delays and strikes by brokerage firm employees. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time, disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.


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MARKET PRICE INFORMATION

The Equity Shares are listed and traded on the NSE, BSE and the MSE. The stock market data presented below is given for the NSE and the BSE separately. There has been no trading on MSE since April 1, 2012. (i) The following tables set forth the reported high, low, the number of Equity Shares traded and the total trading volume on

the dates on which such high and low prices were recorded and the average closing prices of the Equity Shares, on the NSE and the BSE during the fiscal years ended March 31, 2014, March 31, 2013 and March 31, 2012. The shareholders of the Company at the Annual General Meeting held on July 19, 2011approved the issue of Bonus Shares of face value Rs.1 each in the proportion of 1 (one) Bonus Share of Re. 1 each for every 1(one) fully paid-up Equity Share of Re. 1 each. The Equity Shares traded ex-bonus on and from August 2, 2011:

NSE

Fiscal Year

High (Rs.)(1)

Date of high

Number of Equity Shares traded on date

of high

Volume on date of high

(Rs. in lakhs)

Low (Rs.)(2)

Date of low

Number of Equity Shares traded on

date of low

Volume on date of low

(Rs. in lakhs)

Average price for

the Fiscal Year*

(Rs.)2014 24.60 30-May-13 6,833,183 1,659.23 11.75 29-Aug-13 12,706,363 1,517.08 17.63 2013 33.50 02-May-12 13,428,607 4,213.70 18.75 11-Sep-12 3,964,979 823.32 25.06

2012 (Post Bonus)(4)

30.60 17-Feb-12 8,330,013 2,500.70

20.00 22-Dec-11 13,172,542 2,927.71 34.46

2012 (Pre Bonus)(3)

60.65 6-Apr-11 46,06,464 2,659.87 45.30 22-Jun-11 8,322,664 3,861.90 51.30

__________ Source: www.nseindia.com * Average of the daily closing price (1) High of Intraday Highs. In case the price is the same on 2 dates then the date on which the volume is higher has been considered. (2) Low of Intraday Lows. In case the price is the same on 2 dates then the date on which the volume is higher has been considered. (3) Pre Bonus refers to the period from April 1, 2011 to August 1, 2011 (4) Post Bonus refers to the period from August 2, 2011 to March 31, 2012

BSE

Fiscal Year

High (Rs.)(1)

Date of high

Number of Equity Shares

traded on date of high

Volume on date of high (Rs. in

lakhs)

Low (Rs.)(2)

Date of low


traded on date of low


(Rs. in lakhs)

Average price for the

Fiscal Year*

(Rs.) 2014 24.55 30-May-13 459,973 111.46 11.82 29-Aug-13 1,518,495 181.96 17.64 2013 32.90 2-May-12 958,257 300.87 20.25 30-Aug-12 880,712 180.57 25.06 2012 (Post

Bonus)(4)

30.50 17-Feb-12 60,73,120 1,836.90 20.05 22-Dec-11 17,12,467 379.17 25.90

2012 (Pre Bonus)(3)

59.80 5-Apr-11 10,49,139 614.49 45.00 19-May-11 22,48,227 1,079.60 51.20

__________ Source: www.bseindia.com * Average of the daily closing price (1) High of Intraday Highs. In case the price is the same on 2 dates then the date on which the volume is higher has been considered. (2) Low of Intraday Lows. In case the price is the same on 2 dates then the date on which the volume is higher has been considered. (3) Pre Bonus refers to the period from April 1, 2011 to August 1, 2011 (4) Post Bonus refers to the period from August 2, 2011 to March 31, 2012

(ii) The following tables set forth the reported high, low, the number of Equity Shares traded and the total trading

volume on the dates on which such high and low prices were recorded and the average closing prices of the Equity Shares, on the NSE and the BSE during the last six months:


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NSE

Month, Year

High (Rs.)(1)

Date of high


of high

Volume on date of

high (Rs. in lakhs)

Low (Rs.)(2)

Date of low




(Rs. in lakhs)

Average price for

the Month*

(Rs.) Jun-14 39.00 26-Jun-14 60,269,444 23,115.86 30.80 16-Jun-14 17,425,884 5,622.29 34.23 May-14 35.85 26-May-14 53,040,222 17,918.42 21.70 5-May-14 7,086,225 1,583.70 27.33 Apr-14 25.25 11-Apr-14 13,230,673 3,245.01 21.95 30-Apr-14 13,178,669 2,955.43 23.42 Mar-14 24.35 26-Mar-14 70,588,203 15,430.44 15.35 4-Mar-14 3,662,269 570.29 18.55 Feb-14 16.60 4-Feb-14 14,393,963 2,318.66 14.85 17-Feb-14 8,985,964 1,391.58 15.71 Jan-14 19.15 6-Jan-14 15,415,220 2,892.38 15.75 30-Jan-14 10,110,272 1,625.97 17.27 __________ Source: www.nseindia.com * Average of the daily closing price (1) High of Intraday Highs. In case the price is the same on 2 dates then the date on which the volume is higher has been considered. (2) Low of Intraday Lows. In case the price is the same on 2 dates then the date on which the volume is higher has been considered.

BSE

Month, Year

High (Rs.)(1)

Date of high


of high

Volume on date of high (Rs. in lakhs)

Low (Rs.)(2)

Date of low




(Rs. in lakhs)

Average price for

the Month*

(Rs.) Jun-14 39.00 26-Jun-14 4,899,361 1,881.04 30.80 16-Jun-14 2,113,299 682.35 34.21 May-14 35.75 26-May-14 7,403,701 2,506.52 21.8 5-May-14 722,423 160.94 27.31 Apr-14 25.2 11-Apr-14 1,927,866 472.89 22.05 30-Apr-14 776,191 175.17 23.42 Mar-14 24.0 31-Mar-14 2,886,276 681.73 15.4 4-Mar-14 852,598 133.27 18.53 Feb-14 16.55 4-Feb-14 914,167 146.56 14.9 17-Feb-14 1,604,524 248.55 15.72 Jan-14 19.2 6-Jan-14 2,546,298 477.88 15.8 30-Jan-14 651,868 104.71 17.27 __________ Source: www.bseindia.com * Average of the daily closing price (1) High of Intraday Highs. In case the price is the same on 2 dates then the date on which the volume is higher has been considered. (2) Low of Intraday Lows. In case the price is the same on 2 dates then the date on which the volume is higher has been considered.

(iii) The following tables set forth the details of the number of Equity Shares traded and the total trading volume during the last six months and the fiscal years ended March 31, 2014, March 31, 2013 and March 31, 2012 on the NSE and the BSE:

NSE BSE

Period Number of Equity

Shares Traded Volume

(Rs. in lakhs) Number of Equity

Shares Traded Volume

(Rs. in lakhs) Fiscal Year, 2014 2,037,281,459 352,684.49 366,586,586 62,367.91 Fiscal Year, 2013 1,612,137,247 409,155.85 254,107,191 63,720.03 Fiscal Year, 2012 1,347,763,587 453,635.00 194,021,438 65,511.91 Jun-14 584,885,866 203,269.70 55,213,971 19,229.12 May-14 456,330,285 8,363.64 57,529,434 17,030.06 Apr-14 204,879,666 48,250.95 45,215,455 10,732.87 Mar-14 408,523,692 81,449.79 64,114,989 13,332.16 Feb-14 119,800,199 18,927.69 13,440,779 2,117.506 Jan-14 236,313,093 41,523.66 28,425,760 5,005.57 __________ Source: www.nseindia.com, www.bseindia.com


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(iv) The following table sets forth the market price on the Stock Exchanges on May 13, 2013, the first working day following the approval of the Board of Directors for the Issue:

Date NSE BSE

May 13, 2013 Open High Low Close Open High Low Close

Price of the Equity Shares (Rs.) 22.40

22.45

22.00

22.05

22.50

22.50

22.05

22.10

Volume (number of Equity Shares)

51,41,334

2,50,066

__________ Source: www.nseindia.com, www.bseindia.com


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USE OF PROCEEDS The gross proceeds from the Issue will be Rs. 66,672.00 lakhs. The net proceeds from the Issue after deducting fees, commissions and expenses of approximately Rs. 1,600 lakhs, will be approximately Rs. 65,072.00 lakhs. (“Net Proceeds”) Subject to compliance with applicable laws and regulations, the Company intends to use the net proceeds of the Issue primarily for the Company’s long term funding requirement, repayment of existing loans and general corporate purposes and any other purposes as may be permissible under applicable law. In accordance with the decision of the Company’s Board, the Company’s management will have the flexibility in deploying the net proceeds received by the Company from the Issue. Pending authorization of the Net Proceeds for the purposes described above, the Company intends to temporarily invest the funds in bank deposits as approved by the Board in accordance with the investment policy. Our Promoters or Directors are not making any contribution either as part of the Issue or separately in furtherance of the Objects of the Issue.


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CAPITALIZATION AND INDEBTEDNESS

The following table sets forth the Company’s capitalisation and total debt, on a standalone basis, as on March 31, 2014, and as adjusted to give effect to the Issue. This table should be read with the sections “Management’s discussion and analysis of financial condition and results of operations as per standalone financial statements” and “Management’s discussion and analysis of financial condition and results of operations as per consolidated financial statements” beginning on page 69 and 90, respectively and other financial information contained in the section “Financial Statements” beginning on page F-1. As of March 31, 2014

Pre-Issue (audited) (Rs. In lakhs)

As Adjusted for the Issue(1)

(Rs. In lakhs)

(A) Share holders’ funds

Share capital 26,606.80 28,458.80 Reserves and Surplus(2) 4,18,181.63 4,81,401.63

Total Share holders’ funds (A) 4,44,788.43 5,09,860.43 (B) Loan Funds

Secured Loans 2,30,230.32 2,30,230.32 Unsecured Loans 2,38,801.76 2,38,801.76

Total Loan Funds (B) 4,69,032.08 4,69,032.08 Total Capitalisation (A+B) 9,13,820.51 9,78,892.51

(1) As adjusted to show the number of Equity Shares issued in the Issue. (2) Reserves and surplus is net of adjustments for estimated issue expenses of approximately Rs. 1,600 lakhs.


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CAPITAL STRUCTURE The Equity Share capital of our Company, as on the date of this Placement Document is set forth below:

No. Particulars Amount (in Rs. lakhs) Aggregate nominal value

A. Authorised Share Capital 25,35,60,00,000 Equity Shares of Re. 1 each 2,53,560.00 3,65,00,000 Redeemable Non-cumulative Non-convertible Preference Shares of Rs. 10

each 3,650.00 20,00,000 Non-convertible Redeemable Preference Shares of Rs. 100 each 2,000.00 259,210.00

B. Issued Share Capital before the Issue 2,01,45,66,829 Equity Shares of Re. 1 each 20,145.67 64,63,14,480 Equity shares of Re. 1 each issued through Global Depository Receipts 6,463.14 26,608.81

C. Subscribed and Paid-Up Share Capital before the Issue 2,01,43,62,154 Equity Shares of Re. 1 each 20,143.62 64,63,14,480 Equity shares of Re. 1 each issued through Global Depository Receipts 6,463.14 Add: Forfeited shares (amount originally paid up in respect of 760 shares) 0.04 26,606.80

D. Present Issue in Terms of this Placement Document 18,52,00,000 Equity Shares of Re. 1 each(1) 1,852.00

E. Subscribed and Paid-Up Share Capital after the Issue 2,19,95,62,154 Equity Shares of Re. 1 each 21,995.62 64,63,14,480 Equity shares of Re. 1 each issued through Global Depository Receipts 6,463.14 Add: Forfeited shares (amount originally paid up in respect of 760 shares) 0.04 28,458.80

F. Securities Premium Account Before the Issue 75,359.50 After the Issue (2) 4,81,401.63

Note: 1. The Issue has been authorised by the Board of Directors on May 10, 2013 and the shareholders pursuant to their

resolution dated July 16, 2013. 2. The Securities Premium Account is calculated net of adjustments for estimated issue expenses of approximately Rs.

1,600 lakhs. History of Equity Share Capital of our Company On incorporation, the authorized share capital of the Company was Rs. 2,00,00,000 divided into 10,40,000 ordinary “A” class shares of Rs. 15 each and 8,80,000 ordinary “B” class shares of Rs. 5 each. The subscribers to the Memorandum of Association of the Company had subscribed to 3,680 ordinary “A” class shares of Rs. 15 each and 4,680 ordinary “B” class shares of Rs. 5 each. Since incorporation until May 27, 1955 the Company made further allotments of 2,79,071 ordinary “A” class shares of Rs. 15 each and 2,38,407 ordinary “B” class shares of Rs. 5 each. Resultantly, as on May 27, 1955 the paid up share capital of the Company comprised of 2,82,751 ordinary “A” class shares of Rs. 15 each and 2,43,087 ordinary “B” class shares of Rs. 5 each. Pursuant to a resolution dated May 27, 1955, the ordinary “A” class shares of Rs. 15 each and ordinary “B” class shares of Rs. 5 each were converted into a single class of equity shares of Rs. 5 each. Consequently, (a) the authorized share capital of Company was modified from Rs. 2,00,00,000 divided into 10,40,000 ordinary “A” class shares of Rs. 15 each and 8,80,000


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ordinary “B” class shares of Rs. 5 each, to Rs. 2,00,00,000 comprising of 40,00,000 ordinary shares of Rs. 5 each; (b) for every ordinary “A” class shares of Rs. 15 each the Company issued three ordinary shares of Rs. 5 each and for every ordinary “B” class shares of Rs. 5 each the Company issued one ordinary share of Rs. 5 each, resultantly the paid up share capital of Company comprised of 10,91,340 equity shares of Rs. 5 each; Thereafter, since May 27, 1955 until December 7, 1981, the Company made further allotments of 31,908,660 equity shares of Rs. 5 each. Resultantly, as on December 7, 1981 the paid up share capital of the Company was Rs. 16,50,00,000 comprising of 3,30,00,000 equity shares of Rs. 5 each. Pursuant to a resolution dated December 7, 1981, the face value of the equity shares of the Company was changed from Rs. 5 each to Rs. 10 each. Consequently, (a) the authorized share capital of the Company of Rs. 25,00,00,000 comprising of 5,00,00,000 equity shares of Rs. 5 each was converted to 2,50,00,000 equity shares of Rs. 10 each (b) every two equity shares having face value of Rs. 5 each were consolidated into one equity share of Rs. 10 each, resultantly the paid up share capital of the Company comprised of 1,65,00,000 equity shares of Rs. 10 each. The Company is unable to trace copies of prescribed forms filed by it with the Registrar of Companies, inter-alia, in respect of the allotment of Equity Shares since its incorporation until December 7, 1981. While the Company believes that these forms were duly filed, it has not been able to obtain copies of these documents, including from the registrar of companies. The history of the equity share capital of our Company since December 7, 1981 is provided in the following table:

Date of Allotment

No. of Equity Shares allotted

Face value (Rs.)

Issue Price (Rs.)

Form of consideration Cumulative number of

Equity Shares

Cumulative Paid -up Capital

(Rs.)

December 7, 1981

- 10.0 - - 16,500,000 165,000,000

November 1, 1984

1,630,000 10.0 18.0 Cash (Conversion of debentures)

18,130,000 181,300,000

January 1, 1986 3,260,000 10.0 18.0 Cash (Conversion of debentures)

21,390,000 213,900,000

January 1, 1990 9,952,976 10.0 35.0 Cash (Conversion of debentures)

31,342,976 313,429,760

June 27, 1990 153,333 10.0 10.0 Cash (Allotted to members of Ductron Castings Limited upon merger)

31,496,309 314,963,090

May 11, 1992 19,008,275 10.0 50.0 Cash (Conversion of debentures)

50,504,584 505,045,840

October 1, 1992 19,009,112 10.0 50.0 Cash (Conversion of debentures)

69,513,696 695,136,960

September 29, 1993

17,100,000 10.0 50.0 Cash 86,613,696 866,136,960

March 21, 1995 32,315,724 10.0 135.0 Cash (Being underlying shares for

10,771,908 GDR’s issued by the Company)

118,929,420 1,189,294,200

Sub-division of nominal value of Equity Shares of our Company from Rs.10 per equity share to Re. 1 per equity share with effect from July 6, 2004 July 6, 2004 - 1.0 - - 1,189,294,200 1,189,294,200 February 14, 2006

9,886,934 1.0 31.0 Cash (Conversion of FCCN)

1,199,181,134 1,199,181,134

February 25, 2006


1,200,575,263 1,200,575,263

March 10, 2006 5,690,322 1.0 31.0 Cash (Conversion of FCCN)

1,206,265,585 1,206,265,585


1,215,185,164 1,215,185,164


1,221,586,776 1,221,586,776


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Date of Allotment

No. of Equity Shares allotted

Face value (Rs.)

Issue Price (Rs.)

Form of consideration Cumulative number of

Equity Shares

Cumulative Paid -up Capital

(Rs.)

April 10, 2006 5,050,161 1.0 31.0 Cash (Conversion of FCCN)

1,226,636,937 1,226,636,937

April 22, 2006 6,401,612 1.0 31.0 Cash (Conversion of FCCN)

1,233,038,549 1,233,038,549

May 10, 2006 2,987,418 1.0 31.0 Cash (Conversion of FCCN)

1,236,025,967 1,236,025,967

June 3, 2006 1,422,580 1.0 31.0 Cash (Conversion of FCCN)

1,237,448,547 1,237,448,547

June 21, 2006 72,452,032 1.0 31.0 Cash (Conversion of FCCN)

1,309,900,579 1,309,900,579

October 18, 2006


1,314,686,140 1,314,686,140

October 31, 2006


1,320,589,848 1,320,589,848

November 11, 2006


1,322,945,640 1,322,945,640

December 4, 2006

355,645 1.0 31.0 Cash (Conversion of FCCN)

1,323,301,285 1,323,301,285

January 20, 2007 355,645 1.0 31.0 Cash (Conversion of FCCN)

1,323,656,930 1,323,656,930

March 3, 2007 213,387 1.0 31.0 Cash (Conversion of FCCN)

1,323,870,317 1,323,870,317

July 6, 2007 4,998,000 1.0 30.0 Cash (Conversion of FCCN)

1,328,868,317 1,328,868,317

August 20, 2007 1,470,000 1.0 30.0 Cash (Conversion of FCCN)

1,330,338,317 1,330,338,317

August 4, 2011 1,330,338,317 1.0 Nil Bonus issue (1:1) 2,660,676,634 2,660,676,634 In the last one year preceding the date of this Placement Document, the Company has not made any allotments for consideration other than cash.


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DIVIDEND POLICY We generally declare and pay dividends in the fiscal year following the year as to which they relate. Under the Companies Act, an Indian company may pay dividends only upon a recommendation by its board of directors and approval by a majority of its shareholders at the annual general meeting. Shareholders may decrease, but not increase, the amount of dividend recommended by the board of directors. Under the Companies Act, a company may pay dividends only out of its profits in the year in which the dividend is declared or out of the undistributed profits or reserves of prior fiscal years or out of both. The following table sets forth details regarding the dividend paid by the Company on the Equity shares for Fiscal Years 2014, 2013 and 2012:

Particulars Fiscal Year 2014 Fiscal Year 2013 Fiscal Year 2012

Face Value of Equity Shares (Rs. per share) 1.00 1.00 1.00 Final Dividend on Equity Shares (Rs. per share) - 0.60 1.00* Total Dividend on Equity Shares (Rs. in lakhs) - 15,964.06 26,606.77 Dividend Distribution Tax (Rs. in lakhs) - 2,713.09 4,316.28 Dividend Payout Ratio (%)** - 36.81 46.95 ________________ *Post 1:1 bonus issue. ** Dividend per share divided by earning per share The Board of our Company has not recommended any dividend for the Fiscal Year 2014. Amount paid as dividends in the past are not reflective of any future dividends, which are subject to the recommendation of the Board based on various factors and the approval of the Company’s shareholders. Investors are cautioned not to rely on past dividends as an indication of the Company’s future performance or for an investment in the Equity Shares. The form, frequency and amount of future dividends will depend on our revenues, cash flows, financial condition (including capital position) and other factors and shall be at the discretion of our Board and subject to the approval of our shareholders. For a summary of certain Indian tax consequences of dividend distributions to shareholders, see the section “Taxation” beginning on page 188.


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS PER STANDALONE FINANCIAL STATEMENTS

The following discussion and analysis of our financial condition and results of operations is based on our standalone audited financial statements as of and for the year ended March 31, 2012, 2013 and 2014, including the schedules and notes thereto and the reports thereon, which appear in the section titled “Financial Statements” beginning on page F-1. You should read the following discussion of our financial condition and results of operations together with our consolidated audited financial statements for and as of the year ended March 31, 2014 and, in each case, the schedules and notes thereto, which appear elsewhere in this Placement Document and are prepared in accordance with the Companies Act and Indian GAAP. Indian GAAP differs in certain material respects from U.S. GAAP and IFRS. Our Fiscal ends on March 31 of each year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year. In addition, data on the sale of vehicles by the Company in all periods included in this Placement Document have also been derived from published reports of SIAM. Some of the information contained in the following discussion, including information with respect to the Company's plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section “Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements and also the section “Risk Factors” for a discussion of certain factors that may affect the Company's business, results of operations or financial condition. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. Overview In Fiscal 2014, the Company was the second largest manufacturer of medium and heavy commercial vehicles in India (Source: Copyright SIAM Report 2014). Our principal business is the design, development, manufacture and sale of a comprehensive portfolio of commercial vehicle products with varying capacities and applications to cater to different customer segments. The Company manufactures and sells a complete range of goods vehicles spanning medium and heavy duty trucks with capacities ranging from 10 tons GVW to 49 tons GVW and also manufactures engines, gensets (DG sets) and spare parts and various special application vehicles which are used to provide logistics support to the Indian defence sector. Through a strategic partnership with Nissan, we manufacture and sell light commercial vehicles (ranging from 2.5 tons GVW to 7.2 tons GVW) and a passenger carrier. We also manufacture a comprehensive range of city, inter-city, special purpose buses and coaches, ranging from 16 to 80 seats in capacity. In Fiscal 2014, our products were sold in 34 jurisdictions globally. In Fiscal 2012, 2013 and 2014 the Company's revenue from the sales of products were Rs.13,91,287.43 lakhs, Rs.13,53,160.43 lakhs and Rs.10,60,812.88 lakhs respectively. The Company's revenue from sales of products comprises revenue from the sale of commercial vehicles manufactured, traded vehicles, engines, gensets, spare parts and others. In Fiscal 2012, 2013 and 2014 revenue from sale of commercial vehicles manufactured accounted for 86.34%, 77.59% and 75.17% respectively of the Company's total revenue from operations. Revenue from sales of traded vehicles in Fiscal 2012, 2013 and 2014 accounted for 1.19%, 6.88% and 9.84% respectively of the Company's total revenue from operations. The sale of traded vehicles refers to the sale of vehicles purchased by the Company from its joint venture company. For details on trade sales, please see section “Business - Strategic Relationships” beginning of page 139. Revenue from sales of spare parts and others in Fiscal 2012, 2013 and 2014, accounted for 11.33%, 13.64% and 11.48%, respectively of the Company's total revenue from operations (gross). Revenue from sales of spare parts and others comprises revenue generated primarily from the sale of spare parts and from the supply of vehicle kits to the Indian Government which are used by the Indian defence for logistics support. The Company's market share in India in Fiscal 2013 and 2014 in the overall Medium and Heavy Commercial Vehicles ("MHCV") segment (passenger carrier and goods carriers) was 26.4% and 25.8% respectively, making it the second largest in this segment. In Fiscal 2013 and 2014 the Company's domestic market share in the MHCV (goods carrier) segment was 23.4% and 22.8% respectively and the market share in the MHCV (passenger carrier .i.e. the bus segment) segment was


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40.5% and 38.6% respectively. In Fiscal 2013 and 2014 the Company had a market share of 6.6% and 6.3% respectively in the Light Commercial Vehicles ("LCVs") segment (passenger and goods carriers) (Source: Copyright SIAM Report 2014). In May 2008, we entered into three separate joint ventures with Nissan Motor Co. Ltd. to manufacture LCVs with a GVW of less than 7.5 tons, to collaborate and provide technology to the LCV manufacturing entity and manufacture powertrain engines. The Company has also entered into joint venture arrangements with John Deere to manufacture construction equipment and with Alteams Oy to manufacture high-pressure die-casting (“HPDC”) aluminum components. For further information, see “Business - Strategic Relationships – Joint Ventures” beginning on page 139. The Company operates seven manufacturing facilities in India located across Tamil Nadu, Maharashtra, Rajasthan and Uttarakhand with an aggregate production capacity as at March 31, 2014 of 150,500 vehicles per annum (based on operating two production shifts per day). Key components and spare parts for vehicles, including engines, gear boxes and front axles are also manufactured at these facilities. We also operate manufacturing facilities in the UAE and the UK through our associate and subsidiary companies respectively. In the UAE, we operate through Ashok Leyland UAE, LLC which owns a bus manufacturing facility in Ras Al Khaimah with a production capacity of 2,000 vehicles per annum. In the UK we operate through our subsidiary, Optare Plc which owns a bus manufacturing facility in Leeds. As at March 31, 2014, the Company's distribution network across India comprised 264 dealer branches, a network of 159 Authorized Service Centers (“ASCs”), 64 containerized workshops and 152 retail stores which sell spare parts. In aggregate the Company had 639 customer touch-points across India as at March 31, 2014. Our research and development capabilities are focused on innovating, developing and improving engine and vehicle technologies for our vehicles. The Company's center for product research and development near Chennai provides design, development and testing services for new products, as well as for upgrading of existing products. In addition to a modern testing laboratory, the research and development center also provides comprehensive test tracks for testing prototypes under demanding conditions. For example, the six-poster road simulation laboratory is a track simulator for multi-axle vehicles which significantly reduces testing time. In Fiscal 2013 and 2014, the Company incurred Rs.30,386.17 lakhs and Rs.25,623.91 lakhs respectively for research and development in our in house research and development facilities. As at March 31, 2014, the Company had 850 employees in its research and development team. We are a part of the Hinduja Group, which is a diversified business group with operations across several verticals including chemicals, manufacturing, banking and finance, information technology, power, media, real estate, healthcare and trading. The Company was established in 1948 and its equity shares are listed on the MSE, the BSE and the NSE. In Fiscal 2014, the Company undertook certain corporate restructuring processes resulting in certain of its associate companies being consolidated and merged. As a consequence of such corporate restructuring and consolidation, the Company's corporate group structure in Fiscal 2014 is not comparable to its corporate group structure in Fiscal 2013. Further the Company has prepared consolidated financial statements for the first time in Fiscal 2014 and consequently has no comparable consolidated financial statements for prior years. Pursuant to the corporate restructuring, the Company's standalone financial statements for Fiscal 2014 may not be directly comparable to its standalone financial statements in Fiscal 2013 or earlier. For further information, see "Business - Corporate Restructuring" beginning on page 137 and "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Consolidated Financial Statements – Restructuring of the Group and Presentation of Financial Information" beginning on page 90.


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Factors Affecting the Company's Results of Operations General economic conditions in India For Fiscal 2014, we were the second largest manufacturer of MHCVs in India (Source: SIAM Report dated April 11, 2014 ("SIAM Report 2014"). The market for MHCV's is particularly susceptible to the economic condition in which it is sold. We, similar to the rest of the automotive industry, are substantially affected by general economic conditions. The demand for commercial vehicles in the Indian market is influenced by various factors, including, among others, demand for transportation of freight goods from the steel, iron ore and other mining, cement and coal industries and agricultural produce, import and export activities, and the implementation of new emission standards, availability of credit, diesel prices and interest rates. The cost of producing commercial vehicles, engines, spare parts and ferrous castings are dependent to a significant degree on global prices of steel, aluminium, rubber and other commodities used in the production process. During Fiscal 2012, 2013 and 2014 the total units of commercial vehicles sold in India were 809499, 793211 and 632738 respectively. The total units of commercial vehicles sold in Indian in the months ended April 30 2014 and April 30 2013 were 43080 and 56683 respectively. The total units of commercial vehicles sold in India in the months ended May 31, 2014 and May 31, 2013 were 46986 and 55458 respectively. (Source SIAM report). Due to the prevailing economic environment, the total industry volume (“TIV”) of MHCVs reduced at an aggregate of 42.5% between Fiscal year 2012 and Fiscal year 2014. During last two Fiscals,, passenger MHCV TIV registered an absolute drop of approximately 22.4% mainly driven by a 38.0% drop in the 12 to 16.2 tonne bus segment accordingly to SIAM reports and also due to decrease in purchases by State Transport Undertakings (“STUs”) during this period. The truck segment declined by 45.9% (Source SIAM report) during the same period due to continued economic slowdown in general and mining ban in particular. Our level of indebtedness The financial indebtedness of the Company including short term debt and current maturities of long term debt as of March 31, 2014 was Rs.4,69,032.08 lakhs. For further details relating to the financial indebtedness of the Company please see section titled "Management‘s Discussion and Analysis of Financial Condition and Results of Operation -Indebtedness".

The level of indebtedness may affect us in several ways, including: us being required to dedicate a substantial portion of the cash flow from operations for payments towards loan

repayments, thereby reducing the availability of cash flow to fund working capital, research and development, capital expenditure, acquisitions and other general corporate purposes;

our ability to generate sufficient cash for principal and interest payments and other amounts due in respect of these borrowings;

imposing constraints on our business operations and growth plans as a result of the need to take into account the covenants in its debt financing agreements when executing those business operations and growth plans;

limiting our ability to pay dividends; and risking future downgrades of the Company's credit rating by international and domestic rating agencies, thereby

adversely impacting the interest rates and commercial terms of all future financing.

Although we aim to deleverage our balance sheet, such efforts may be adversely impacted by, among other things, adverse conditions in the commercial vehicle market; foreign currency fluctuations; failure to receive the necessary regulatory or corporate approvals; and failure of our growth and expansion plans. Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Seasonality and cyclicality The sales volumes and prices for our vehicles are influenced by the cyclicality and seasonality of demand for these products. Demand for trucks is generally lower in the first half of a Fiscal and higher in the second half of a Fiscal due to the harvest season and increased movement of agricultural products, as well as the desire of customers to take advantage of certain tax benefits before the year end. In addition, customers demand for vehicles is generally depressed towards the end of a calendar


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year, particularly in December, as customers seek to avoid vehicles purchased being classified as older models based on the year of manufacture. As a result, customers prefer to delay the acquisition of a vehicle to January of the next calendar year. We believe that the cyclical nature of demand for commercial vehicles in India can be mitigated with longer periods of growth due to the likely sustainability of economic growth, improvement in road infrastructure, including the execution of several NHAI projects, greater availability and affordability of financing for vehicles and the introduction of more stringent emissions standards. Interest rates and availability of credit for vehicle purchases. Our volumes are significantly dependent on the availability of vehicle financing arrangements and the cost thereof. The end users of our commercial vehicles include single truck operators, companies utilizing commercial vehicles for the transport of their products and, operators of commercial vehicle fleets. Purchases in the commercial vehicle industry are generally financed by banks and finance companies including Hinduja Leyland Finance Limited. To the extent the interest rate goes up or the availability of financings at economically feasible levels ceases ,our customers may defer the purchase of vehicles or may not buy the vehicles at all. These factors could have a significant effect on the Company's results of operations and financial condition. Competition We face competition primarily from various Indian and international commercial vehicle manufacturers including Tata Motors Limited, Volvo Eicher Motors Limited , Daimler India Commercial Vehicles,, Asia Motor Works Motors Limited and Mahindra Navistar Automotives Limited. We have historically enjoyed a significant market share in southern and western India, and have significantly focused on increasing market penetration in northern and eastern India in recent years. In Fiscal 2013 and 2014, we were the second largest manufacturer of MHCVs in India. (Source: SIAM Report 2014). The following table sets forth, for each of the periods indicated, our market share in India for each of the categories presented: (In %) Fiscal 2012 Fiscal 2013 Fiscal 2014 MHCV Buses 41.9 40.5 38.6 MHCV Trucks 20.2 23.4 22.8 MHCV Total 23.3 26.4 25.8 (Source: SIAM Report 2014 and SIAM report dated April 10, 2013 ("SIAM Report 2013")) In terms of engines manufactured for industrial use, gensets, agricultural and marine applications, we face competition from Cummins India Limited, Mahindra & Mahindra Limited, Kirloskar Oil Engines Limited and Greaves Cotton Limited. Several international commercial vehicle manufacturers have increased or are expected to increase their participation in the Indian market through technology transfers, joint ventures or wholly-owned subsidiaries, such as Daimler and Mahindra Navistar. We expect to face increased competition from international manufacturers that seek to penetrate the Indian commercial vehicle market through technology transfers, joint ventures or direct investments. There is a risk that competitors will set up or actively target the same geographical regions and product segments as the Company. Increased competition may result in greater price competition and reduced demand for the Company's products, thereby adversely affecting the Company's results of operations and financial condition. Regulations As an automotive manufacturing company, we are subjected to extensive governmental regulations regarding vehicle emission levels, noise and safety of automotive products, as well as on levels of pollutants generated by the plants that produce automotive vehicles, that may increase our manufacturing costs and delay operations. To comply with applicable regulatory requirements, we incur substantial capital expenditure and research and development costs to upgrade our products and manufacturing facilities. This may increase our production costs and thereby adversely affect the competitiveness of our products. In addition, any change in such legislation or regulatory requirements could require us to invest substantial additional capital to develop products that comply with such new legislation or regulatory requirements. Also, there is a significant likelihood that consumer demands will take increasing account of fuel efficiency and emissions. There can be no assurance that there will be no further reductions in import duties on commercial vehicles or components, or a relaxation or


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removal of import restrictions by the Indian government, all of which may in turn adversely affect the Company's results of operations and financial condition. Significant Accounting Policies A summary of the significant accounting policies applied in the preparation of our financial statements is set out in the notes to the financial statements included elsewhere in this Placement Document. Financial statements are prepared in accordance with Indian GAAP The financial statements have been prepared on an accrual basis under historical cost convention except for certain categories of fixed assets that are carried at re-valued amounts. All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - non current classification of assets and liabilities. The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize. Tangible and Intangible Fixed assets and depreciation/amortisation Cost of all civil works (including electrification and fittings) is capitalised with the exception of alterations and modifications of a capital nature to existing structures where the cost of such alteration or modification is Rs 100,000 and below. Other fixed assets, including intangible assets and assets given on lease, where the cost exceeds Rs.10,000 and the estimated useful life is two years or more, is capitalised. Cost of initial spares and tools is capitalised along with the respective assets. Cost of fixed assets is net of eligible credits under CENVAT/VAT Scheme. Expenditure directly related and incidental to construction / development and borrowing costs are capitalised upto the date the assets are ready for their intended use. Certain categories of fixed assets were revalued and are carried at the revalued amounts less accumulated depreciation and impairment loss, if any. Increase in the net book value on such revaluation is credited to “Revaluation Reserve Account”. Upon the sale, disposal, extinguishment of the revalued assets the amount of revaluation reserve against such assets is adjusted against their carrying values and the difference between the sale proceeds of such assets and the adjusted carrying value are recognised in the statement of profit and loss. Tangible fixed assets and Intangible assets, that are not yet ready for their intended use, are carried at cost comprising direct cost, and other incidental / attributable expenses and reflected under Capital work in progress / Intangible assets under development, respectively. Assets are depreciated/amortised, as below, on straight line basis:

(a) Leasehold land over the period of lease; (b) Leasehold land and buildings, as revalued, is calculated on the respective revalued amounts, over the

balance useful life as determined by the valuers in the case of buildings and as per (a) above in the case of land;

(c) Buildings, plant and machinery (except assets subject to impairment) and other assets, including assets

given on lease and assets in leased premises / customer premises, over their estimated useful lives or lives derived from the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is lower;

(d) Assets subject to impairment, on the asset's revised carrying amount, over its remaining useful life.


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(e) Intangible assets are amortized over their estimated useful life.

Depreciation/amortisation is provided on a pro-rata basis from the month the assets are put to use during the financial year. In respect of assets sold or disposed off during the year, depreciation/amortisation is provided upto the month of sale or disposal of the assets. The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount exceeds the recoverable amount. Borrowing costs Borrowing costs attributable to the acquisition, construction or production of qualifying assets, are added to the cost of those assets, upto the date when the assets are ready for their intended use. Expenditure incurred on issue of debentures is adjusted against securities premium account. Expenditure incurred on raising loans is amortised over the period of such borrowings. Premium paid on prepayment of borrowing is amortised over the unexpired period thereof or six months, whichever is less. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred. Investments Long term investments are carried individually at cost. However, provision for diminution is made to recognise a decline, if any, other than temporary, in the carrying value of the investment. Current investments are carried individually at lower of cost and fair value. Inventories Inventories are valued at lower of cost and net realisable value; cost being ascertained on the following basis:

Stores, raw materials and components and work-in-progress: On monthly moving weighted average basis. spares, consumable tools : weighted average basis In respect of works-made components, cost includes applicable production overheads. -Finished / trading goods: under absorption costing method. Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes. Cost of patterns and dies is amortised over a period of five years. Surplus / obsolete / slow moving inventories are adequately provided for. Foreign currency transactions and derivatives Foreign currency transactions are recorded at the rates prevailing on the date of the transaction. Monetary assets and liabilities in foreign currency are translated at closing rate. Exchange differences arising on settlement or translation of monetary items other than those mentioned "Financial Statements - Significant Accounting Policies" below are recognised as income or expense in the Statement of Profit and Loss in the period it arises. Exchange differences on translation or settlement of long term foreign currency monetary items (i.e. whose term of settlement exceeds twelve months from date of its origination) at rates different from those at which they were initially recorded or reported in the previous financial statements, insofar as it relates to acquisition of depreciable assets are adjusted to the cost of the assets and depreciated over remaining useful life of such assets.In other cases, these are accumulated in “Foreign currency monetary item translation difference account” and amortised by recognition as income or expense in each period over the balance term of such items till settlement occurs but not beyond March 31, 2020. The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating


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to firm commitments and highly probable forecast transactions. The company designates such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in Accounting Standard- 30 “Financial Instruments-Recognition and measurement” issued by ICAI. Gains and losses on these forward contracts designated as “effective Cash flow hedges” are recognised in the “Hedge Reserve Account” till the underlying forecasted transaction occurs. Any ineffective portion however, is recognised immediately in the statement of profit and loss. Gains and losses on all other derivatives (including forward contracts not designated as cash flow hedge) are recognised in the statement of profit and loss in the period it arises. Premium or discount on forward contracts is amortized over the life of the contract. Investments in equity capital of companies registered outside India are carried in the balance sheet at the rates prevailing on the date of the transaction. Income/expenditure of overseas branches are recognised at the average rate prevailing during the month in which transaction occurred. Revenue recognition Sale of goods: Revenue from sale of products net of returns, is recognised on despatch or appropriation of goods in accordance with the terms of sale and is inclusive of excise duty. Price escalation claims are recognised to the extent there is reasonable certainty of its realisation. Sale of Services: Revenue from services is recognised in accordance with the specific terms of contract on performance. Other operating revenues: Other operating revenues comprise of income from ancillary activities incidental to the operations of the Company and is recognised when the right to receive the income is established as per the terms of the contract. Other income: Interest income is accounted on accrual basis. Dividend income is accounted as and when the right to receive the dividend is established. Government grants Grants in the form of capital/investment subsidy are treated as capital reserve. Export incentives and incentives in the nature of subsidies given by the Government are reckoned in revenue in the year of eligibility. Research and Development Costs Expenditure on the design and production of prototypes is charged to the Statement of Profit and Loss as and when incurred. Product development costs, including knowhow developed / acquired, incurred on new vehicle/ engine platforms, variants on existing platforms and aggregates are recognised as Intangible assets only when product’s technical feasibility is established and amortised over their estimated useful life. Employee benefits Employee benefit expenses include salary, wages, performance incentives, compensated absences, medical benefits, and other perquisites. It also includes post-employment benefits such as provident fund, superannuation fund, gratuity, pension benefits etc. Short term employee benefit obligations are estimated and provided for. Post-employment benefits and other long term employee benefits Defined contribution plans: Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees.


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In respect of provident fund contributions made to a trust administered by the Company, the interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be contributed by the Company and charged to the Statement of Profit and Loss. Defined benefit plans and compensated absences: The Company’s liability towards gratuity, other retirement benefits and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence. Termination benefits: Expenditure on termination benefits (including expenditure on voluntary retirement scheme) is recognised in the statement of profit and loss in the period of incurrence. Provisions and contingencies A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

Provision for product warranties is made for contractual obligations in accordance with the policy in force and is estimated for the unexpired period.

Income taxes Income tax expenses comprise current and deferred taxes. Current tax is determined on income for the year chargeable to tax in accordance with the Income Tax Act, 1961 and after considering credit for Minimum Alternate Tax (MAT) available under the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of adjustments to future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit associated with it will flow to the company resulting in payment of normal income tax. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax assets are recognised for timing differences other than unabsorbed depreciation and carry forward losses only to the extent that there is a reasonable certainty that there will be sufficient future taxable income to realise the assets. Deferred tax asset pertaining to unabsorbed depreciation and carry forward of losses are recognised only to the extent there is a virtual certainty of its realisation. Cash Flow statement Cash flow statements are reported using the indirect method, whereby profit/(loss) before extra-ordinary items/exceptional items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipt or payments. The cash flows from operating, investing and financing activities of the company are segregated based on available information including taxes paid relating to these activities. Certain Income Statement Items Revenue Revenue from operations/total revenue The following tables set forth a summary of the Company's revenue from operations for the periods indicated, in absolute terms and expressed as a percentage of revenue from operations/total revenue:

Fiscal 2012 Fiscal 2013 Fiscal 2014 Rs. in lakhs (%) Rs. in lakhs (%) Rs. in lakhs (%)

Sale of Products - Commercial vehicles - Manufactured 11,84,618.44 86.34 10,31,833.53 77.59 7,93,811.00 75.17


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- Traded 16,348.06 1.19 91,517.14 6.88 1,03,960.68 9.84 - Engines and Gensets 34,921.00 2.55 48,351.63 3.64 41,783.90 3.96 - Spare parts and others 1,55,399.93 11.33 181,458.13 13.64 121,257.30 11.48 Total sale of products 13,91,287.43 101.41 13,53,160.43 101.75 10,60,812.88 100.45 Revenue from services 8,266.77 0.60 13,825.46 1.04 10,248.62 0.97 Other operating revenues - Contract Manufacturing 2,637.88 0.19 11,849.87 0.89 9,430.02 0.89 - Export incentives 8,945.23 0.65 8,286.31 0.62 4,140.48 0.39 - Scrap Sales 7,255.54 0.53 7,501.82 0.56 7,159.13 0.68 - Others 1,248.42 0.09 174.18 0.01 39.68 0.00 Total other operating revenues 20,087.07 1.46 27,812.18 2.08 20,769.31 1.96 Less: Commission, rebate and discounts 47,560.77 3.47 64,942.18 4.87 35,746.28 3.38 Total revenue from operations 13,72,080.50 100.00 13,29,855.89 100.00 10,56,084.53 100.00

Commercial vehicles are the largest component of the Company's revenue and this revenue is generated mainly from sale of MHCVs. See "Business –Product Offerings – Commercial Vehicles" beginning on page 123 for more information regarding the Company's commercial vehicle segments, including contribution from the Company's joint ventures. For Fiscal 2012, 2013 and 2014, sales from commercial vehicles manufactured accounted for 86.34%, 77.59% and 75.17% of total revenue from operations, respectively. The Company generates revenues from LCV’s through sale of LCV’s branded ‘Dost’, Partner, Stile & MiTR which is a brand owned by Ashok Leyland Nissan. In addition, the Company generates revenue which is recognized under "other operating revenue", as fees from Ashok Leyland Nissan for the production of all ‘Dost’, Partner & MiTR vehicles in the Company's Hosur II facility under its contract manufacturing arrangement with Ashok Leyland Nissan. As all sales of the LCVs from Ashok Leyland Nissan originate in the state of Tamil Nadu, Ashok Leyland Nissan is able to avail tax incentives on all sales made within the state of Tamil Nadu. Ashok Leyland Nissan sells the LCVs directly to customers in the state of Tamil Nadu and to the Company for sale by the Company outside the state of Tamil Nadu. The revenue generated by the Company from sale of LCV’s, which it buys from Ashok Leyland Nissan, in states outside the state of Tamil Nadu, is recognized under "commercial vehicles traded". Revenue from engines and gensets is generated mainly from sale of engines for the application in the industrial, marine engines and power industries. For Fiscal 2012, 2013 and 2014, engines and gensets accounted for 2.55%, 3.64% and 3.96% of total revenue from operations, respectively. Revenue from spare parts and others is generated mainly from supply of vehicle kits for the Indian defence logistics sector, the sale of spare parts and the sale of other traded items. For Fiscal 2012, 2013 and 2014, spare parts and others accounted for 11.33%, 13.64% and 11.48% of total revenue from operations, respectively. Revenue from services is generated mainly from annual maintenance contracts and fees from information technology sharing services. For Fiscal 2012, 2013 and 2014, revenues from services accounted for 0.60%, 1.04% and 0.97% of total revenue from operations. Other operating revenue is generated mainly from contract manufacturing, export incentives, scrap sales and others. For Fiscal 2012 other operating revenues accounted for 1.46% of total revenue from operations and for Fiscal 2013 and 2014 it was 2.08% and 1.96% respectively. Other Income Other income comprises of interest income, dividend income, profit on disposal of current investments and other non-operating income.


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Expenses Cost of goods sold Cost of goods sold comprises of cost of materials consumed, purchases of stock-in-trade – traded goods and changes in inventories of finished goods, work-in-process and stock-in-trade. For Fiscal 2012, 2013 and 2014, cost of goods sold accounted for 73.09%, 72.74% and 75.95% of net revenue from operations, respectively. Cost of materials consumed The following tables set forth a summary of the Company's cost of materials consumed, for the periods indicated, in absolute terms and expressed as a percentage of cost of materials:

Fiscal 2012 Fiscal 2013 Fiscal 2014 Rs. in lakhs

% Rs. in lakhs

% Rs. in lakhs

%

Cost of materials consumed - Forgings and Castings 65,312.66 7.16 48,787.84 6.47 33,593.08 5.68 - Plates, sheets, bars, steel tubes & angles 54,563.93 5.98 49,919.13 6.62 37,270.39 6.31 - Tyres, tubes and flaps 91,672.53 10.05 61,361.34 8.14 64,465.26 10.91 - Finished and other items 7,00,824.84 76.83 5,93,903.66 78.77 4,55,678.71 77.11 Less: issues capitalised 225.63 0.02 30.33 0.00 37.97 0.01 Total cost of materials consumed 9,12,148.33 100.0 7,53,941.64 100.00 5,90,969.47 100.0

Finished and other items consist primarily of starter motors, radiators, batteries and fuel pumps. For Fiscal 2012, 2013 and 2014, finished and other items accounted for 76.83%, 78.77%, and 77.11% of cost of materials consumed, respectively. For Fiscal 2012, 2013 and 2014, tyres, tubes and flaps accounted for 10.05%, 8.14% and 10.91% of cost of materials consumed, respectively. For Fiscal 2012, 2013 and 2014, forgings and castings accounted for 7.16%, 6.47%, and 5.68% of the cost of materials consumed, respectively. For Fiscal 2012, 2013 and 2014, plates, sheets, bars, steel tubes and angles accounted for 5.98%, 6.62% and 6.31% of cost of materials consumed, respectively. Purchases of stock-in-trade – traded goods Purchases of stock-in-trade-traded goods are comprised of traded engines, LCVs, spare parts and auto components. Purchases of LCVs by the Company from Ashok Leyland Nissan, which are subsequently sold outside the state of Tamil Nadu, are accounted for as purchase of stock-in-trade. Changes in inventories of finished goods, work-in-progress and stock-in-trade Changes in inventories of finished goods, work-in-progress and stock-in-trade represent the movement in production/purchase and sales. Employee benefits expense Employee benefits expense is comprised of salaries, wages and bonus, contribution to provident, gratuity and other funds and welfare expenses.


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Other expenses Other expenses include consumption of stores and tools, power and fuel, rent, repairs and maintenance, insurance, rates and taxes, selling and administration expenses, service and product warranties, packing and forwarding charges, research and development, diminution in value of investments and bad and doubtful debts. Depreciation and amortisation expense Depreciation and amortisation expense includes the depreciation of the Company's fixed assets and the amortisation of the Company's intangible assets, including computer software and technical knowhow. Finance costs Finance costs are comprised of interest expense, amortisation costs of loan raising/debenture issues expenses and amortisation costs on forward contract premiums. Results of Operations for Fiscal 2012, 2013 and 2014 The summary of the Company's results of operations for Fiscal 2012, 2013 and 2014 is set out in the table below, in absolute terms and as a percentage of total revenue.

Fiscal 2012 Fiscal 2013 Fiscal 2014 Rs. in lakhs % Rs. in lakhs % Rs. in lakhs %

Income Revenue from operations 13,72,080.50 106.00 13,29,855.89 106.02 10,56,084.53 105.50 Less: Excise Duty 81,647.85 6.31 81,735.89 6.52 61,741.86 6.16 Revenue from operations (net) 12,90,432.65 99.69 12,48,120.00 99.50 9,94,342.67 99.34 Other income 4,035.03 0.31 6,235.15 0.50 6,652.07 0.66 Total Revenue 12,94,467.68 100.00 12,54,355.15 100.00 10,00,994.74 100.00 Expenses Cost of materials consumed 9,12,148.33 70.47 7,53,941.64 60.11 5,90,969.47 59.04 Purchase of stock-in-trade - traded goods 50,737.37 3.92 1,31,173.94 10.46 1,26,902.76 12.68 Changes in inventories of finished goods, work in process and stock-in-trade

(16,701.30)

(1.30)

27,197.69

2.17

42,387.10

4.23

9,46,184.40 73.09 9,12,313.27 72.74 7,60,259.33 75.95 Employee benefits expense 1,02,039.42 7.88 107,551.34 8.57 99,967.23 9.99 Finance costs 25,525.32 1.97 37,688.57 3.00 45,292.48 4.52 Depreciation and amortisation expense 35,281.32 2.73 38,078.35 3.04 37,703.60 3.77 Other expenses 1,16,599.34 9.01 140,608.56 11.21 117,459.88 11.73 Total expenses 12,25,629.80 94.68 12,36,240.09 98.56 10,60,682.52 105.96 Profit/(loss) before exceptional items & tax 68,837.88 5.32 18,115.06 1.44 (59,687.78) (5.96) Exceptional items 159.78 0.01 28,955.61 2.31 50,565.89 5.05 Profit/(loss) before tax 68,997.66 5.33 47,070.67 3.75 (9,121.89) (0.91) Tax expense Current tax 7,752.00 0.60 -- -- -- -- Deferred tax 4,648.00 0.36 3,700.00 0.29 (12,060.00) (1.20) Profit for the year from continuing operations 56,597.66 4.37 43,370.67 3.46 2,938.11 0.29

Fiscal 2014 compared to Fiscal 2013 The Company undertook certain corporate restructuring processes resulting in certain of its associate companies being consolidated and merged into the Company. As a consequence of such corporate restructuring and consolidation the Company's group structure in Fiscal 2014 is not comparable to its group structure in Fiscal 2013 and its standalone financial statements for Fiscal 2014 have undergone significant change and as a result are not comparable to its standalone financial statements in Fiscal 2013 or earlier.


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Revenue Total revenue decreased 20.20% to Rs.10,00,994.74 lakhs in Fiscal 2014 from Rs.12,54,355.15 lakhs in Fiscal 2013. Net revenue from operations decreased 20.30% to Rs.9,94,342.67 lakhs in Fiscal 2014 from Rs.12,48,120.0 lakhs in Fiscal 2013, primarily as a result of decrease in sale volume of commercial vehicles, spare parts and also decreases in revenue from services and other operating revenues such as export incentives. Sales of engines and gensets decreased 13.58% in Fiscal 2014 from Fiscal 2013 due to drop in sale volume. Sales of spare parts and others decreased 33.18% to Rs.1,21,257.30 lakhs in Fiscal 2014 from Rs.1,81,458.13 lakhs in Fiscal 2013 due to lower sale in defence kits. This drop is due to lower new vehicle sales as well as vehicles not plying resulting in no repair requirement. This has resulted in drop in private sales significantly. Other income increased 6.69 percent to Rs.6,652.07 lakhs in Fiscal 2014 from Rs.6,235.15 lakhs in Fiscal 2013 due to higher profits on sale of fixed assets. Expenditure Total expenditure decreased by 14.20%, to Rs.10,60,682.52 lakhs in Fiscal 2014 from Rs.12,36,240.09 lakhs in Fiscal 2013. Cost of goods sold decreased 16.67% in line with the decrease in revenue from operations to Rs.7,60,259.33 lakhs in Fiscal 2014 from Rs.9,12,313.27 lakhs in Fiscal 2013 primarily as a result of decrease in volumes. Employee benefits expense decreased 7.05% to Rs.99,967.23 lakhs in Fiscal 2014 from Rs.1,07,551.34 lakhs in Fiscal 2013 primarily due to 5% cut in executive salary and reduction in head count across all levels. However, this reduction is partially offset by wage increases settled with workers across all manufacturing units covering Ennore, Hosur 1, 2 &3, Bhandara and Alwar. During the year, the Company also announced voluntary retirement scheme for executives which was availed by 342 executives. impact of this redundancy amounted to Rs. 4674.9 lakhs which is covered under exceptional items. Other expenses decreased 16.46% to Rs.117,459.88 lakhs in Fiscal 2014 from Rs.140,608.56 lakhs in Fiscal 2013 primarily as a result of lesser service and product warranties and lower power, fuel, repair and maintenance costs, travel, selling and administration expenses and foreign exchange gain. Depreciation and amortisation expense decreased 0.98% to Rs.37,703.60 lakhs in Fiscal 2014 from Rs. 38,078.35 lakhs in Fiscal 2013 primarily due to change in the depreciation for technical knowhow as well as lower depreciation due to disposal of assets in Ennore and Hosur Units. Finance costs increased 20.18% to Rs. 45,292.48 lakhs in Fiscal 2014 from Rs. 37,688.57 lakhs in Fiscal 2013 primarily as a result of increased borrowings to fund working capital and investments. Further during Fiscal 2013 we had the benefit of capitalization of interest relating to projects at Pantnagar, Vellivoyalchavadi and Alwar. Profit before exceptional items and tax As a result of the foregoing, profit before exceptional items and tax decreased 429.49% to a loss of Rs.59,687.78 lakhs in Fiscal 2014 from a profit of Rs.18,115.06 lakhs in Fiscal 2013 primarily as a result of lower sale volumes. Exceptional items The Company recognized an income of Rs.50,565.89 lakhs in Fiscal 2014 way of sale of investments ie., IndusInd Bank shares sale (Rs.30,133.85 lakhs) & Defiance Testing and Engineering Services USA (Rs.6,736.59 lakhs), sale of assets comprising immoveable properties at various locations (Rs.19,327.24 lakhs) which is offset by one time redundancy cost under voluntary retirement scheme for executives (Rs.4,674.94 lakhs) and dimunition in investments value (Rs. 957.32 lakhs). There were also other exceptional items from profit of sale of long term investment amounting to Rs.0.47 lakhs.


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Tax expense Tax expense was lower by 425.95% to a tax asset of Rs. 12060.00 lakhs in Fiscal 2014 from a tax liability of Rs.3,700.00 lakhs in Fiscal 2013 due to the timing difference in depreciation of assets. Profit for the year from continuing operations As a result of the foregoing, profit for the year from continuing operations decreased 93.23% to Rs.2,938.11 lakhs in Fiscal 2014 from Rs.43,370.67 lakhs in Fiscal 2013 due to drop in sale volumes. Fiscal 2013 compared to Fiscal 2012 Revenue Total revenue decreased 3.10% to Rs.12,54,355.15 lakhs in Fiscal 2013 from Rs.12,94,467.68 lakhs in Fiscal 2012 Net revenue from operations decreased 3.28 % to Rs.12,48,120.0 lakhs in Fiscal 2013 from Rs.12,90,432.65 lakhs in Fiscal 2012, primarily as a result of drop in MHCV volumes by 15.6 %. Revenue from engines and gensets increased by 38.46% due to increase in units sold in Fiscal 2013 from Fiscal 2012. Revenue from spare parts and others increase by 16.77% to Rs.1,81,458.13 lakhs in Fiscal 2013 from Rs.1,55,399.93 lakhs in Fiscal 2012 from sales of spare parts and others mainly due to higher spare parts sales both in the domestic and exports markets. However, defence revenues declined during Fiscal 2013. Other income increased 54.53 % to Rs. 6235.15 lakhs in Fiscal 2013 from Rs.4,035.03 lakhs in Fiscal 2012 due to higher interest receipts on inter-corporate deposits. Expenses Total expenses increased 0.87% to Rs.12,36,240.09 lakhs in Fiscal 2013 from Rs.12,25,629.80 lakhs in Fiscal 2012. Cost of goods sold decreased 3.58% to Rs.9,12,313.27 lakhs in Fiscal 2013 from Rs.9,46,184.40 lakhs in Fiscal 2012 primarily as a result of softening of commodity prices during second half of Fiscal 2013. Employee benefits expense increased 5.40% to Rs.1,07,551.34 lakhs in Fiscal 2013 from Rs.1,02,039.42 lakhs in Fiscal 2012 primarily as a result of increase in head count. Other expenses increased 20.59% to Rs.1,40,608.56 lakhs in Fiscal 2013 from Rs.1,16,599.34 lakhs in Fiscal 2012 primarily as a result of higher warranty, packing and forwarding, higher consultancy and advertisement and publicity. Depreciation and amortization expense increased 7.93% to Rs.38,078.35 lakhs in Fiscal 2013 from Rs.35,281.32 lakhs in Fiscal 2012 primarily due to the impact of additions made to fixed assets during Fiscal 2012. Finance costs increased 47.65% to Rs.37,688.57 lakhs in Fiscal 2013 from Rs.25,525.32 lakhs in Fiscal 2012 primarily as a result of increased borrowings to fund capital expenditure and investment requirements. This was partially offset by interest capitalized for various projects during Fiscal 2013. Profit before exceptional items and tax As a result of the foregoing, profit before exceptional items and tax decreased 73.68% to Rs.18,115.06 lakhs in Fiscal 2013 from Rs.68,837.88 lakhs million in Fiscal 2012 due to lower vehicle sales volumes. Exceptional items Income from exceptional items increased substantially to Rs.28,955.61 lakhs in Fiscal 2013 due to profit earned on sale of long term investments as compared to income of Rs.159.78 lakhs due to the sale of several non-current investments in Fiscal 2012.


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Tax expense Tax expense decreased 70.16% to Rs.3,700.00 lakhs in Fiscal 2013 from Rs.12,400.00 lakhs in Fiscal 2012 due to lesser profits. Profit for the year from continuing operations As a result of the foregoing, profit for the year from continuing operations decreased 23.37% to Rs.43,370.67 lakhs in Fiscal 2013 from Rs.56,597.66 lakhs in Fiscal 2012. Liquidity and Capital Resources Our primary liquidity needs have been to finance working capital requirements, including the costs of raw materials and components and salaries, wages and related costs, and capital expenditures. To fund these costs and expenditures, we have relied principally on cash flows from operating activities and short-term and long-term borrowings including external commercial borrowings. For sales to governmental undertakings, including STUs and the Indian defence logistics sector, we typically, offers 30 to 60 day credit terms. We offer credit to our customers on the sales of engines. For commercial vehicles, we introduced a "cash-and-carry" system with effect from May 31, 2009, whereby credit is not offered on private vehicles sales, thus significantly improving liquidity and decreasing working capital levels. Net Working Capital As of March 31, 2014 and March 31, 2013, our net working capital, defined as current assets after deducting current liabilities was a negative of Rs.73,116.70 lakhs and a negative of Rs. 1,01,920.39 lakhs respectively. Receivables due from trade decreased to Rs.1,29,901.05 lakhs as of March 31, 2014 from Rs.1,41,941.13 lakhs as of March 31, 2013 while amounts due to trade payables also decreased to Rs.2,21,415.37 lakhs from Rs.2,48,536.85 lakhs over the same period. As of March 31, 2013 and 2012, net working capital was a negative of Rs.1,01,920.39 lakhs and Rs.53,925.36 lakhs, respectively. Cash Flows The table below summarises the Company’s cash flows for Fiscal 2012, 2013 and 2014: Fiscal 2012 Fiscal 2013 Fiscal 2014

Rs. in lakhs Rs. in lakhs Rs. in lakhs Net cashflow from operating activities (A) 1,14,731.36 72,829.96 55,643.01 Net cashflow (used in) investing activities excluding proceeds from sale of immoveable properties and long term investments being exceptional items

(1,30,866.33) (1,57,896.61) (71,713.12)

Proceeds from sale of immoveable properties and long term investments

25,114.30

41,464.58

60,699.02

Net cashflow from/ (used in) investing activities (B) (105,752.03) (116,432.03) (11,014.10) Net cashflow (used in)/from financing activities (C) (24,112.24) 41,698.00 (44,863.64) Net cash inflow/(outflow) (A+B+C) (15,132.91) (1,904.07) (234.73)

Cash from operating activities and borrowings have been our primary source of liquidity over the past three Fiscals. Our main uses of funds have been for repayments of loans, capital expenditures and dividend payments. Fiscal 2014 compared to Fiscal 2013 As of March 31, 2014, the Company had cash and cash equivalents of Rs.505.90 lakhs, a decrease of Rs.275.19 lakhs, from Rs.781.09 lakhs as of March 31, 2013.


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The Company's net cash generated from operating activities decreased by Rs.17,186.95 lakhs, or 23.60% to Rs.55,643.01 lakhs in Fiscal 2014 compared to Rs.72,829.96 lakhs in Fiscal 2013. The decrease in cash flows from operating activities was primarily due to the losses on account of subdued volumes during the year. The Company's net cash used in investing activities excluding proceeds from sale of immoveable properties and long term investments being exceptional items decreased by Rs.86,183.49 lakhs to Rs.71,713.12 lakhs in Fiscal 2014 from Rs.1,57,896.61 lakhs in Fiscal 2013. This change was primarily attributable to decrease in capital expenditure and long term investments during the year. Further, the Company during Fiscal 2014 has secured a cash inflow of Rs.60,699.02 lakhs on account of sale of immoveable properties and long term investments as exceptional items which is higher than Fiscal 2013 inflow of Rs.41,464.58 lakhs. The Company's net cash used in financing activities increased by Rs.86,561.64 lakhs to cash outflow of Rs.44,863.64 lakhs in Fiscal 2014 as against an inflow of Rs. 41,698.00 lakhs in Fiscal 2013. This change was primarily attributable to higher repayment of long term borrowings with interest in Fiscal 2014. Fiscal 2013 compared to Fiscal 2012 As of March 31, 2013, we had cash and cash equivalents of Rs.781.09 lakhs, a decrease of Rs.1,965.22 lakhs, from Rs.2,746.31 lakhs as of March 31, 2012. Our net cash generated from operating activities decreased by Rs.41,901.40 lakhs to Rs.72,829.96 lakhs in Fiscal 2013 from Rs.1,14,731.36 lakhs in Fiscal 2012. The decrease was primarily attributable to reduction in profits as well as reduction in current liabilities and provisions. Our net cash used in investing activities excluding proceeds from sale of immoveable properties and long term investments being exceptional items increased from Rs.1,30,866.33 lakhs in Fiscal 2012 to Rs.1,57,896.61 lakhs in Fiscal 2013. This change was primarily attributable to an increase in investment purchases, offset by a decrease in assets acquisition. Proceeds from sale of immovable properties and long term investments was higher in Fiscal 2013 at Rs,41,464.58 lakhs as against Rs.25,114.30 lakhs Our net cash used in financing activities changed from an outflow of Rs.24,112.24 lakhs in Fiscal 2012 to an inflow of Rs.41,698.00 lakhs in Fiscal 2013. This change was primarily attributable to an increase in net long-term borrowings and net short term borrowings during 2013. Capital Expenditure Our operations require capital expenditure to maintain capacity and for research and development. Capital expenditure (additions / adjustments to fixed assets) amounted to Rs.62,088.05 lakhs, Rs.76,890.90 lakhs and Rs.89,323.53 lakhs for the Fiscal 2012, 2013 and Fiscal 2014, respectively. We incurred capital expenditure in Fiscal 2014, for the renewal of existing capacity, product development activities and improvement in post-production storage facilities. Further an exchange difference of Rs.22,571.55 lakhs has been capitalized during Fiscal 2014. We incurred capital expenditure in Fiscal 2013 for the development of additional infrastructure and other facilities at Pantnagar for setting up integrated manufacturing facilities. Further we also incurred capital expenditure relating to the manufacturing facility for LCV at Hosur pursuant to our joint venture with Nissan Motors, Japan. We also incurred capital expenditure towards implementing a new ERP system. The rest of the capital expenditure was towards capacity optimization programmes in existing plants. We incurred capital expenditure in Fiscal 2013 for the development of additional infrastructure and other facilities at Pantnagar for setting up integrated manufacturing facilities, the development of manufacturing facility for LCV at Hosur for Ashok Leyland Nissan, product development activities including the new generation driver cabin and the development of a new ERP system. Indebtedness

As of March 31, 2012, 2013 and 2014, the Company had Rs. 2,29,335.11 lakhs, Rs.2,73,784.18 lakhs and Rs.3,29,650.51 lakhs, respectively, of long-term debt (excluding current portion of long-term debt) outstanding. The terms of certain of the Company’s financing documents contain covenants which may limit, among others, the Company’s ability to make any


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substantial change in the nature of business, sell the Company's assets, to hedge pledge within assets as security, making investments and other restricted payments to undertake major capacity expansion, incur additional liens, undergoing change of control or any material change in the management of the Company or its memorandum or articles of association. In addition, certain of these financing documents contain financial covenants, which require the Company to maintain among other things, certain levels of net worth, debt-to-equity ratio, debt service coverage ratio and level of profitability. For the purpose of financial covenant calculation (unless the loan agreements stipulate otherwise), the Company recognizes its borrowings as well as its financial and corporate guarantees as debt. Certain of the Company’s long-term debt is secured by a pari passu first charge over the Company’s fixed assets excluding windmills, windmill-related assets, residential properties and certain other properties aggregating to Rs. 2,90,102 lakhs and all of the Company’s short-term debt (excluding the current portion of long-term debt) is secured by a charge on the Company’s inventory and receivables. See "Risk Factors – Risks associated with the Company’s business – Restrictive financial and other covenants may limit our operations and financial flexibility" beginning on page 39 for more information regarding the Company's financial covenants.

The Company has breached certain covenants under some of its financing documents, including the following:

(1) Under the Barclays Bank Facility Agreement, the Company was to maintain a debt service coverage ratio of a least 1.5 times, however the Company breached this covenant for the testing period ended September 30, 2012. For the testing period ended March 31, 2013, the Company was to maintain the ratio of total outstanding liabilities to tangible net worth of less than 3:1, total debt to EBITDA of maximum of 4.5 times and a minimum total net worth of Rs. 27 billion. The Company had breached these covenants for the testing period ended March 31, 2013.

The Company was to maintain a Total Debt to EBITDA and EBITDA to Interest Expense ratio of less than 4.5 :1 and not less than 2.5:1 respectively. For the testing period ending September 30, 2013 and March 31, 2014, the Company’s Total Debt to EBITDA and EBITDA to Interest Expense ratios (calculated in accordance with revised covenant levels prescribed by the bank) was as under:

Covenant Norms to be complied

Actual as at March 31, 2014

Actual as on September 30, 2013

Long term loans and short term loans to EBITDA max 4.5 times 6.35 7.39 EBITDA to Interest Expense min 2.5 times 1.63 1.85

The Company had obtained a waiver for the breach in relation to the testing period ended September 30, 2012, March 31, 2013 and September 30, 2013. For the testing period ended March 31, 2014, the due date for submission of compliance certificate is July 29, 2014 and the compliance certificate will be submitted accordingly.

(2) Under the Bank of America Facility Agreement, the Company was to maintain a Total Borrowing to EBITDA ratio of less than 3.5 times, a Total Gross Borrowing to Tangible Networth ratio of less than 2.5 times, a EBITDA to Interest Expense of not less than 3.0 times and a debt service coverage ratio of not more than 1.5:1. For the testing period ended March 31, 2012, the Company breached the covenant on total gross borrowings to tangible net worth. For the testing period ending September 30, 2012, the Company’s total gross borrowings tangible net worth ratio was 2.53:1 and its debt service coverage ratio was 1.37 (both calculated in accordance with the methodology prescribed in the loan agreement). The Company has obtained a waiver for the breaches under the Bank of America Facility Agreement for the testing period ended March 31, 2012 and September 30, 2012.

Some of the financial covenants were breached for the testing period ended March 31, 2014, September 30, 2013 and March, 31 2013 as detailed below:

Covenants Norms to be

complied March 31, 2014 September

30, 2013 March 31, 2013

Consolidated Standalone Standalone Standalone Total Borrowings/EBITDA(1)

Less than 3.5 times 24.73 26.0 14.21 4.92

Total Gross Borrowings /Tangible Networth(2)

Less than 2.5 times 3.42 2.49 2.84 2.56


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EBITDA / Interest(3) Not less than 3.0 times

0.41 0.41 0.98 2.42

Debt Service Coverage Ratio(4)

Not less than 1.5 times

0.23 0.23 0.37 0.79

(1) Total borrowings / EBITDA ratio is calculated by dividing the sum of secured and unsecured borrowings and financial guarantees by EBITDA for the last 12 months less other income.

(2) Total gross borrowings / Total net worth ratio is calculated by dividing the sum of secured and unsecured borrowings, financial guarantees, current liabilities and provisions excluding proposed dividends and dividend tax by equity less revaluation reserve and miscellaneous expenditures to the extent not written off.

(3) EBITDA / Interest ratio is calculated by dividing EBITDA for the last 12 months less other income by interest expense.

(4) Debt service coverage ratio is calculated by dividing EBITDA for the last 12 months less tax and less other income by the sum of interest expense and long term loan repayments made during the period excluding long term loan prepayments.

The Company has reported the breach as on March 31, 2013 and September 30, 2013 to the Lenders and sought a waiver for the breach; The Lenders have not accelerated the loan repayments till the date of this Placement Document for breach in any of the earlier testing periods. For the testing period ended March 31, 2014, the due date for submission of the compliance certificate is July 29, 2014. However, the last instalment of the loan under the Bank of America Facility Agreement, which was due on June 30, 2014, was paid by the Company on June 30, 2014. Consequently, the need for filing the compliance certificate does not arise.

(3) Under the DBS Bank Ltd Facility Agreement, there are breaches in financial covenants for the testing period ended

March 31, 2014 as detailed below:

Covenants Norms to be complied Covenants as on March 31, 2014

Covenants as on March 31, 2013

Total Debt / EBITDA

Maximum 4.5 times 6.35 times 3.55 times

EBITDA / Interest Minimum 2.5 times 1.63 times 3.26 times

Total borrowings / EBITDA ratio has increased from 3.55 times in Fiscal 2013 to 6.35 times in Fiscal 2014 and EBITDA / Interest has decreased from 3.26 times in Fiscal 2013 to 1.63 times in Fiscal 2014, due to an increase in borrowings and decrease in EBITDA level.

The due date of submission of compliance certificate for the testing period of March 31, 2014 is July 29, 2014 (4) Under the Mizuho Corporate Bank, Ltd Facility Agreement, the covenants are to be complied based on the

consolidated financial statement. For the testing period ended March 31, 2014, there are breaches in financial covenants as detailed below:

Covenants Norms to be

complied Covenants as on March 31, 2014 (Consolidated)

Covenants as on March 31, 2014 (Standalone)


Debt / EBITDA Maximum 4.5 times 6.82 times 6.35 times 3.55 times EBITDA / Interest

Minimum 2.5 times 1.57 times 1.63 times 3.26 times

On standalone basis, Debt / EBITDA ratio has increased from 3.55 times in Fiscal Year 2013 to 6.35 times in Fiscal Year 2014 and EBITDA / Interest has decreased from 3.26 times in Fiscal Year 2013 to 1.63 times in Fiscal Year 2014, due to an increase in borrowings and decrease in EBITDA level. The due date of submission of compliance certificate for the testing period of March 31, 2014 is July 29, 2014. (5) Under The Bank of Nova Scotia Asia Limited Facility Agreement, the covenants are to be complied based on the consolidated financial statements. For the testing period ended March 31, 2014, there are breaches in financial covenants as detailed below:


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Covenants Norms to be complied Covenants as on

March 31, 2014 (Consolidated)



Debt / EBITDA Maximum 4.5 times 6.82 times 6.35 times 3.55 times EBITDA / Interest Minimum 2.5 times 1.57 times 1.63 times 3.26 times On standalone basis, Debt / EBITDA ratio has increased from 3.55 times in Fiscal 2013 to 6.35 times in Fiscal 2014 and EBITDA / Interest has decreased from 3.26 times in Fiscal 2013 to 1.63 times in Fiscal 2014, due to an increase in borrowings and decrease in EBITDA level. The due date of submission of compliance certificate for the testing period of March 31, 2014 is July 29, 2014. (6) Under The Bank of Tokyo – Mitsubishi UFJ, Ltd Facility Agreement, there are breaches in financial covenants for the testing period ended March 31, 2014 as detailed below: Covenants Norms to be complied Covenants as on

March 31, 2014 Total Borrowings to EBITDA Maximum 4.5 times 20.52 times EBITDA / Interest Minimum 2.5 times 0.50 times Debt Service Coverage Ratio Minimum 1 time 0.63 times Under the Facility Agreement, March 31, 2014 is the first testing period and hence, comparison to previous year levels is not applicable. The compliance certificate is to be submitted within 4 months of the testing period. There can be no assurance that such lenders will consent to granting waivers for breaches, under which circumstances, lenders may declare a default and enforce their remedies under these financing documents, which remedies include acceleration of the repayment of the amounts outstanding under the financing documents, enforcement of any security interests created under the financing documents, the imposition of penalty interest and taking possession of assets given as security in respect of the financing documents, including any pledge of Equity Shares provided as security by any of the promoters or members of the promoter group. Such a declaration of default and acceleration may trigger cross-default provisions under the Company’s other financing agreements. As at the date of this Placement Document, the Company has met its repayment obligations under all of its outstanding financing arrangements, including the payments required under the terms of all the ECB loans. Any acceleration of repayments or cross-acceleration as a result of the declaration of an event of default by lenders or cross-default, as the case may be, will require the approval of the Reserve Bank of India for payments to persons or entities not resident in India.

The Company funds its short-term working capital requirements through cash flow from operating activities and borrowings from banks and other lending institutions. As of March 31, 2014, 2013 and 2012, the Company had Rs. 1,39,381.57 lakhs, Rs.1,61,759.07 lakhs and Rs.80,454.22 lakhs, respectively, of short-term debt (including current portion of long-term debt) outstanding. Furthermore, the Company has a working credit facility of Rs. 1,65,000 lakhs from a consortium of 19 banks led by the State Bank of India of which Rs. 90,000 lakhs is fund based and Rs. 75,000 lakhs is non-fund based limits.

Contractual Obligations The following table sets forth a summary of the maturity profile for the Company’s outstanding long-term debt obligations including current maturity and short-term and long-term debt as of the periods indicated

(Rs.lakhs) Outstanding

as of March 31, 2014

Payment due by March 31, Particulars 2015 2016 2017 2018 onwards

Long-term debt obligation (including current maturities)

4,10,291.27 80,640.76 87,477.49 71,006.46 1,71,166.56

Total short-term debt 58,740.81 58,740.81 -- -- -- Other long-term debt -- -- -- -- --


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Total 4,69,032.08 80,179.98 87,938.30 71,006.46 1,71,166.56 As of March 31, 2014 Rs.2,30,230.3 lakhs of the Company’s indebtedness was secured indebtedness. Contingent Liabilities and Capital Commitments Contingent liabilities and commitments as of March 31, 2014 included the following: Particulars As at March 31, 2014

Amount (Rs. in lakhs)

Contingent liabilities Claims against the Company not acknowledged as debts Sales Tax 11,675.71 Others 2,458.83 Guarantees 18,272.15 The outflow in respect of the above is not practicable to ascertain in view of uncertainties involved. Capital Commitments (net of advances) not provided for 5,057.83 Uncalled liability on party paid shares/investments 0.14 Other commitments Financial support given to certain subsidiaries, joint ventures, etc.*

*The outflow in respect of the above is not practicable to ascertain in view of uncertainties involved.

The Company’s principal contingent liabilities are guarantees. The Company has provided financial guarantees in an aggregate amount of Rs.18,272.15 lakhs on behalf of overseas subsidiary and joint venture companies in order to further its business interests in the commercial vehicle business. These financial guarantees have been given to specific banks to enable certain associate companies to have access to credit facilities to carry on their business without relying on further financial support from promoter companies. .

The Company is required to make royalty payments under certain licence and other agreements with third parties relating to the transfer of technology to the Company. The amount of such royalty payments are determined based on a percentage of sales of products manufactured using such technology.

Except as disclosed above, there are no other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.

Interest coverage ratio

The interest coverage ratio, which we define as profit before tax plus interest charge plus depreciation/interest charge, for Fiscal 2012, 2013, and 2014 was 5.63, 3.42 and 1.71 respectively.

Related Party Transactions

For information on related party transactions, see the section “Financial Statements” beginning on page F-1

Changes in accounting policies

For information relating to the impact of changes to accounting policies, see section "Financial Statements" beginning on page F-1.

Quantitative and Qualitative Disclosure about Market Risks

The Company is exposed to market risks as described below:


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Inflation High inflation in India may significantly affect our results of operations owing to among others things, the resultant increases in our expenses, manpower costs and raw materials costs

Exchange Rate Risks

The Company faces exchange rate risks to the extent that its income and expenses are denominated in currencies other than Rupees. In recent periods, the Company has been reducing its exposure to exchange rate risks by hedging such foreign currency loans and minimizing imports.

Earnings in foreign currency amounted to Rs.1,64,595.37 lakhs, Rs.1,51,776.53 lakhs and Rs.1,29,203.44 lakhs and for Fiscal 2012, 2013 and 2014, respectively, and comprised income earned in US Dollars, which is the major currency other than Rupees in which the Company generates its income. A portion of the Company’s capital equipment, raw material, component and technology costs are denominated in foreign currencies, including US Dollars, Euros and Japanese Yen.

The Company had foreign currency long term loans including current maturities outstanding of Rs.1,75,518.74 lakhs, Rs.1,93,616.50 lakhs and Rs.1,98,718.08 lakhs, and Rs. March 31, 2012, 2013 and 2014, respectively.

Appreciation or depreciation of the Rupee relative to foreign currencies can cause the Company to recognise foreign exchange gains or losses. As the Company's exports are principally denominated in foreign currencies predominantly in US Dollars, income from exports is subject to changes in the applicable exchange rates. If the Indian Rupee appreciates against the relevant foreign currency between the time a sale is recorded and the time payment is received, the Company will recognise a foreign exchange loss. In addition, changes in the value of the Indian Rupee relative to foreign currencies may also have an impact on the Company’s product prices, cost of raw materials and profitability.

With regard to the loan payment exposures mentioned above, the Company believes that as it enjoys receivables in foreign currency, a natural hedge (i.e. whenever the liability increases consequent to the depreciation of the Indian Rupee with respect to the US Dollar, there is also a consequential increase in income by way of receivables in US Dollars at a higher exchange rate). In addition, the Company enters into forward foreign exchange contracts, foreign currency swap contracts and other hedging products aimed at reducing or managing the adverse impact of changes in foreign exchange rates on the Company’s operating results and cash flows. Generally, the counterparty to these contracts and other arrangements is a bank. In accordance with corporate governance measures, the Company has implemented an extensive foreign exchange risk management policy. The board of directors of the Company reviews the hedging policy from time to time and monitors total exposures on a marked to market basis. These hedge arrangements may not cover all of the Company’s exposure to foreign exchange risks.

The Company uses derivative financial instruments such as forward contracts and currency swaps to hedge certain currency exposures, present and anticipated, denominated mostly in US Dollars, Euros, Japanese Yen and British Pounds. Generally, such contracts are taken for exposures materializing in the next 12 months. The Company actively manages its currency / interest rate exposures through a centralised treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically reviewed by management and the Board. The Company believes that the market risk on derivatives is mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk management.

The following table shows the outstanding amounts under the Company's foreign exchange contracts and currency swaps for the periods indicated;

Foreign currency (in millions) As of March 31,

Details Currency 2014 2013

Foreign exchange contracts

USD / INR USD / INR EUR / USD GBP / USD EUR / USD

Sold Bought Bought Bought Sold

USD USD EUR GBP EUR

38.41 87.52 1.21 0.25 --

111.34 170.33 1.80 1.74 10.00


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USD / JPY Sold USD 0.25 1.01 Currency Swaps

USD / JPY

Sold

USD

190.67

298.33 Commodity Price Risks The Company is subject to market risks with respect to commodity prices. The demand for the Company’s commercial vehicles, substantially all of which are powered by diesel fuel, have in the past and will in the future fluctuate, depending on, among other factors, the price of diesel fuel. The cost of producing commercial vehicles, engines, spare parts and ferrous castings are dependent to a significant degree on global prices of steel, aluminium, rubber and other commodities used in the production process. As global steel, aluminium, rubber and other prices have softened recently, input costs have been under control. The Company does not use any derivative financial instruments or futures contracts to hedge exposure to fluctuations in commodities prices. Interest Rate Risks The Company's business is capital intensive and we are exposed to interest rate risks. Our current debt facilities carry interest at variable rates as well as fixed rates with the provision for periodic reset of interest rates. An increase of interest expense may have an adverse effect on our debt funding and our results of operations and financial condition. For further information see "Risk Factors" beginning on page 38. Auditors Qualification There have been no reservations or qualifications or adverse remarks of auditors in the last five fiscals immediately preceding the year of circulation of this Placement Document. Change in accounting policy and its impact During Fiscal 2012, the Company changed its accounting policy to adjust expenditure on issue of debentures against the balance in the securities premium account instead of amortising the same over the period of the borrowing. The impact of this change on the results for Fiscal 2012 was a lower charge of Rs 23.30 lakhs in the statement of profit and loss. In respect of the previously revalued items of fixed assets sold / disposed, the Company has, during Fiscal 2014 changed its earlier accounting practice to adjust the amount in revaluation reserve of such assets against the carrying value of such assets and recognized the consequent profit / sale thereof. The impact of the said change is a higher profit on sale / disposal of immovable properties by Rs. 10756.56 lakhs for Fiscal 2014. Significant developments after March 31, 2014 that may affect our future results of operations Except as stated in this Placement Document, to our knowledge no circumstances have arisen since the date of the last financial statements as disclosed in this Placement Document which materially and adversely affect or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months. Except as stated in this Placement Document, there is no development subsequent to March 31, 2014 that we believe is expected to have a material impact on the earnings per share and book value of the Company.


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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AS PER CONSOLIDATED FINANCIAL STATEMENTS

The following discussion and analysis of our financial condition and results of operations is based on our consolidated audited financial statements as of and for the year ended March 31, 2014, including the schedules and notes thereto and the reports thereon, which appear in the section titled “Financial Statements” beginning on page F-1. You should read the following discussion of our financial condition and results of operations together with our standalone audited financial statements for and as of the Fiscal ended March 31, 2012, 2013 and 2014 and, in each case, the schedules and notes thereto, which appear elsewhere in this Placement Document and are prepared in accordance with the Companies Act and Indian GAAP. Indian GAAP differs in certain material respects from U.S. GAAP and IFRS. Our Fiscal ends on March 31 of each year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year. In addition, data on the sale of vehicles by the Company in all periods included in this Placement Document have also been derived from published reports of SIAM. Some of the information contained in the following discussion, including information with respect to the Company's plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section “Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements and also the section “Risk Factors” for a discussion of certain factors that may affect the Company's business, results of operations or financial condition. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. Restructuring of the Group and Presentation of Financial Information In Fiscal 2014, pursuant to a scheme of amalgamation certain of the Company's associate companies were consolidated and merged with the Company. In Fiscal 2014, the Company has consolidated its 13 direct subsidiaries, excluding the "held for sale" subsidiaries (on a line by line basis) and five joint ventures on a proportionate consolidation basis and has taken into consideration the share of the Company's profits/losses in its four Associates. For further information on the group restructuring and basis of consolidation, see below. As a consequence of such group restructuring, (i) our group structure in Fiscal 2014 is not comparable to our group structure in Fiscal 2013; (ii) we have prepared consolidated financial statements for the first time in Fiscal 2014 and consequently no comparable consolidated financial statements for prior years are available; and (iii) as a result of the restructuring, the Company's Standalone Financial Statements for Fiscal 2014 is not directly comparable to its Standalone Financial Statements in Fiscal 2013 or earlier. Amalgamation of Ashley Holdings Limited, Ashley Investments Limited and Ashok Leyland Project Services Limited with Ashley Services Limited Under a scheme of amalgamation approved by the High Court of Madras by its order dated July 15, 2013 (the “Order”), Ashley Holdings Limited, Ashley Investments Limited and Ashok Leyland Project Services Limited (collectively, the “Transferor Companies”) were amalgamated into Ashley Services Limited with effect from April 1, 2013 and each of Ashley Holdings Limited, Ashley Investments Limited and Ashok Leyland Project Services Limited were dissolved without winding-up. Accordingly, the entire business and whole of the undertaking of the Transferor Companies, including all their assets and properties of whatsoever nature, employees, licenses, agreements or any rights devolving pursuant to such agreements, or holding of investments to appoint directors, all permits, and approvals were transferred and/or deemed to be transferred to and vested in Ashley Services Limited so as to become the properties and assets of Ashley Services Limited. The Order stated that transfer or vesting of the assets of the Transferor Companies shall be subject to the existing charges or hypothecation or mortgages over or in respect of the assets or any part of such assets of the Transferor Companies. Also the liabilities of the Transferor Companies were transferred to and vested in Ashley Services Limited. Further the equity shares held by each of the Transferor Companies in each of the other Transferor Companies stood cancelled. The Scheme became effective on August 19, 2013 upon the filing of the order with the RoC.


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In a subsequent development, Ashley Services Limited became a wholly owned subsidiary of our Company with effect from April 1, 2013. Further on October 29, 2013, a Scheme of Arrangement between Ashley Services Limited and its shareholders and creditors was approved by the High Court of Madras. Pursuant to this scheme of arrangement, a certain portion of the capital reserve amount under the capital reserve account of ASL was required to be adjusted/set-off against a diminution loss recorded in the balance sheet and profit and loss of ASL. Amalgamation of Ashley Services Limited with the Company The High Court of Madras by its order dated March 21, 2014 (the “Order 2”) further approved the scheme of amalgamation of Ashley Services Limited with the Company with effect from July 1, 2013 and the dissolution of Ashley Services Limited without winding-up. Accordingly, the entire business and whole of the undertaking of Ashley Services Limited, including all its assets and properties of whatsoever nature, employees, licenses, agreements or any rights devolving pursuant to such agreements, or holding of investments to appoint directors, all permits, and approvals were transferred and/or deemed to be transferred to and vested in the Company so as to become the properties and assets of the Company. The Order 2 stated that the transfer or vesting of the assets of Ashley Services Limited shall be subject to the existing charges or hypothecation or mortgages over or in respect of the assets or any part of such assets of Ashley Services Limited. Also the liabilities of Ashley Services Limited were transferred to and vested in the Company. For further details in relation to accounting treatment in relation to the amalgamation, see "Financial Statements" beginning on F-1. This scheme became effective on March 27, 2014 on the filing of the Order 2 with the RoC. Each of the Madras Stock Exchange Limited, the BSE Limited and the National Stock Exchange of India Limited by their letters dated December 19, 2013, January 23, 2014 and January 22, 2014, respectively have given their no-objection in relation to the Scheme. The Company has followed the accounting treatment prescribed in the said approved scheme of amalgamation, as follows: The amalgamation of Ashley Services Limited with the Company has been accounted by the Company in the books by using the pooling of interests method in accordance with the scheme of amalgamation and Accounting Standard (AS) 14 as notified under the Companies Act, 1956. Accordingly, the Company has recorded all the assets and liabilities, and reserves of ASL at their respective book values as appearing in the books of ASL as at July 1, 2013, the details of which are as follows:

Particulars Rs. Lakhs

ASSETS Fixed Assets- Tangible 1.81 Non-current investments 126,848.18 Long term loans and advances 3,730.63 Current assets: - Cash and Cash Equivalents 28.04 - Short term loans and advances 9.90 LIABILITIES Current Liabilities 99.99 RESERVES Capital Reserve 8,793.10 Deficit in statement of profit and loss (4.77) Pursuant to such amalgamation and in terms of the said approved scheme, the authorized share capital of the Company stands increased by the authorized share capital of Ashley Services Limited aggregating to Rs.219,210.00 lakhs. The sub division in terms of class of share capital is as follows:

Particulars No of shares Face Value per share Rs. (in lakhs)

Equity Shares 21,356,000,000 1.00 213,560.00


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Redeemable Non- Cumulative Non- ConvertiblePreference Shares

36,500,000 10.00 3,650.00

Non-Convertible Redeemable Preference Shares 2,000,000 100.00 2,000.00

Basis of Consolidation The Consolidated Financial Statements relate to the Company and certain of its subsidiaries (as described below), joint ventures and associates. The Company and its subsidiaries and its jointly controlled entities constitute the group. The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) "Consolidated Financial Statements", Accounting Standard 23 (AS 23), "Accounting for Investment in Associates in Consolidated Financial Statements" and Accounting Standard 27 (AS 27), "Financial Reporting of Interests In Joint Ventures" notified by the Companies (Accounting Standard) Rules, 2006. Since this was the first year of consolidation, there are no comparable consolidated financial statements in Fiscal 203 or earlier. The financial statements of the Company and its subsidiaries have been combined on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions and unrealized profits have been completely eliminated. The difference between the cost of investment in the subsidiaries, over the net assets at the time of acquisition of shares in the subsidiaries is recognized in the financial statements as goodwill or capital reserve (net) as the case may be. The difference between the proceeds from the disposal of investments in the subsidiary and the carrying amount of its assets and liabilities as on the date of disposal is recognized as profit or loss on disposal of investments in the subsidiary in the statement of profit and loss. Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and further movements in their share in the equity, subsequent to the dates of investments as stated above. The following subsidiaries are considered in the consolidated financial statements. S.No Name of the subsidiary company Country of Incorporation % of ownership Interest

March 31, 2014 Direct Subsidiaries

1. Defiance Technologies Limited and its subsidiaries

India 100.00%

2. Hinduja Leyland Finance Limited India 65.84% 3. Ashok Leyland Nissan Vehicles Limited India 51.00% 4. Irizar - TVS Limited (w.e.f, December 10, 2013) India 61.67%

5. Ashok Leyland Wind Energy Limited India 60.00%

6. Gulf Ashley Motor Limited India 91.53%

7. Defiance Testing and Engineering Services Inc. USA (ceased to be a subsidiary w.e.f. September 30,2013)

USA Nil

8. Optare Plc UK and its subsidiaries UK 75.11%

9. Ashok Leyland (UK) Limited UK 100.00%

10. Ashok Leyland (Nigeria) Limited Nigeria 100.00%

11. Ashok Leyland (Chile) Chile 100.00%

12. Mangalam Retail Services Limited India 74.94%


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13. HLF Services Limited India 84.22%

The financial statements of the subsidiary companies used in the consolidation are drawn upto the same reporting date as of the Company i.e. year ended March 31, 2014.

Albonair GmbH, Albonair (India) Private Limited and Avia Ashok Leyland Motors s.r.o (subsidiaries of the Company) have been "held for sale" and therefore, not considered for the preparation of the Consolidated Financial Statements.

The following joint venture companies are considered in the consolidated financial statements.

S.No Name of the Joint Venture Country of Incorporation % of ownership Interest 31-Mar-14

1. Ashley Alteams India Limited India 50.00%

2. Ashok Leyland John Deere Construction Equipment Company Private Limited

India 50.00%

3. Automotive Infotronics Limited (under liquidation)*

India 50.00%

4. Nissan Ashok Leyland Powertrain Limited India 49.00%

5. Nissan Ashok Leyland Technologies Limited India 50.00%

The financial statements of the joint venture companies have been combined by using proportionate consolidation in accordance with Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint ventures".

The financial statements of the joint ventures used in the consolidation are drawn upto the same reporting date as of the Company i.e. year ended March 31, 2014.

* The operations of Automotive Infotronics Limited (under liquidation) are not significant in relation to the group's business.

The following associates have been considered in the preparation of consolidated financial statements of the group in accordance with Accounting Standard 23 "Accounting for Investment in Associates in consolidated financial statements" S.No Name of the Associate Country of Incorporation % of ownership Interest

31-Mar-14 1. Ashok Leyland Defence Systems Limited India 26.00%

2. Ashley Aviation Limited India 49.00%

3. Ashok Leyland (UAE) LLC UAE 49.00%

4. Lanka Ashok Leyland Plc Sri Lanka 27.85%

Held for Sale Subsidiaries The Board of Directors on May 22, 2014 resolved to sell three of the Company's subsidiaries viz., Avia Ashok Leyland Motors Limited s.r.o, Albonair GmbH and Albonair India Private Limited. The decision of the Board of Directors to sell these subsidiaries was to achieve (i) efficiency in fund raising; (ii) reduction in the number of companies; (ii) ease of management; (iv) streamline the holding in various operating companies in the group and (iv) consolidate the talent pool. These subsidiaries were classified as "held for sale" since it was intended that they would be sold within 12 months. The "held for sale" subsidiaries are classified as a current investment in accordance with Accounting Standard (AS 13) for which its carrying amount would be the lower of cost and fair value. It would be possible for the "held for sale" subsidiaries to be reclassified should the Board of Directors consider that the reasons for the such subsidiaries to be classified as a current investment in the "held for sale" category no longer exists, and the effect of the consolidation of such "held for sale" entities on our consolidated financial statements could be materially adverse, particularly since two of these "held for sale"


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companies incurred significant losses in Fiscal 2014 and there can be no assurance that these entities will not incur losses in the future. In addition, the Company has issued an undertaking to a customer of Albonair GmbH under which, the Company has undertaken to indemnify the customer against all costs, losses and damages which the customer may suffer or incur due to a default or delay by Albonair GmbH in performing its obligations towards the customer, due to the financial inadequacy of Albonair GmbH. However, the Company’s absolute cumulative aggregate liability under this undertaking for whatever reasons is limited to the amount of EUR 7 million or 100% of the current yearly turnover of Albonair GmbH to the customer under the agreement, whichever is higher. Significant Accounting Policies A summary of the significant accounting policies applied in the preparation of our financial statements is set out in the notes to the financial statements included elsewhere in this Placement Document. Financial statements are prepared in accordance with Indian GAAP. The financial statements have been prepared on an accrual basis under historical cost convention except for certain categories of fixed assets that are carried at re-valued amounts. All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - non current classification of assets and liabilities. The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialize. Tangible and intangible fixed assets and depreciation/amortization Cost of all civil works (including electrification and fittings) is capitalised with the exception of alterations and modifications of a capital nature to existing structures where the cost of such alteration or modification is Rs 100,000 and below. Other fixed assets, including intangible assets and assets given on lease, where the cost exceeds Rs.10,000 and the estimated useful life is two years or more, is capitalised. Cost of initial spares and tools is capitalised along with the respective assets. Cost of fixed assets is net of eligible credits under CENVAT/VAT Scheme. Expenditure directly related and incidental to construction / development and borrowing costs in para 3 below are capitalised upto the date the assets are ready for their intended use. Certain categories of fixed assets were revalued and are carried at the revalued amounts less accumulated depreciation and impairment loss, if any. Increase in the net book value on such revaluation is credited to “Revaluation Reserve Account”. Upon the sale, disposal, extinguishment of the revalued assets the amount of revaluation reserve against such assets is adjusted against their carrying values and the difference between the sale proceeds of such assets and the adjusted carrying value are recognised in the statement of profit and loss. Tangible fixed assets and intangible assets, that are not yet ready for their intended use, are carried at cost comprising direct cost, and other incidental / attributable expenses and reflected under Capital work in progress / Intangible assets under development, respectively. Assets are depreciated / amortised, as below, on straight line basis:

(a) Leasehold land over the period of lease; (b) Leasehold land and buildings, as revalued, is calculated on the respective revalued amounts, over the

balance useful life as determined by the valuers in the case of buildings and as per (a) above in the case of land;


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(c) Buildings, plant and machinery (except assets subject to impairment) and other assets, including assets

given on lease and assets in leased premises / customer premises, over their estimated useful lives or lives derived from the rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is lower;

(d) Assets subject to impairment, on the asset's revised carrying amount, over its remaining useful life. (e) Intangible assets are amortized over their estimated useful life.

Depreciation / amortisation is providedon a pro-rate basis from the month the assets are put to use during the financial year. In respect of assets sold or disposed off during the year, depreciation / amortisation is provided upto the month of sale or disposal of the assets. The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount exceeds the recoverable amount. Borrowing costs Borrowing costs attributable to the acquisition, construction or production of qualifying assets, are added to the cost of those assets, upto the date when the assets are ready for their intended use. Expenditure incurred on issue of debentures is adjusted against securities premium account. Expenditure incurred on raising loans is amortised over the period of such borrowings. Premium paid on prepayment of borrowing is amortised over the unexpired period thereof or six months, whichever is less. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred. Investments Long term investments are carried individually at cost, However, provision for diminution is made to recognise a decline, if any, other than temporary, in the carrying value of the investment. Current investments are carried individually at lower of cost and fair value. Repossessed Stocks Repossessed assets are valued at net realizable value Receivables under financing activity All loan exposures to borrowers with instalment structure are stated at the full agreement value after netting off: a) Unearned income b) Collections appropriated up to the year end and c) Loan assigned Provision for standard asset is made as per internal estimates, based on past experience, realization of security, and other relevant factors, on the outstanding amount of standard assets subject to minimum provisioning requirement specified by RBI. Provision for non-performing assets is made subject to minimum provisioning requirements as specified by RBI Inventories Inventories are valued at lower of cost and net realisable value; cost being ascertained on the following basis:

Stores, raw materials and components and work-in-progress: On monthly moving weighted average basis.


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Spares, consumable tools : weighted average basis In respect of works-made components, cost includes applicable production overheads. Finished / trading goods: under absorption costing method. Cost includes taxes and duties and is net of eligible credits under CENVAT/VAT Schemes. Cost of patterns and dies is amortised over a period of five years. Surplus / obsolete / slow moving inventories are adequately provided for. Foreign currency transactions and derivatives Foreign currency transactions are recorded at the rates prevailing on the date of the transaction. Monetary assets and liabilities in foreign currency are translated at closing rate. Exchange differences arising on settlement or translation of monetary items other than those mentioned below are recognised as income or expense in the Statement of Profit and Loss in the period it arises. Exchange differences on translation or settlement of long term foreign currency monetary items (i.e. whose term of settlement exceeds twelve months from date of its origination) at rates different from those at which they were initially recorded or reported in the previous financial statements, insofar as it relates to acquisition of depreciable assets are adjusted to the cost of the assets and depreciated over remaining useful life of such assets. In other cases, these are accumulated in “Foreign currency monetary item translation difference account” and amortized by recognition as income or expense in each period over the balance term of such items till settlement occurs but not beyond March 31, 2020. We use foreign currency forward contracts to hedge our risks associated with foreign currency fluctuations relating to firm commitments and highly probable forecast transactions. We designate such forward contracts in a cash flow hedging relationship by applying the hedge accounting principles set out in Accounting Standard- 30 “Financial Instruments-Recognition and measurement” issued by ICAI. Gains and losses on these forward contracts designated as “effective Cash flow hedges” are recognised in the “Hedge Reserve Account” till the underlying forecasted transaction occurs. Any ineffective portion however, is recognised immediately in the statement of profit and loss. Gains and losses on all other derivatives (including forward contracts not designated as cash flow hedge) are recognised in the statement of profit and loss in the period it arises. Premium or discount on forward contracts is amortized over the life of the contract. Investments in equity capital of companies registered outside India are carried in the balance sheet at the rates prevailing on the date of the transaction. Income/expenditure of overseas branches are recognised at the average rate prevailing during the month in which transaction occurred. Revenue recognition Sale of goods: Revenue from sale of products net of returns, is recognized on despatch or appropriation of goods in accordance with the terms of sale and is inclusive of excise duty. Price escalation claims are recognized to the extent there is reasonable certainty of its realization. Sale of Services: Revenue from services is recognised in accordance with the specific terms of contract on performance. Income from financial services: Interest / finance income from assets on finance / loan included in revenue from operations represents interest income arrived at based on internal rate of return method. Interest income is recognised as it accrues on a time proportion basis taking into account the amount outstanding and the rate applicable, except in the case of nonperforming assets (NPA) where it is recognised upon realisation.


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Income on securitisation/assignment: (i) In respect of transfer of financial assets by way of securitisation or bilateral assignments, the said assets are derecognized upon contractual transfer thereof, and transfer of substantial risks and rewards to the purchaser. The gain arising on transfer of financial assets by way of securitisation or bilateral assignments, if received in cash, is amortised over the tenure of the related financial assets, and if received by way of excess interest spread, is recognised based on the contractual accrual of the same. Loss on sale, if any is charged to statement of profit and loss immediately at the time the sale is effected (ii) upfront income pertaining to loan origination is accounted for upfront as and when it becomes due. Income from energy generated: Revenue from energy generated through windmills is recognized based on the contracted rates with the customers and the credit granted by the regulatory authorities to the said customers for units generated. Other operating revenue: Other operating revenues comprise of income from ancillary activities incidental to our operations and is recognised when the right to receive the income is established as per the terms of the contract. Other income: Interest income is accounted on accrual basis. Dividend income is accounted as and when the right to receive the dividend is established. Government grants Grants in the form of capital/investment subsidy are treated as capital reserve. Export incentives and incentives in the nature of subsidies given by the Government are reckoned in revenue in the year of eligibility. Employee benefits Employee benefit expenses include salary, wages, performance incentives, compensated absences, medical benefits, and other perquisites. It also includes post-employment benefits such as provident fund, superannuation fund, gratuity, pension benefits etc. Short term employee benefit obligations are estimated and provided for. Post-employment benefits and other long term employee benefits Defined contribution plans: Our contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees. In respect of provident fund contributions made to a trust administered by us, the interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be contributed by us and charged to the statement of profit and loss. Defined benefit plans and compensated absences: The Company’s liability towards gratuity, other retirement benefits and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period of occurrence. Termination benefits: Expenditure on termination benefits (including expenditure on voluntary retirement scheme) is recognised in the statement of profit and loss in the period of incurrence. Provisions and contingencies A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


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Provision for product warranties is made for contractual obligations in accordance with the policy in force and is estimated for the unexpired period. Provision for non-performing assets and doubtful assets Non-performing assets (‘NPA’) including loans and advances and receivables are identified as bad/doubtful based on the duration of the delinquency. NPA provisions are made based on the management’s assessment of the degree of impairment and the level of provisioning meets the Non-Banking Financial (Non-Deposit Accepting or Holding). Companies Prudential Norms (Reserve Bank) Directions, 2007,as amended by Reserve Bank of India from time to time. These provisioning norms are considered the minimum and additional provision is made based on perceived credit risk where necessary. Provision for standard assets Provisions for standard assets are made as per the RBI notification DNBS.PD.CC.No.207/3.02.002/2010-11 dated January 17, 2011.

Certain Income Statement Items Revenue Revenue from operations/total revenue The following table set forth a summary of our revenue from operations for the Fiscal 2014:

Fiscal 2014 (Rs. lakhs) Sale of products

Commercial vehicles manufactured ................. 861,588.59 Commercial vehicles traded 105,873.08 Construction Equipment 3,642.47 Engines and gensets .......................................... 52,364.97 Spare parts and others ....................................... 127,769.97

Total sale of products (A) ..................................... 1,151,239.08 Revenue from services (B) ..................................... 28,276.40 Other operating revenues

Contract manufacturing .................................... 1,269.80 Export incentives .............................................. 4,473.69 Scrap sales ........................................................ 7,254.55 Others ............................................................... 2,252.36

Total other operating revenues (C) ...................... 15,250.40 Interest / Finance Income relating to vehicle financing (D) 51,581.58 Income from energy generated (E) 2,338.25 Total revenue from operations (before commission, rebate and discounts) (A+B+C+D+E) 1,248,685.71

Less: Commission, rebate and discounts .......... 37,247.82 Total revenue from operations ............................. 1,211,437.89

Commercial vehicles are the largest component of the Company's revenue and this revenue is generated mainly from sale of MHCVs. For further information, see "Business –Product Offerings – Commercial Vehicles" beginning on page 123, for more information regarding the Company's commercial vehicle segments, including contribution from the Company's joint ventures. As all sales of the LCVs from Ashok Leyland Nissan originate in the state of Tamil Nadu, Ashok Leyland Nissan is able to avail tax incentives on all sales made within the State of Tamil Nadu. Ashok Leyland Nissan sells the LCVs directly to customers in the State of Tamil Nadu and to the Company for sale by the Company outside the state of Tamil Nadu. The


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revenue generated by the Company from sale of LCV’s, which it buys from Ashok Leyland Nissan, in states outside the state of Tamil Nadu, is recognized under "Commercial vehicles traded." The Company generates revenues from LCV’s through sale of LCV’s branded ‘Dost’, Partner, Stile & MiTR which is a brand owned by Ashok Leyland Nissan. In addition, the Company generates revenue which is recognized under "other operating revenue", as fees from Ashok Leyland Nissan for the production of all ‘Dost’, Partner & MiTR vehicles in the Company's Hosur II facility under its contract manufacturing arrangement with Ashok Leyland Nissan. Revenue from engines and gensets is generated mainly from sale of engines for industrial, marine and genset applications. Revenue from spare parts and others is generated mainly from supply of vehicle kits for the Indian defence logistics sector, the sale of spare parts and the sale of other traded items. Revenue from services is generated mainly from annual maintenance contracts, and fees from information technology sharing services. Other operating revenue is generated mainly from contract manufacturing, export incentives, scrap sales and others. Other income comprises of interest income, dividend income, profit on disposal of current investments and other non-operating income Interest/financing income is mainly from the financing activities conducted by our subsidiary HLFL. Expenses The following table sets forth a summary of our expenditure for the Fiscal 2014:

Fiscal 2014 (Rs. lakhs)

Expenses Cost of materials consumed .............................. 703,011.90 Cost of services availed………. 1,278.52 Purchases of stock-in-trade – traded goods ...... 73,250.47 Changes in inventories of finished goods, work-in-progress and stock-in-trade

...................................................................... 36,306.25 Cost of goods sold ................................................... 813,847.14 Employee benefits expense ...................................... 134,558.33 Finance costs ............................................................ 80,548.82 Depreciation and amortization expense ................... 52,996.51 Other expenses ......................................................... 158,064.13 Total expenses ........................................................ 1,240,014.93

Cost of materials consumed Cost of material consumed primarily relates to the operations of the Company. For further details, see "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Standalone Financial Statements - Certain Income Statement Items" beginning on page 76.


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Purchases of stock-in-trade – traded goods Purchases of stock-in-trade traded goods are comprised of traded engines, LCVs, spare parts and auto components. Purchases of ‘Dost’ LCVs by the Company from Ashok Leyland Nissan, which are subsequently sold outside the state of Tamil Nadu, are accounted for as purchase of stock-in-trade. Changes in inventories of finished goods, work-in-progress and stock-in-trade Changes in inventories of finished goods, work-in-progress and stock-in-trade represent the movement in production / purchase and sales. Employee benefits expense Employee benefits expense is comprised of salaries, wages and bonus, contribution to provident, gratuity and other funds and welfare expenses. Other expenses Other expenses include consumption of stores and tools, power and fuel, rent, repairs and maintenance, insurance, rates and taxes, selling and administration expenses, service and product warranties, packing and forwarding charges, research and development, diminution in value of investments and bad and doubtful debts. Depreciation and amortisation expense Depreciation and amortisation expense includes the depreciation of the Company's fixed assets and the amortisation of the Company's intangible assets, including computer software and technical knowhow. Finance costs Finance costs are comprised of interest expense, amortisation costs of loan raising / debenture issues expenses and amortisation costs on forward contract premiums. Results of Operations for Fiscal 2014 The summary of our results of operations for Fiscal 2014, as reflected in our consolidated audited financial statements for Fiscal 2014, is set out in the table below:


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Fiscal 2014 (Rs. lakhs)

Income Revenue from operations ......................................... 1,211,437.89

Less: Excise duty .............................................. 62,765.93 Revenue from operations (Net) ................................ 1,148,671.96 Other income ........................................................... 9,244.94 Total revenue .......................................................... 1,157,916.90 Expenses

Cost of materials consumed .............................. 703,011.90 Cost of services availed………. 1,278.52 Purchases of stock-in-trade – traded goods ...... 73,250.47 Changes in inventories of finished goods, work-in-progress and stock-in-trade

...................................................................... 36,306.25 Cost of goods sold and services availed ................ 813,847.14 Employee benefits expense ...................................... 134,558.33 Finance costs ............................................................ 80,548.82 Depreciation and amortization expense ................... 52,996.51 Other expenses ......................................................... 158,064.13 Total expenses ........................................................ 1,240,014.93 Loss before exceptional items and tax .................. (82,098.03) Exceptional items ..................................................... 52,077.41 Loss before tax ....................................................... (30,020.62) Tax Expense ........................................................... - Current tax ........................................................... 5,465.50 - Deferred tax ......................................................... (12,315.34) Loss after tax from continuing operations ........... (23,170.78) Share of profit of associates (net) 992.43 Minority interest (5,766.11) Loss for the year (16,412.24)

Total revenue in Fiscal 2014 amounted to Rs. 1,157,916.90 lakhs. Net revenue from operations in Fiscal 2014, amounted to Rs. 1,148,671.96 lakhs. Commercial vehicles are the largest component of our revenue and this revenue is generated mainly from sale of MHCVs and LCVs. For Fiscal 2014, sales from commercial vehicles manufactured accounted for 71.12% of total revenue from operations. For Fiscal 2014, revenue from construction equipment accounted for 0.30% of the total revenue from operations. Revenue from engines and gensets is generated mainly from sale of engines for the application in the industrial, marine engines and power industries. For Fiscal 2014, engines and gensets accounted for 4.32% of total revenue from operations. For Fiscal 2014, revenue from spare parts and others accounted for 10.55% of total revenue from operations. For Fiscal 2014, revenue from services accounted for 2.33% of total revenue from operations. For Fiscal 2014, our other operating revenue accounted for 1.26% of total revenue from operations.


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Other Income For Fiscal 2014, income from interest / finance income relating to vehicle financing accounted for 4.26% of total revenue from operations. Income from energy generated is mainly generated from sale of CERS. For Fiscal 2014, the energy generated accounted for 0.19% of the total revenue from operations. Expenses Cost of goods sold comprises of cost of materials consumed, cost of services availed, purchases of stock-in-trade – traded goods and changes in inventories of finished goods, work-in-process and stock-in-trade. Cost of materials consumed For Fiscal 2014, the cost incurred by us of materials consumed accounted for 60.71% of total income. Cost of services availed For Fiscal 2014, the cost incurred by for cost of services availed accounted for 0.11% of total income. Purchases of stock-in-trade – traded goods For Fiscal 2014, the cost incurred by us for purchases of stock-in-trade goods accounted for 6.33% of total income. Changes in inventories of finished goods, work-in-progress and stock-in-trade Changes in inventories of finished goods, work-in-progress and stock-in-trade represent the movement in production/purchase and sales and cost incurred by us thereto accounted for 3.14% of total income. Employee benefits expense For Fiscal 2014, employee benefits expense accounted for 11.62% of total income. Other expenses For Fiscal 2014, other expenses accounted for 13.65% of total income. Depreciation and amortisation expense For Fiscal 2014, depreciation and amortisation expense accounted for 4.58% of total income. Finance costs For Fiscal 2014, finance costs accounted for 6.96% of total income. Loss before exceptional and extraordinary items and tax The loss before exceptional and extraordinary items and tax was primarily a result of lower vehicle sale volumes. For Fiscal 2014, the loss before exceptional and extraordinary items and tax amounted to Rs. 82,098.03 lakhs. Exceptional items We recognized profit of Rs. 30133.85 lakhs and Rs. 7830.78 lakhs due to sale of long term investments in Indusind Bank Limited, Defiance Testing and Engineering Services Inc. USA respectively in Fiscal 2014. Due to payment of voluntary retirement compensation of Rs. 4,694.42 lakhs under the Company’s voluntary retirement scheme (2013) and profit earned as


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a result of sale of immovable properties after the change of Company’s accounting practice to adjust the amount in revaluation reserve of such assets against the carrying value of such assets of Rs. 19,294.39 lakhs in Fiscal 2014. The diminution in value of long term investment in AVIA Ashok Leyland s.r.o amounted to Rs. 487.66 lakhs . There were also other exceptional items from sale of long term investments amounting to Rs. 0.47 lakhs. Tax expense Tax expense including the expense from current tax amounted to Rs. 5,465.50 lakhs and deferred tax asset amounted to Rs. 12,315.34 lakhs in Fiscal 2014. Loss for the year before minority interest from continuing operations As a result of the foregoing, loss for the year (before minority interest) from continuing operations amounted to Rs. 23,170.78 lakhs in Fiscal 2014. Share of profit of associate (net) The net share of profit of associate during Fiscal 2014 was Rs. 992.43 lakhs. Minority Interest Share of minority interest for Fiscal 2014 amounted to Rs. 5,766.11 lakhs. Liquidity and Capital Resources Our primary liquidity needs have been to finance working capital requirements, including the costs of raw materials and components and salaries, wages and related costs, and capital expenditures. To fund these costs and expenditures, the Company has relied principally on cash flows from operating activities and short-term and long-term borrowings including external commercial borrowings. For sales to governmental undertakings, including STUs and the Indian defence logistics sector, we typically, offer 30 to 60 day credit terms. We offer credit to our customers on sales of engines and spares. We introduced a "Cash-and-Carry" system with effect from May 31, 2009, whereby credit is not offered on all other vehicles sales, which has improved liquidity and decreasing working capital levels. Working Capital As of March 31, 2014, our net working capital, defined as current assets after deducting current liabilities was a negative of Rs. 53,608.95 lakhs. Receivables due from trade was Rs. 138,108.69 lakhs as of March 31, 2014, while amounts due to trade payable was Rs. 259,243.96 lakhs over the same period. Cash Flows The table below summarises our cash flows for Fiscal 2014:

Fiscal 2014 (in lakhs)Net cash flow from / (used in) operating activities………………………………….. (10,400.34) Net cash flow from / (used in) investing activities .... (37,725.99) Net cash flow from / (used in) financing activities .... 46,129.46 Net cash flow inflow / (outflow) (1,996.87) Cash from operating activities and borrowings have been our primary sources of liquidity. Our main uses of funds have been for repayments of loans, interest payment and voluntary retirement compensation paid.


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Fiscal 2014 As of March 31, 2014, we had cash and cash equivalents of Rs. 10,637.31 lakhs. As of March 31, 2014, the Company had cash and cash equivalents of Rs. 10,637.31 lakhs, a net decrease of Rs. 2,037.33 lakhs from the opening balance of Rs. 12,674.64 lakhs. Net cash used in operating activities was Rs. 10,400.34 lakhs. This was due to the non availability of profits as well as the increase in working capital. Net cash used in investing activities was at Rs. 37,725.99 lakhs driven predominantly by payments for purchase of assets amounting to Rs. 40,805.06 lakhs, purchase of long-term investments amounting to Rs. 53,479.32 lakhs and others Rs.5,234.82 lakhs offset by proceeds from sale of intangible assets and long term investments being exceptional items Rs. 61,793.21 lakhs. Net cash inflow from financing activities was at Rs. 46,129.46 lakhs primarily attributable to borrowings and interest payments. Capital Expenditure Our operations require capital expenditure to maintain and increase capacity and for research and development. Capital expenditure (additions/adjustments to fixed assets) amounted to Rs. 130,564.71 lakhs for Fiscal 2014. We incurred capital expenditure in Fiscal 2014, for the renewal of existing capacity, product development activities and improvement in post-production storage facilities. Indebtedness As of March 31, 2014, we had Rs. 549,118.41 lakhs, of long-term debt (excluding current maturities of long-term debt) outstanding. The terms of certain of our financing documents contain covenants which may limit, among others, our ability to make any substantial change in the nature of business, sell our assets, to pledge assets as security, making investments and other restricted payments to undertake major capacity expansion, incur additional liens, undergoing change of control of the Company or any material change in the management or its memorandum or articles of association. In addition, certain of these financing documents contain financial covenants, which require to maintain among other things, a certain levels of net worth, debt-to-equity ratio, debt service coverage ratio and level of profitability. See "Risk Factors – Risks associated with the Standalone business – Restrictive financial and other covenants may limit our operations and financial flexibility" beginning on page 39 for more information regarding the Company's financial covenants. The Company has breached certain covenants under some of its financing documents. See "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Standalone Financial Statements - Indebtedness" beginning on page 83. There can be no assurance that such lenders will consent to granting waivers for breaches, under which circumstances, lenders may declare a default and enforce their remedies under these financing documents, which remedies include acceleration of the repayment of the amounts outstanding under the financing documents, enforcement of any security interests created under the financing documents, the imposition of penalty interest and taking possession of assets given as security in respect of the financing documents, including any pledge of Equity Shares provided as security by any of the promoters or members of the promoter group. Such a declaration of default and acceleration may trigger cross-default provisions under the Company’s other financing agreements. As at the date of this Placement Document, the Company has met its repayment obligations under all of its outstanding financing arrangements, including the payments required under the terms of the ECB Loans. See “Risk Factors – Risks associated with the Company’s Business – The Company has breached certain covenants under some of its financing arrangements. The lenders may declare a default and enforce their remedies under these financing documents, and lenders under the Company’s other agreements that contain cross-default provisions could take similar actions. If such remedies are exercised, the Company’s cash flow and results of operations could be adversely affected.” Any acceleration of repayments or cross-acceleration as a result of the declaration of an event of default by lenders or cross-


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default, as the case may be, will require the approval of the Reserve Bank of India for payments to persons or entities not resident in India. The Company funds its short-term working capital requirements through cash flow from operating activities and borrowings from banks and other lending institutions. As of March 31, 2014, the Company had Rs. 300,877.79 lakhs, of short-term debt (including current maturities of long-term debt) outstanding. Certain Subsidiaries As of the previous financial year, our subsidiaries Optare Plc UK, Ashok Leyland Nissan Vehicles Limited, Defiance Technologies Limited, Irizar -TVS Limited, Albonair GmbH, Albonair India Private Limited and Avia Ashok Leyland Motors s.r.o, incurred losses. Of these loss making subsidiaries, Avia Ashok Leyland Motors s.r.o and Albonair GmbH are being "held for sale". Additionally our subsidiaries Optare Plc UK and Defiance Technologies Limited also have a negative net worth. The following table sets forth a summary of the losses incurred by our subsidiaries and their net worth as of their last financial year:

Subsidiary Losses (Rs. in lakhs) Networth (Rs. in lakhs) Ashok Leyland Nissan Vehicles Limited 17,451.30 44,114.07 Defiance Technologies Limited 1,574.11 (2,590.67) Optare Plc UK* 7,513.37 (11,644.56) Irizar - TVS Limited 356.19 2,141.1 Mangalam Retail Services Limited* 0.14 11.94 Ashok Leyland UK Limited 21.99 80.67 Held for sale Albonair India Private Limited 59.27 820.03 Albonair GmbH** 6,711.56 3,453.56 Avia Ashok Leyland Motors s.r.o 8,712.00 14,352.00 *Based on unaudited financial statements.

Investors are advised to not place any undue reliance on the information stated in the table above.

Contractual Obligations The following table sets forth a summary of the maturity profile for the Company’s outstanding long-term debt obligations (including current maturities) as of March 31, 2014:

Payments due by period Rs. lakhs Repayment within one year 174,428.99 Repayment after one year 549,118.41 Total 723,547.40 The following table sets forth the Company’s short-term and long-term debt as of the periods indicated: As of March 31, 2014 Rs, lakhs Total short-term debt 126,448.80 Total current maturities of long-term debt 174,428.99 Other long-term debt 549,118.41 Total 849,996.20 As of March 31, 2014 Rs. 583,561.54 lakhs of the Company’s indebtedness was secured indebtedness. Our total debt (long term, current maturities of long term and short term) is Rs.8,49,996.20 lakhs and includes total debt (long term, current maturities of long term and short term) debt of Hinduja Leyland Finance Limited amounting to Rs.2,93,361.96 lakhs.


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Contingent Liabilities and Commitments Contingent liabilities and commitments as of March 31, 2014 included the following: Particulars As at March 31, 2014

Amount(Rs. in lakhs)

Contingent liabilities Claims against the Company not acknowledged as debts (net) Sales Tax 11,680.60 Others 2,458.83 Guarantees 158.44 The outflow in respect of the above is not practicable to ascertain in view of uncertainties involved.

Capital Commitments (net of advances) not provided for [including Rs,1,791.98 lakhs in respect of intangible assets]

9,169.00

Uncalled liability on party paid shares/investment 0.14 Export obligation under the EPCG scheme 82,266.09 Other commitments Financial support given to certain subsidiaries, joint ventures, etc* * The outflow is not practicable to ascertain in view of the uncertainties involved

We are required to make royalty payments under certain licence and other agreements with third parties relating to the transfer of technology us. The amount of such royalty payments are determined based on a percentage of sales of products manufactured using such technology. Except as disclosed above, there are no other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors. Interest coverage ratio The interest coverage ratio, which we define as profit before tax plus interest charge plus depreciation/interest charge, for Fiscal 2014 was 1.4869 times. Related Party Transactions For information on related party transactions, see the section “Financial Information” beginning on page F-1. Auditors Qualification There have been no reservations, qualifications or adverse remarks in the Fiscal immediately preceding the year of circulation of this Placement Document. Change in accounting policy There has been no change to our accounting policy in Fiscal 2014. Quantitative and Qualitative Disclosure about Market Risks We are exposed to market risks from changes in foreign exchange rates, interest rates and certain commodity prices.


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Seasonality and Cyclicality The sales volumes and prices for our vehicles are influenced by the cyclicality and seasonality of demand for these products. Demand for trucks is generally lower in the first half of a Fiscal and higher in the second half of a Fiscal due to the harvest season and increased movement of agricultural products, as well as the desire of customers to take advantage of certain tax benefits before the year end. In addition, customers demand for vehicles is generally depressed towards the end of a calendar year, particularly in December, as customers seek to avoid vehicles purchased being classified as older models based on the year of manufacture. As a result, customers prefer to delay the acquisition of a vehicle to January of the next calendar year. We believe that the cyclical nature of demand for commercial vehicles in India can be mitigated with longer periods of growth due to the likely sustainability of economic growth, improvement in road infrastructure, including the execution of several National Highways Authority of India projects, greater availability and affordability of financing for vehicles and the introduction of more stringent emissions standards. Inflation Risk High inflation in India may significantly affect our results of operations owing to among other, the resultant increases in our expenses, manpower costs and raw materials costs Exchange Rate Risks We face exchange rate risks to the extent that its income and expenses are denominated in currencies other than Rupees. In recent periods, we have been reducing our exposure to exchange rate risks by hedging such foreign currency loans and minimizing imports. For further details our the exchange rate risks that we may be subject to, See "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Standalone Financial Statements - Exchange Rate Risk" beginning on page 87. Commodity Price Risks We are subject to market risks with respect to commodity prices. The demand for our commercial vehicles, substantially all of which are powered by diesel fuel, have in the past and will in the future fluctuate, depending on, among other factors, the price of diesel fuel. The cost of producing commercial vehicles, engines, spare parts and ferrous castings are dependent to a significant degree on global prices of steel, aluminium, rubber and other commodities used in the production process. As global steel, aluminium, rubber and other prices have softened recently, input costs have have reduced. We do not use any derivative financial instruments or futures contracts to hedge exposure to fluctuations in commodities prices. Interest Rate Risks As our business is capital intensive, we are exposed to interest rate risks. Interest rates for borrowings have been volatile in India in recent periods. The increase of interest expense may have an adverse effect on our debt funding and our results of operations and financial condition would also be affected. Our current debt facilities carry interest at variable rates as well as fixed rates with the provision for periodic reset of interest rates. Although we may decide to engage in interest rate hedging transactions or exercise any right available to us under our financing arrangements to terminate the existing debt financing arrangement on the respective reset dates and enter into new financing arrangements, there can be no assurance that we will be able to do so on commercially reasonable terms, that our counterparties will perform their obligations, or that these agreements, if entered into, will protect us adequately against interest rate risks.


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INDUSTRY

The information in this section is derived from various publicly available sources, government publications, other industry sources and market data. The information in this section has not been independently verified by the Company, the Joint Global Coordinator and Book Running Lead Managers, or their respective legal, financial or other advisors, and no representation is made as to the accuracy of this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and accordingly, investment decisions should not be based on such information. Overview of the Indian Economy India is the fourth largest economy in the world, after the United States of America, European Union and China. (Source: CIA World Factbook). As per the advance estimates released by the Central Statistics Office (CSO), the Indian economy is estimated to have registered a growth rate of 4.7% in 2013-14 (in terms of GDP at factor cost at constant prices). The growth is significantly lower in comparison to the decadal average of 7.6% during the period 2004-05 to 2013-14. (Source: Macro-Economic Framework Statement, 2014-15). A moderate recovery of the Indian economy is expected to set in during 2014-2015 broadly in line with the RBI’s indicated projections in January 2014. The pace of recovery, nevertheless, is likely to be modest. The recovery is likely to be supported by investment activity picking up due to part resolution of stalled projects and improved business and consumer confidence. In addition, external demand is expected to improve further during 2014-15 stemming from encouraging prospects for global growth, notwithstanding some recent loss in export growth momentum. (Source: Macro-economic and Monetary Developments 2014-15, RBI). According to the Macro-economic and Monetary Developments Report of RBI (2014-15), the Index of Industrial Production (IIP) showed no increase during April-January 2013-14, compared with a 1.0% growth in the corresponding period of the previous year. This stagnation in growth over two years reflects subdued investment and consumption demand which has resulted in a contraction in production of capital goods and consumer durables in the current year. Output of basic metals, fabricated metal products, machinery and equipment, motor vehicles, food products, gems and jewellery and communication equipment have recorded a decline in recent years. (Source: Macro-economic and Monetary Developments 2014-15, report of the RBI) The Indian Automobile Market The automobile industry is one of the key manufacturing sectors in India and contributed to around 6.7% of India’s GDP in 2013. (Source: PWC report titled “Automobiles: The economic outlook and employment situation”, dated August 2013) There was a fundamental change in the Indian automobile industry in 1991 with the de-licensing of the sector and subsequent liberalization of the sector. Following liberalization several global automobile players have set up manufacturing facilities in India. India's automobile market is one of the most competitive markets amongst the global markets due to its price competitiveness. It can be divided into the following segments (a) two wheelers; (b) three wheelers; (c) passenger cars and (d) commercial vehicles. Projected capacity and production of the automobile sector by 2016-17 According to the Report of the Working Group on Automotive Sector for the 12th Five Year Plan (2012-2017) the projected capacity and production of passenger vehicles and commercial vehicles in the automobile sector for the 12th plan period 2012-17 is as follows:

Segment Projected Capacity (Units) Projected Production (Units) Passenger vehicles 93,72,838 69,09,797 Commercial vehicles 23,97,257 17,41,122 The Automotive Mission Plan (2006-2016) also envisaged doubling the contribution of the automotive sector to the National GDP from around 5% in 2006 to 10% in 2016 and increasing exports to USD 35 billion by 2016. (Source: Report of the


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Working Group on Automative Sector for the 12th Five Year Plan, Department of Heavy Industry Ministry of Heavy Industries and Public Enterprises, GoI) The automotive industry produced a total 1,990,010 vehicles in May 2014 including passenger vehicles, commercial vehicles, three wheelers and two wheelers as against 1,742,939 in May 2013, registering a growth of 14.18% compared to the corresponding period in the previous year. The export of commercial vehicles also registered growth of 20.80% in May 2014 compared to May 2013. (Source: Press Release dated June 10, 2014 on Excise Duty Cuts Provide Some Succor to Auto Sales, available at www.siamindia.com). The Commercial Vehicle Market in India Categories of Commercial Vehicles The Motor Vehicles Act, 1988 of India categorizes commercial vehicles into: (i) HCVs; (ii) MCVs; and (iii) LCVs on the basis of GVW which comprises the weight of the vehicle plus the rated payload. HCVs and MCVs are collectively referred to as MHCVs. The rated payload is the maximum weight permitted to be loaded on a vehicle under the Motor Vehicles Act, 1988. LCVs are vehicles with a GVW of less than 7.5 tons; MCVs are vehicles with a GVW between 7.5 tons and 16.2 tons; and HCVs are vehicles with a GVW of over 16.2 tons. LCVs, MCVs and HCVs are further classified into passenger or goods carriers, depending on their use. While LCVs are typically used over short hauls and to distribute smaller payloads within cities and towns, MCVs and HCVs are typically used to carry heavier payloads over long distances. Market Size and Growth of the Overall Commercial Vehicle Market in India The table below sets out the units of LCVs, MCVs and HCVs produced and sold in India during Fiscal 2012, 2013 and 2014: Category of Vehicle Fiscal 2012 Fiscal 2013 Fiscal 2014LCVs Produced Passenger Carriers 50,017 50,058 45,136 Goods Carriers 494,318 501,914 432,102 Total Produced 544,335 551,972 477, 238 Sold Passenger Carriers 48,868 47,827 42,799 Goods Carriers 411,415 476,695 389,312 Total Sold 460,283 524,522 432,111 MCV and HCVs Produced Passenger Carriers 54,156 51,382 41,175 Goods Carriers 330,645 229,295 180,451 Total Produced 384,801 280,677 221,626 Sold Passenger Carriers 49,882 46,913 38,709 Goods Carriers 299,334 221,776 161,918 Total Sold 349,216 268,689 200,627 (Source: Copyright SIAM Report 2013 for Fiscal 2012 data and Copyright SIAM Report 2014 for Fiscal 2013 and 2014 data) As can be seen from the table above, MHCVs accounted for approximately 31.71% of total commercial vehicle sales in India during Fiscal 2014. Sales of commercial vehicles in Fiscal 2014 as compared to Fiscal 2013 and Fiscal 2012 decreased from 33.87% and 43.14% respectively. According to SIAM Demand Forecast for Automobile (April 2014) MHCV sales will


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recover marginally in line with anticipated industrial GDP in Fiscal 2015. Commercial vehicle production trends The following table depicts the automobile production trends in India (in terms of numbers of commercial vehicles produced between 2006 and 2013):

519,982 549,006

416,870

567,556

760,735

929,136

831,744

0

200,000

400,000

600,000

800,000

1,000,000

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

(Source: www.siamindia.com) There were 698,864 commercial vehicles manufactured during Fiscal 2014 (Source: Copyright SIAM Report 2014). Rising government investments in the road infrastructure sector are likely to enhance connectivity within the country, which in turn is expected to increase the demand for passenger carriers including buses. Further the the implementation of the Bus Rapid Transport System (BRTS) in more cities across India is expected to lead to higher demand for buses. In the initial phase the BRTS is planned to cover 10 cities out of which nine are funded under the Jawaharlal Nehru National Urban Renewal Scheme of the Government of India Scheme (JnNURM Scheme). Thus the procurement of buses under JnNURM Scheme is likely to provide support to the bus demand during 2014-15.

Market Players—Domestic and Foreign Competition The table below lists the market players in the MHCV (Passenger Carrier) segment for Fiscal 2014:

Manufacturer Fiscal 2014 Domestic Sales (Units) Market Share (Percentage)

Ashok Leyland Ltd. 14,951 38.62 Mahindra Trucks and Buses Ltd. 958 2.47 SML Isuzu Ltd. 3,401 8.79 Tata Motors Ltd. 15,528 40.11 VECVs-Eicher 3,721 9.61 Volvo Buses India Pvt. Ltd. 150 0.39 Total 38,709 100.00 (Source: Copyright SIAM Report 2014) For Fiscal 2014, the major participants in the MHCV (Passenger Carrier) market were Tata Motors, the Company and VECVs-Eicher (Source: Copyright SIAM Report 2014).


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The table below lists the market players in the MHCV (Goods Carrier) segment for Fiscal 2014:


AMW Motors Ltd 4,606 2.84 Ashok Leyland Ltd 36,876 22.77 Mahindra Trucks and Buses Ltd 2,285 1.41 SML Isuzu Ltd 2,095 1.29 Tata Motors Ltd 94,659 58.46 VECVs-Eicher 20,670 12.77 VECVs-Volvo 727 0.45 Total 161,918 100.00 (Source: Copyright SIAM Report 2014 ) For Fiscal 2014, the major participants in the MHCV (Goods Carrier) market were Tata Motors, the Company and VECVs-Eicher (Source: Copyright SIAM Report 2014). The table below lists the market players in the LCV (Passenger Carrier) segment for Fiscal 2014:


Ashok Leyland Ltd 47 0.11 Force Motors Ltd 16,259 37.99 Mahindra Trucks and Buses Ltd 2,748 6.42 SML Isuzu Ltd 2,859 6.68 Tata Motors Ltd 16,603 38.79 VECVs-Eicher 4,283 10.01 Total 42,799 100.00 (Source: Copyright SIAM Report 2014) For Fiscal 2014, the major participants in the LCV (Passenger Carrier) market were Tata Motors, Force Motors and VECVs-Eicher (Source: Copyright SIAM Report 2014). The table below lists the market players in the LCV (Goods Carrier) segment for Fiscal 2014:


Ashok Leyland Ltd 27,236 7.00 Force Motors Ltd 2,893 0.74 Hindustan Motors Ltd 184 0.05 Mahindra & Mahindra Ltd 152,398 39.15 Mahindra Trucks and Buses Ltd 2,170 0.56 Piaggio Vehicles Pvt Ltd 6,968 1.79 SML Isuzu Ltd 1,034 0.27 Tata Motors Ltd 191,097 49.09 VECVs-Eicher 5,332 1.37 Total 389,312 100.00 (Source: Copyright SIAM Report 2014 ) For Fiscal 2014, the major participants in the LCV (Goods Carrier) market were Tata Motors Ltd, Mahindra & Mahindra Ltd and the Company (Source: Copyright SIAM Report 2014).


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Key Drivers for the Commercial Vehicle Market Road Network and Investment in Infrastructure India's underdeveloped infrastructure has hindered the expansion of the road transport sector and, consequently, has affected the growth of the commercial vehicle market. The Indian road network, which is approximately 33 lakh kms in length, is the second largest in the world as of 2013 (Source: www.nhai.org/roadnetwork.htm). The Government of India is taking steps to improve the road infrastructure in the country through its implementation of the National Highways Development Project, amongst other initiatives. For rural areas, the GoI launched Pradhan Mantri Gram Sadak Yojana in 2000 to construct about 3.71 lakh km roads for new connectivity and 3.68 lakh km of roads under upgradation (Source: www.pmgsy.nic.in). Such government initiatives may improve the infrastructure in India and increase transportation of goods and people by road, resulting in future growth of the commercial vehicle market. Economy Growth The general economic conditions in India and around the world substantially affect the Indian automobile industry. The commercial vehicle market is closely linked to the performance of certain core sectors of the economy such as mining, infrastructure and steel. The rise in interest rates over the last few years, as a result of credit tightening measures taken to overcome inflationary pressures along with, contraction in industrial activity and an overall decline in business optimism, have resulted in a moderate GDP growth during Fiscal Year 2014. These factors, combined with relatively lower infrastructure spending, have started to adversely affect demand for new commercial vehicles, especially in the HCV segment. Vehicle Financing Rises in interest rates have increased the cost of financing, which have had a negative impact on demand for commercial vehicles. Inflation has been on the rise in India and the RBI interest rates have also been rising and averaged 6.64% from 2000 until 2014, reaching a high of 14.50 % in August of 2000 and a low of 4.25 % in April of 2009. (Source: www.tradingeconomics.com). As a corollary, banks have raised lending rates, impeding auto financing and vehicle demand in India.


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The chart below plots interest rates as at the periods indicated below:

A decrease in the interest rate could cause the lending rates for commercial vehicles to decline, which may improve demand for commercial vehicles in the future. Higher interest rates could also impact the sentiment of buyers, as MCV and HCV customers may delay their purchases until the interest rates stabilize. Fuel Prices Typically, heavy commercial vehicles are powered by diesel fuel engines. Retail prices for diesel fuel in India have historically been subject to governmental regulation and control. However, the Government of India has proposed ending its regulation of diesel prices, which could result in substantial volatility in diesel prices. In 2010, the Government of India deregulated petrol prices, enabling oil marketing companies to adjust prices according to global markets. Since deregulation, the retail price of petrol and consequently the price of diesel has increased, which in turn has increased diesel prices during the same period. A substantial increase in diesel prices could adversely affect the competitiveness of diesel fuel-powered vehicles as compared to other vehicles or other modes of transportation. Fuel cost is a significant proportion of total operating costs for a MHCV operator. Key Trends in the Commercial Vehicle Industry Hub and Spoke Model – Polarization of the Commercial Vehicle Market Governmental efforts targeted at improving road infrastructure on the one hand and government regulations restricting MHCVs from entering metropolitan cities on the other have led to the growth in demand for higher tonnage vehicles to operate on longer distance routes and lighter tonnage commercial vehicles to operate within the city. This trend has resulted in a polarization of demand in the commercial vehicle industry, as depicted in the chart below.

Segment Domestic Sales (Units)

Fiscal 2013 (Cumulative) Fiscal 2014 (Cumulative) LCVs LCVs (Passenger Carriers) 47,827 42,799 LCVs (Goods Carriers) 476,695 389,312


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Total LCVs 524,522 432,111 MHCVs MHCVs (Passenger Carriers) 46,913 38,709 MHCVs (Goods Carriers) 221,776 161,918 Total MHCVs 268,689 200,627 (Source: Copyright SIAM Report 2014) Cyclicality in domestic sales of MHCVs has been on a decline due to rising share of LCVs. During Fiscal 2014, MHCV sales were negatively impacted owing to low growth expectation in primary Billion Tonne Kilometers (BTKM) and large capacity overhang from previous years. However, some respite was provided by good kharif produce on the back of normal monsoons. MHCV sales are expected to recover gradually in line with improvement in industrial GDP growth in Fiscal 2015 (Source: SIAM Demand Forecast for Automobile (April 2014)). New Entrants and Barriers to Market Share Gain Following governmental efforts to liberalize the economy, new market entrants from outside of India have entered the Indian market. Further, with domestic sales volumes of over 600,000 units in Fiscal 2014, the Indian commercial vehicle market is gradually attaining a meaningful size and scale that makes it an attractive market for international OEMs. (Source: Copyright SIAM Report 2014) The new entrants are conforming their premium products for local markets as well as entering the low-cost segment through local engineering and production. Most international players have forged alliances with local partners to help them assess the market and to meet the specific requirements of Indian customers at competitive prices. In the MHCV segment, several international OEMs, including Volvo (through its Joint Venture entity Volvo Eicher Commercial Vehicles) have launched their vehicles. (Source: Copyright SIAM Report 2014) After-Sales Customer Service Network New entrants, in the short-term, may also not have an after-sales customer service network on the same scale as existing commercial vehicle manufactures. Such companies will require substantial financial resources and human resource expertise, as well as the cost benefit of economies of scale, to offer comparable after-sales customer service at competitive prices. Improving Technology and Emission Standards The Motor Vehicle Act, 1988 and Central Motor Vehicle Rules, 1989 govern automotive safety standards in India. Various agencies have been established to test and certify vehicles based on safety and emission standards. India's emission norms are on par with the European Union, but India has been slower than western markets to adopt these standards. Currently, we are behind the current Euro norms by few years, however, a beginning has been made, and emission norms are being aligned with Euro standards and vehicular technology is being accordingly upgraded. Vehicle manufactures are also working towards bridging the gap between Euro standards and Indian emission norms. (Source: www.siamindia.com) Environmental and Safety Regulations Environmental and safety regulations, which may increase the cost of production of vehicles, are likely to decrease the demand for commercial vehicles. At the same time, environmental regulations are likely to result in quicker phasing out of old vehicles, leading to increased demand.


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BUSINESS

Some of the information contained in the following discussion, including information with respect to our plans and strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section “Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements and also the section “Risk Factors” for a discussion of certain factors that may affect our business, financial condition or results of operations. Our actual results may differ materially from those expressed in or implied by these forward-looking statements. Our fiscal year ends on March 31 of each year, so all references to a particular Fiscal are to the twelve-month period ended March 31 of that year. In addition, data on the sale of vehicles by the Company in all periods included in this Placement Document have also been derived from published reports of SIAM.

In this section, unless the context requires otherwise, any reference to “we”, “us” or “our” refers to Ashok Leyland Limited, its subsidiaries, joint ventures and associate companies on a consolidated basis, as the context requires and references to the "Company" refers to Ashok Leyland Limited. Unless otherwise indicated, all financial information presented herein in is on a standalone basis.

OVERVIEW

In Fiscal 2014, the Company was the second largest manufacturer of medium and heavy commercial vehicles in India (Source: Copyright SIAM Report 2014). Our principal business is the design, development, manufacture and sale of a comprehensive portfolio of commercial vehicle products with varying capacities and applications to cater to different customer segments. The Company manufactures and sells a complete range of goods vehicles spanning medium and heavy duty trucks with capacities ranging from 10 tons GVW to 49 tons GVW and also manufactures engines, gensets (DG sets) and spare parts and various special application vehicles which are used to provide logistics support to the Indian defence sector. Through a strategic partnership with Nissan, we manufacture and sell light commercial vehicles (ranging from 2.5 tons GVW to 7.2 tons GVW) and a passenger carrier. We also manufacture a comprehensive range of city, inter-city, special purpose buses and coaches, ranging from 16 to 80 seats in capacity. In Fiscal 2014, our products were sold in 34 jurisdictions globally.

In Fiscal 2012, 2013 and 2014 the Company's revenue from the sales of products were Rs.13,91,287.43 lakhs, Rs.13,53,160.43 lakhs and Rs.10,60,812.88 lakhs respectively. The Company's revenue from sales of products comprises revenue from the sale of commercial vehicles manufactured, traded vehicles, engines, gensets, spare parts and others.

In Fiscal 2012, 2013 and 2014 revenue from sale of commercial vehicles manufactured accounted for 86.34%, 77.59% and 75.17% respectively of the Company's total revenue from operations. Revenue from sales of traded vehicles in Fiscal 2012, 2013 and 2014 accounted for 1.19%, 6.88% and 9.84% respectively of the Company's total revenue from operations. The sale of traded vehicles refers to the sale of vehicles purchased by the Company from its joint venture company. For details on trade sales, please see section “Business - Strategic Relationships” beginning on page 139. Revenue from sales of spare parts and others in Fiscal 2012, 2013 and 2014, accounted for 11.33%, 13.64% and 11.48%, respectively of the Company's total revenue from operations (gross). Revenue from sales of spare parts and others comprises revenue generated primarily from the sale of spare parts and from the supply of vehicle kits to the Indian Government which are used by the Indian defence for logistics support.

The Company's market share in India in Fiscal 2013 and 2014 in the overall Medium and Heavy Commercial Vehicles ("MHCV") segment (passenger carrier and goods carriers) was 26.4% and 25.8% respectively, making it the second largest in this segment. In Fiscal 2013 and 2014 the Company's domestic market share in the MHCV (goods carrier) segment was 23.4% and 22.8% respectively and the market share in the MHCV (passenger carrier .i.e. the bus segment) segment was 40.5% and 38.6% respectively. In Fiscal 2013 and 2014 the Company had a market share of 6.6% and 6.3% respectively in the Light Commercial Vehicles ("LCVs") segment (passenger and goods carriers) (Source: Copyright SIAM Report 2014).

In May 2008, we entered into three separate joint ventures with Nissan Motor Co. Ltd. to manufacture LCVs with a GVW of less than 7.5 tons, to collaborate and provide technology to the LCV manufacturing entity and manufacture powertrain engines.


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The Company has also entered into joint venture arrangements with John Deere to manufacture construction equipment and with Alteams Oy to manufacture high-pressure die-casting (“HPDC”) aluminum components. For further information, see “Business - Strategic Relationships – Joint Ventures” beginning on page 139.

The Company operates seven manufacturing facilities in India located across Tamil Nadu, Maharashtra, Rajasthan and Uttarakhand with an aggregate production capacity as at March 31, 2014 of 150,500 vehicles per annum (based on operating two production shifts per day). Key components and spare parts for vehicles, including engines, gear boxes and front axles are also manufactured at these facilities.

We also operate manufacturing facilities in the UAE and the UK through our associate and subsidiary companies respectively. In the UAE, we operate through Ashok Leyland UAE, LLC which owns a bus manufacturing facility in Ras Al Khaimah with a production capacity of 2,000 vehicles per annum. In the UK we operate through our subsidiary, Optare Plc which owns a bus manufacturing facility in Leeds.

As at March 31, 2014, the Company's distribution network across India comprised 264 dealer branches, a network of 159 Authorized Service Centers (“ASCs”), 64 containerized workshops and 152 retail stores which sell spare parts. In aggregate the Company had 639 customer touch-points across India as at March 31, 2014.

Our research and development capabilities are focused on innovating, developing and improving engine and vehicle technologies for our vehicles. The Company's center for product research and development near Chennai provides design, development and testing services for new products, as well as for upgrading of existing products. In addition to a modern testing laboratory, the research and development center also provides comprehensive test tracks for testing prototypes under demanding conditions. For example, the six-poster road simulation laboratory is a track simulator for multi-axle vehicles which significantly reduces testing time. In Fiscal 2013 and 2014, the Company incurred Rs.30,386.17 lakhs and Rs.25,623.91 lakhs respectively for research and development in the year in-house R & D facilities. As at March 31, 2014, the Company had 850 employees in its research and development team.

We are a part of the Hinduja Group, which is a diversified business group with operations across several verticals including chemicals, manufacturing, banking and finance, information technology, power, media, real estate, healthcare and trading.

The Company was established in 1948 and its equity shares are listed on the MSE, the BSE and the NSE. In Fiscal 2014, the Company undertook certain corporate restructuring processes resulting in certain of its associate companies being consolidated and merged. As a consequence of such corporate restructuring and consolidation, the Company's corporate group structure in Fiscal 2014 is not comparable to its corporate group structure in Fiscal 2013. Further the Company has prepared consolidated financial statements for the first time in Fiscal 2014 and consequently has no comparable consolidated financial statements for prior years. Pursuant to the corporate restructuring, the Company's standalone financial statements for Fiscal 2014 may not be directly comparable to its standalone financial statements in Fiscal 2013 or earlier. For further information, see "Business - Corporate Restructuring" beginning on page 137 and "Management's Discussion and Analysis of Financial Condition and Results of Operations as per the Consolidated Financial Statements - Restructuring of the Group and Presentation of Financial Information" beginning on page 90.


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KEY STRENGTHS

We are one of the largest commercial vehicle manufacturers in India

In Fiscal 2014, the Company was the second largest manufacturer of MHCVs in India (Source: Copyright SIAM Report 2014). The Company believes that its significant market share in the commercial vehicles segment is due to:

its products being regarded as quality products by its customers;

its ability to leverage its extensive experience (over 65 years) in and knowledge of the markets in which it operates to develop innovative products that specifically meet the markets’ specific requirements. For example, products such as the five axle rigid truck with a GVW of 37 tons, the BOSS intermediate commercial vehicle and the LCV 'Dost' are innovative product offerings which we believe have enabled us to increase the Company's market share;

its ability to deploy its purchasing, research and development, design, engineering, marketing and distribution resources and capabilities across its vehicle production base to deliver products which are competitively priced;

Ashok Leyland being a recognized brand.

Table: Ashok leyland market share in India (Copyright SIAM Report 2014)

The market share above reflects the Company's ability to maintain market share in the Heavy Commercial Vehicle ("HCV") segment over a five year period between Fiscal 2010 and Fiscal 2014 despite the entry of new competitors in the market. The Company has also consistently grown its market share in the Medium Commercial Vehicle ("MCV") segment over the past five years which demonstrates the Company's ability to grow market share by tapping latent demand through the introduction of new competitively priced products.

In order to maintain its market share, the Company has made significant capital expenditure in the past three years for the renewal of existing capacity, development of additional infrastructure including a manufacturing facility for LCVs, product development activities and improvement in post-production storage facilities.


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The Company's significant market share, its recognized brand and its investments in expanding our capacity and bringing innovative products to the market provides it with a competitive advantage in securing new business from existing and new customers.

We have a comprehensive portfolio of contemporary products, backed by a track record of customer focused product innovation

Through our recent investments in new vehicle platforms we have a comprehensive portfolio of commercial vehicle products with varying capacities and applications to cater to different customer segments. We are currently in a position to provide our customers with a complete range of goods vehicles spanning light, medium and heavy duty trucks with capacities ranging from 2.5 tons GVW to 49 tons GVW. We are also capable of delivering a comprehensive range of city, inter-city, special purpose buses and coaches, ranging from 16 to 80 seats in capacity. Our ability to innovate, provides us with a "first mover" advantage and this helps us generate new customer interest and maintain existing customer relationships. For instance, our new product, the BOSS won the Commercial Vehicle of the Year as well as the Intermediate Commercial Vehicle Cargo Carrier of the Year award at the Apollo CV awards 2014. The DOST premium LCV won the Apollo LCV of the year award in 2012 and set a new benchmark in this product segment.

Examples of our product innovation include:

The "Partner'' series of vehicles with a four ton payload capacity, featuring the ZD30 diesel engine and an ergonomic cab with tilt steering, air conditioning, cable shift gearbox and several such distinctive features, launched in January 2014.

The Captain heavy commercial vehicle platform, which can be used to develop tippers, tractor trailers and multi-axle vehicles. The first of this series, an MHCV tipper with 25 tons GVW was launched in January 2014 and includes features such as a 225 hp common rail engine, hub reduction axle and V Rod bogie suspension as well as modular cab series that has successfully completed rigorous crash tests and mechanical suspended seats.

The new "Super Stallion" vehicle is targeted specifically at the logistics need of the Indian defence sector. This high mobility vehicle is powered by the new “Neptune” range of engines.

MiTR, a modern LCV bus, is a 26+1+1 seater aimed at a comfortable ride and has a ZD30 diesel engine, quiet interiors and safety features.

Jan Bus, is an innovative low floor front-engined urban bus that offers passengers the convenience of modern low floor bus while providing operators the economy and capacity offered by the front engine configuration

MetroDecker, a monocoque double decker bus specifically designed to meet the requirement of large global metropolises, such as London.

We have also invested in developing critical aggregates required to power our vehicles currently in the future, and are adequately equipped today to power our entire range. Our P15 1.5L Common Rail engine has been powering the DOST SCV for over two years, and is also available in CNG option. Our H series engines have been upgraded to be Euro III and Euro IV compliant and now span a power range of 120 to 225 hp and a torque range of 500 -800 Nm. This series is also available in CNG. Our engine range is topped by the all-new Neptune series, that delivers a power range of 160-360 hp and torque range of 600-1475 Nm. Neptune is an engine platform that is upgradeable to Euro V and Euro VI. It features a 3rd Generation Common Rail Direct Injection system, four valves per cylinder and other features that enable it to deliver flat torque curves.

We have also developed the ability to engineer and manufacture hybrid and electric vehicles. Optare Plc’s VERSA EV won the SMMT 2012 award for Automotive innovation.


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Globally benchmarked best practice processes for continuous improvement

The Company has implemented proprietary processes in order to incorporate efficiencies and align business operations. These processes have been developed by benchmarking global best practices. The Company believes that these processes have helped it better manage overhead costs through governance of key performance indicators, implement technology to help enhance product development and improve customer engagement.

Product development: The Company has implemented a product development process called "Genmod". The Genmod process is based on the principles of lean product development, portfolio planning, governance of key benchmarks, automation and project management. Through Genmod, the Company has been able to channel its resources judiciously, use market data in planning its portfolio and incorporate customer feedback in the design and engineering process to develop products which aims at maximising value to the customer thus helping the Company increase its market share and profitability.

Manufacturing: The Company rolled-out mission "Gemba" across all its manufacturing units in order to enhance shopfloor cross functionality, communication and alignment with the aim to improve shop floor efficiency and capacity utilization. Employees on the shop floor are empowered to work on all critical shopfloor performance metrics in their areas and implement continual improvement ideas. Mission "Gemba" has been rolled out across the Company's manufacturing facilities and as of March 31, 2014 there were 89 "Gembas" in operation across various manufacturing units.

Customer engagement: The Company has also restructured its sales and marketing processes in order to enhance customer engagement and provide a more interactive after sales experience to existing customers. Through a customised process "PRISM", the Company has standardized pre-sales and post sales customer engagement processes (including pre-sales marketing, post sales follow up, service staff training, addressing customer complaints and managing customer feedback), defined quality benchmarks which are expected to be met by the sales team and set up a review mechanism to drive this process. The Company has also enabled critical modules of the sales process on a mobile platform.

Technology: The Company has implemented a SAP platform called "Gennext" across the Company to align operations, integrate systems and processes and improve governance through access to better operational data.

In addition to the above, several practices have been introduced to improve the quality of vehicle delivery to the customer. For example, the introduction of a "zero kilometer on the speedometer" delivery system, wherein trucks are not driven to customer sites, but delivered on trailers and protective wraps have been introduced in new vehicles to enhance the quality of vehicle delivery to customers.

Strategically located and well equipped manufacturing facilities

The Company operates seven manufacturing facilities in India which are located in Tamil Nadu, Maharashtra, Rajasthan and Uttarakhand, with an aggregate production capacity as at March 31, 2014 of 1,50,500 vehicles per annum, calculated on the basis of two production shifts per day.

The establishment of the Pant Nagar manufacturing facility was a strategic initiative to increase market share in North India. The Pant Nagar manufacturing facility commenced operations in March 2010 and is vertically integrated incorporating all the major processes required for truck manufacturing. An integrated manufacturing facility allows the Company to achieve greater economies of scale and cost efficiencies, manage product flow and inventory and eliminate duplication of business functions and administrative expenses. The manufacturing facility has a capacity of 50,000 units, per annum on a two shift basis.

The Company's key manufacturing facility at Ennore has been substantially upgraded with new machining facilities for engines and gear boxes as well as a new assembly line. This manufacturing facility caters to a significant portion of the Company's export business and produces both the "H" and the Neptune series of engines and a wide range of buses and truck chassis.


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The Company's manufacturing facility at Alwar has also been upgraded to manufacture fully built buses including the Jan Bus. Similarly, the manufacturing facility at Hosur has been upgraded to manufacture LCVs to cater to the growing demand in this segment.

We have two manufacturing facilities outside India. We have an assembly facility for buses in Ras Al Khaimah, UAE established as a joint venture with the Ras Al Khaimah Investment Authority. This manufacturing facility has the capacity to assemble 2,000 vehicles per year. Through our subsidiary Optare Plc., we own a modern assembly line bus body facility at Leeds, UK. This manufacturing facility has the capabilities to assemble diesel, hybrid and electric buses.

A balanced portfolio of businesses positions us to participate in different sectors and hedge the cyclicality inherent in the commercial vehicle business

In order to mitigate the risks associated with the cyclicality and seasonality of demand for trucks, the Company has diversified its product offering to include non-cyclical segments such as manufacturing of buses and LCVs.

Further, in order to mitigate risks associated with the commercial vehicle manufacturing business, the Company has also developed allied businesses in which its technological strengths and experience provide it a competitive advantage. The principal allied businesses are:

Defence logistics support: The Company manufactures specialised vehicles which are used by the Indian defence for logistics support. The Company presently has four products including the Stallion 4x4, Stallion 6x6, Super Stallion 6x6 and Super Stallion 8x8, which it has been regularly supplying to the Indian Government. Given the high entry barrier in this segment and the Company's track record in manufacturing heavy multi-purpose utility vehicles, the Company believes this is a niche business segment which has synergies with its main business and provides it with a unique opportunity for growth and diversification.

Power Solutions Business: The Company's power solutions business comprises manufacturing gensets (DG sets) with output capacity in the range of 15-2500 kVA, marine engines of varying horsepower used to power boats generator sets, earthmoving equipment, compressors, cranes, harvester combines and road construction machinery. The power solutions business also manufactures engines which operate on compressed natural gas.

Parts: The Company also manufactures, trades and imports spare parts which are sold under the trade names 'LEYPARTS' and 'VALUEPARTS' which support its vehicle manufacturing, defence logistics support and power solutions business. The spare parts business is a key allied business which supports the Company's growing fleet of vehicles in the market.

The Company believes its diversification allows it to participate in the growth of different sectors thereby making it more resilient to any adverse developments which may occur in any one sector, leading to greater earnings stability.

Comprehensive sales and after-sales customer service network

As at March 31, 2014, the Company had a large distribution network across India, which comprised dealerships, after sales service centres, containerised workshops and retail stores for auto spare parts. The Company's distribution network has grown on a year-on-year basis by 28% during Fiscal 2014 with the number of customer touch points increasing from 500 in Fiscal 2013 to 639 in Fiscal 2014. The Company has grown its distribution and after sales service network across the country particularly focussing on North, West and East India in order to be closer to its customers.

The Company also undertakes joint initiatives with its dealers to promote its products and provide performance based initiatives to help grow the sales of its vehicles. The Company has also worked with its dealers to develop formats (re-branded outlets, showrooms and display pavilions) to limit infrastructure costs without compromising on the customers purchasing experience at the dealerships. The Ashok Leyland brand also helps position the Company as a credible business partner for its sales services providers including dealers.

The Company believes that a comprehensive sales and after-sales customer service network can offer a compelling customer experience and influences its customers’ buying decisions. An effective after sales network also helps it maintain the Ashok Leyland brand and obtain rapid customer feedback. The Company believes that a new entrant to the commercial vehicle


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industry would require extensive knowledge of the local automobile market, adequate financings and human resources expertise to establish a comparable after-sales customer service network. The Company has been successful with various customer service initiatives, like "Tatkaal" and "Leyland Direct" which are programmes aimed at building brand loyalty. The Company also offers "Vishwas" a professional, comprehensive and preventative maintenance cover for both in-use and new vehicles in order to sustain the vehicles condition and provide it a better resale value. The Company also offers quality re-built engines besides extended service and warranty packages. Through our subsidiary Hinduja Leyland Finance Ltd we are able to provide our dealers with commercial vehicle financing solutions which they can offer to their customers. We believe this an important value added service which we provide to our dealers.

International presence across emerging markets

While we are committed to maintaining our market share in India, we have developed a deliberate strategy to grow our international business across five clusters including the Middle East, Africa, Commonwealth of Independent States, ASEAN and Latin America. At present we have manufacturing facilities in the UAE and the UK.

We sell our products across multiple international markets through our channel partners including, the Middle East, Kenya, Ghana, Nigeria, Chile, Peru, Bangladesh and Sri Lanka. In the Middle East we sell a substantial number of buses with our key markets being Oman, Qatar and Saudi Arabia. In the African market we are primarily present in East and West Africa. In Kenya we sell our trucks and in Nigeria and Ghana we sell our buses which are used for public transportation. We also have a body building partner in Ukraine through whom we sell buses and we also have a presence in Russia through a local company established there. We have recently received a significant purchase order from the Sri Lanka Transport Board for the supply of Viking brand buses.

We believe these markets offer substantial medium and long term growth opportunities. We believe our track record in India, our manufacturing facilities and our in-house engineering and design capabilities enable us to develop products for other emerging markets which have a compelling value proposition. Experienced management team and employees

We believe that we have an experienced professional senior management team, supported by a capable and talented pool of employees, to maintain strategic direction, manage current operations and risk profile and meet future business challenges, including the planned expansion and the addition of new businesses. Our managers have diverse experience in various aspects of the automobile sector, which we believe allows us to develop and provide products suited to the markets in which we operate. We have also strengthened our internal management team which focuses on international markets, to improve our export activities.

STRATEGY Capture volume upside from expected recovery in demand Over the past three years the Company has made substantial capital investment in capacity expansion, implemented benchmarked business processes to improve efficiencies and introduced new innovative products in the market. These initiatives have provided the Company a larger portfolio of products and the flexibility to bring new products to the market in the future. After the recently concluded general elections in India, we anticipate that the newly appointed Government will focus on reviving industrial production, improve road infrastructure and implement urban transportation systems, we expect this to increase domestic demand over the medium and long term for MHCV passenger and goods carriers and LCVs.

LCV volumes have grown at 22% CAGR between 2010 and 2013 (Source: Copyright SIAM Report 2014). The Company's LCV sales volume grew from 7,593 units in Fiscal 2012 (our first year of operation) to 34,917 units in Fiscal 2013 which was a growth of 359.9% on a year-on-year basis. The Company's sales volume of LCVs declined in Fiscal 2014 to 28,995 units


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due to an overall slowdown in the Indian economy, which the Company believes is a temporary phenomenon. With growing populations in India's urban centres and improving road network, we expect the demand for lighter tonnage commercial vehicles to continue to grow as these vehicles are ideally suited to operate within urban centres for short to medium distances. With three new models available in the LCV segment, we believe we are well placed to meet the demand in this segment. We have accordingly also upgraded our manufacturing facility in Hosur to manufacture LCVs.

The defence logistics sector is an important growth sector for the Company. The Company's deep understanding of this niche segment and its track record gives it a competitive advantage. In anticipation of growing demand, the Company is developing several prototypes and has also set up a modern prototype workshop at Sengadu near Chennai to test and develop new products. As urban transportation infrastructure across the country continues to improve we anticipate a growth in demand for our passenger buses. We are well equipped to introduce premium high end buses (using the products developed by Optare plc.) in the Indian market as public transportation becomes more prevalent. Continue developing non-cyclical businesses The sales volumes of the Company's vehicles, in particular trucks are influenced by the cyclicality and seasonality of demand. In relation to trucks, demand is generally lower in the first half of a Fiscal and higher in the second half of a Fiscal due to the harvest season and increased movement of agricultural products, as well as the desire of customers to take advantage of certain tax benefits before the year end. In order to mitigate the risks associated with the cyclicality and seasonality of demand for trucks, the Company has diversified its commercial vehicle product offerings to non-cyclical segments such as buses and special purpose vehicles which are used to provide logistics support to the Indian defence logistics sector. The Company has also developed a suite of allied businesses including manufacturing engines for industrial and marine applications, gensets (DG sets) and spare parts. In addition the Company has also entered into several joint ventures and made investments in other businesses. The Company's allied businesses has been supported with a comprehensive product portfolio, distribution network and manufacturing capacity in the past few years. We will continue to drive our offerings in the allied businesses and continue to diversify our portfolio of commercial vehicle products. Continue to grow our presence across our targeted international clusters We continue to focus on growing our international business. In the short term we are focussed on using our existing relationships to grow our presence in the Middle East and Africa by penetrating more markets in these geographic regions, as we believe these are high growth markets which we are familiar with. We believe we are well positioned to use our existing resources to cater to the growing demand for commercial vehicles in these markets and our product portfolio provides a compelling value proposition to customers in these markets. We also intend to develop a network of dealers, importers and after sales service agents in the Middle East and Africa to effectively service our customer base and build our brand reputation. In the medium term we intend on focussing on growing our presence in the ASEAN region and Latin America. Deleveraging balance sheet and reducing costs The Company plans to sustain the cost reduction and operating flexibility progress it has made as a result of its continuous improvement processes. The Company aims to increase its vehicle profitability by maintaining competitive incentive levels with its strengthened product portfolio and by actively managing its production levels through monitoring its dealer inventory levels. Through better governance, we were able to achieve a reduction of our net working capital by Rs.28,803.69 lakhs from Fiscal 2013 to Fiscal 2014. The Company also reduced its manpower costs by 7.1% from Rs.1,07,551.34 lakhs in Fiscal 2013 to Rs.99,967.23 lakhs in Fiscal 2014. The Company also sold certain long term investments and immovable properties in Fiscal 2014 for a consideration of Rs.60,699.02 lakhs. As of March 31, 2014 the Company's total debt (including current maturities) was at Rs.4,69,032.08 lakhs resulting in a gearing of 1.38 times.


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Pursue exits from certain businesses held for sale The Company has implemented, and plans to continue to implement, efficiency measures to improve the long-term competitiveness of its business. This includes initiatives, among others, the sale of the Company's subsidiaries Avia Ashok Leyland Motors s.r.o, Albonair GmbH and Albonair India, which are being Subsidiaries Held for Sale. Leveraging joint ventures We will continue to leverage our joint ventures to offer innovative products at competitive prices, to gain presence in international markets, and to mitigate cyclicality. We believe that our relationships with our joint ventures and associates allow us to blend our knowledge and expertise in the Indian market with our joint venture partners’ technical expertise and experience in the international market. For instance, we have entered into joint ventures with Nissan for the manufacture of LCVs and powertrain engines and a joint venture with John Deere for the manufacture of construction equipment. We have also formed a joint venture with Alteams Oy for the manufacture of HPDC aluminium components. We continue to seek joint ventures and other strategic partnerships to diversify our product offerings and related services, particularly in segments that are less sensitive to cyclicality such as automotive services and spare parts components. PRODUCT OFFERINGS Our principal businesses are:

Vehicle manufacturing - including MHCVs (passenger and goods carriers), LCVs (passenger and good carriers), vehicles for special applications and a passenger vehicle;

Engines and gensets (DG sets); and

Spare parts.

Commercial Vehicles Our principal business is the design, development, manufacture and sale of a comprehensive portfolio of commercial vehicle products with varying capacities and applications to cater to different customer segments. The Company manufactures and sells a complete range of goods vehicles spanning light, medium and heavy duty trucks with capacities ranging from 2.5 tons GVW to 49 tons GVW and various special application vehicles which are used to provide logistics support to the Indian defence sector. We manufacture and sell LCVs through a strategic partnership with Nissan. Our product portfolio of commercial vehicles also includes a comprehensive range of city, inter-city, special purpose buses and coaches, ranging from 16 to 80 seats in capacity. The Company's market share in India in Fiscal 2013 and 2014 in the overall MHCV segment (passenger carrier and goods carriers) was 26.4% and 25.8% respectively, making it the second largest in this segment. In Fiscal 2013 and 2014 the Company's domestic market share in the MHCV (good carrier) segment was 23.4% and 22.8% respectively and the market share in the MHCV (passenger carrier) segment was 40.5% and 38.6% respectively. In Fiscal 2013 and 2014 the Company had a market share of 6.6% and 6.3% respectively in the LCV (passenger and good carriers) segment. (Source: Copyright SIAM Report 2014).

Significant New Products Some of our significant new products include:

Boss. Launched in the intermediate commercial vehicle segment, it has an ergonomically designed dashboard and multi-angle adjustable seats, tiltable steering column and a two point suspended cabin. The LX version of the Boss has an automated manual transmission.


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Dost. Our joint venture with Nissan has introduced the Dost, a ready to use vehicle suited for light-load applications,

focused on efficiency and comfort. It features the P 15 engine and has a modern cabin with power steering and AC options. Further Dost won the LCV Cargo Carrier of the Year award in 2012 presented by the Apollo CV awards.

Partner. The Partner' series of vehicles with a four ton payload capacity, featuring the ZD30 diesel engine and an

ergonomic cab with tilt steering, air conditioning, cable shift gearbox and several such distinctive features, launched in January 2014

Captain. The Captain 2523 Tipper was launched in January 2014 and features a 225 hp common rail engine, hub reduction axle and V Rod bogie suspension as well as modular cab series that has successfully completed rigorous crash tests and mechanical suspended seats.

Super Stallion. This vehicle is targeted specifically at the needs of the Indian defence logistics sector and is a high mobility vehicle.

MiTR. This is a modern LCV bus, is a 26+1+1 seater aimed at comfort and has a ZD30 diesel engine.

Jan Bus. This is an innovative low floor front-engined urban bus that offers passengers the convenience of modern low floor bus while providing operators the economy and capacity offered by the front engine configuration

MetroDecker. This is a monocoque double decker bus specifically designed to meet the requirement of large global metropolises, such as London.

MHCV Segment Products We manufacture a variety of MHCVs, both in the goods and passenger segment including buses, multi-axle vehicles, tractors, haulage, tipper and distribution trucks such as Boss and Ecomet. Trucks The tables below set forth our range of trucks in the MHCV segment: Long Haul – Multi Axle Vehicles

Model Engine Transmission GVW (Kg) Approximate Horsepower

2516il H series ZF 6S 25000 160 2516il/1 H series ZF6S 25000 160 2516XL H series ZF6S 25000 160 2523 HA157L165 CRS 9S synchromesh 25000 230 2523/1 HA157L165 CRS 9S synchromesh 25000 230 3116il H Series ZF6S 31000 160 3116XL H Series ZF6S 31000 160 3118il HA6ETI3U ZF6S 31000 180 3118ilXL HA6ETI3U ZF6S 31000 180 3118il Super HA6ETI3U 6S 31000 180 3120 8x2 4Cyl Neptune CRS engine ALGB 6 speed 31000 205 3123XL HL57L165 ZF9 speed 31000 225


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3718il HA6ETI3U 9S synchromesh 37000 180 Tractors


3518il Tractor HA6ETI3U 6S synchromesh 35200 180 U3518il Tractor HA6ETI3U 6S synchromesh 35200 180 4019il Tractor HA6ETI3U 6S synchromesh 40200 180 U4019il Tractor HA6ETI3U 6S synchromesh 40200 180 4023XP H Series CRS 6S synchromesh 40200 225 U4023TT H Series CRS 6S synchromesh 40200 225 4923 H Series CRS 9S synchromesh 49000 225 U4923TT H Series CRS 9S synchromesh 49000 225 4x2 Haulage


1616il H series 6 ETI ZFS636 16200 160 1612il H Series 4CTI ZFS636 16200 120 1616xl HA6DTI3N S636MkII 16200 168 Mining and Construction: 4x2Trucks


1616/1616XL H Series 6 speed ODGB 16200 160 1618il H Series 6 speed GB 16200 180 U1619 Neptune 6 speed GB 16200 190 Multi Axle Tipper Trucks


2518Til H Series 6 speed GB 25,000 180 2518TilHD H Series 9 speed GB 25000 180 2518H3/4C H Series 6 speed GB 25000 180 2518ilLWBRMC HA6ETI3U ZF 6 speed 25000 180 U2518 T/1 H Series 6 speed GB 25000 180 U2518T H Series 6 speed GB 25000 180 U2518ilT tipper H Series 6 speed GB 25000 180 U2518il T HD H Series 9 speed GB 25000 180 U2519T BS IV Neptune 6 speed GB 25000 190 U2523T H Series 9 speed GB 25000 225 Captain 2523T H Series N.A. 25000 225 3118T H Series 9 speed GB 31000 180 U3123R H Series 9 speed GB 31000 225


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U3123T H Series 9 speed GB 31000 225 Distribution Trucks: Boss


912 LE H Series 6 speed overdrive 9,600 120 1112LE H Series 6 speed overdrive 11,990 120 1212LE H Series 6 speed overdrive 12,900 120 913 LX H Series 6 speed overdrive 9,600 130 1113 LX H Series 6 speed overdrive 11,990 130 1213 LX H Series 6 speed overdrive 12,900 130 Ecomet


1012 Strong HA4CTI ZF6S 10,900 120 1212 Strong HA4CTI ZF6S 12,900 120 1212 Smart HA4CTI ZF5S 12,900 120 1214 Strong HA4CTI SF6S 14,600 120 Buses The table below sets forth our comprehensive range of buses in the MHCV segment: City Bus

Model Engine Transmission ULECNG BS 4 Cummins 6 CylCNG automatic transmission Viking BS 3 IL MEch H Series 6 Cyl 6 speed synchromesh Viking BS 4 H Series 6 Cyl 5 speed synchromesh Cheetah BS 3 IL MEch H Series 6 Cyl 6 speed synchromesh FE SLFCNG BS 4 H Series 6 CylCNG 5 speed synchromesh Titan Double Decker H Series 6 Cyl 5 speed synchromesh Stag BS 3 H Series 5 speed synchromesh ULE Diesel BS 4 H Series 6 Cyl automatic transmission Viking BS 3 EDC H Series 6 Cyl 6 speed synchromesh Cheetah BS 3 EDC H Series 6 Cyl 6 speed synchromesh FE SLF BS 4 H Series 6 Cyl 5 speed synchromesh RE SLF BS 4 H Series 6 Cyl 5 speed synchromesh Vestibule Bus BS 3 H Series 6 DTI 5 speed synchromesh Lynx BS 3 H Series 4CTI 5 speed synchromesh Suburban Bus

Model Engine Transmission Viking BS 3 IL MEch H Series 6 Cyl 6 speed synchromesh Cheetah BS 3 EDC H Series 6 Cyl 6 speed synchromesh 12 Mtr BS 3 EDC H Series 6 Cyl 6 speed synchromesh Stag BS 3 H Series 4CTI 5 speed synchromesh Viking BS 3 EDC H Series 6 Cyl 6 speed synchromesh


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Cheetah BS 3 IL MEch H Series 6 Cyl 6 speed synchromesh 12 Mtr BS 3 IL MEch H Series 6 Cyl 6 speed synchromesh Lynx BS 3 H Series 4CTI 5 speed synchromesh Inter-City Bus

Model Engine Transmission Viking BS 3 IL MEch H Series 6 Cyl 6/5 speed synchromesh 12 Mtr BS 3 EDC H Series 6 Cyl 6 speed synchromesh 12 Mtr BS 3 CRS H Series 6 Cyl 6 speed synchromesh Viking BS 3 EDC H Series 6 Cyl 6 speed synchromesh 12 Mtr BS 3 IL MEch H Series 6 Cyl 6 speed synchromesh Lynx BS 3 H Series 4CTI 5 speed synchromesh Special Bus

Model Engine Transmission Viking BS 3 IL MEch H Series 6 Cyl 6/5 speed synchromesh FE SLF BS 4 H Series 6 Cyl 5 speed synchromesh Lynx BS 3 H Series 4CTI 5 speed synchromesh Viking BS 3 EDC H Series 6 Cyl 6/5 speed synchromesh Stag BS 3 H Series 4 CTI 5 speed synchromesh School and Staff Bus

Model Engine Transmission Avion ULF H Series 4 Cyl automatic transmission Power solutions business The Company's power solutions business comprises manufacturing gensets (DG sets) with output capacity in the range of 15-2500 kVA, engines used to power boats, generator sets, earthmoving equipment, compressors, cranes, harvester combines and road construction machinery. The power solutions business also manufactures engines which operate on compressed natural gas. In Fiscal 2012, 2013 and 2014, sales of engines and gensets was Rs.34,921.00 lakhs, Rs.48,351.63 lakhs and Rs.41,783.90 lakhs respectively which represented 2.55%, 3.64% and 3.96%, respectively, of the Company's total revenue from operations(gross). The Company manufactures the following engines for use in its commercial vehicles and for other third party applications: Neptune Series Engine In a collaboration with Anstalt für Verbrennungskraftmaschinen (“AVL Austria”) the Company has developed a new range of in-line engines ranging between 160 and 230 hp in four cylinder engines and between 270 and 360 hp in six cylinder engines and torque range of 600-1475 Nm. The Neptune series engines comply with Bharat III and IV emissions standards, and is designed for a quieter, stronger and more reliable performance as well as superior fuel efficiencies. This series features a 3rd Generation Common Rail Direct Injection system, four valves per cylinder and other features that enable it to deliver flat torque curves. The Neptune series engines have been launched in Fiscal 2014. This engine is upgradable to Euro V and VI standards. P15 1.5L The Company has developed the P15 1.5L engine with 58 hp in three cylinders and a torque of 157.5 Nm. This engine features the Common Rail Direct Injection system and is available in Euro III and Euro IV variants. This engine is used to power LCVs and is presently being used in the Dost. The P15 1.5L is also available in CNG option.


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"H" Series Engines The "H" Series engine, currently our most popular engine, is available with four or six cylinder options and provides between 120 and 225 hp and a torque range of 500 -800 Nm. The H Series engine meets Bharat III and Bharat IV emission standards and have CNG variants. The Company has over the years improved the performance of the “H” Series engine with assistance from AVL, Austria and Robert Bosch GmbH of Germany. The H series engines have been upgraded to be Euro III and Euro IV compliant. Spare parts and other products The Company also manufactures, trades and imports spare parts which are sold under the trade names 'LEYPARTS' and 'VALUEPARTS' which support its vehicle manufacturing, defence logistics support and power solutions business. The spare parts business is a key allied business which supports the Company's growing fleet of vehicles in the market. In Fiscal 2012, 2013 and 2014, sales of spare parts and other products was Rs.1,55,399.93 lakhs, Rs.1,81,458.13 lakhs and Rs.1,21,257.30 lakhs respectively, representing 11.33%, 13.64% and 11.48% respectively of the Company's total revenue from operations (gross).

Defence Logistics Support

The Company manufactures specialised vehicles which are used by the Indian defence for logistics support. The Company presently has four products including the Stallion 4x4, Stallion 6x6, Super Stallion 6x6 and Super Stallion 8x8, which it has been regularly supplying to the Indian Government. The Company has also set up a modern prototype workshop at Sengadu near Chennai to test and develop new products.

SERVICE OFFERINGS In connection with our various product offerings, the Company also provides annual maintenance contracts, engine re-building services, selling used trucks, providing training to service teams of its dealer's, operating driver training institutes and facilitating insurance programmes in conjunction with our dealers for our end customers. The Company's used truck business is still in its early stage with the Company planning to grow it gradually. The Company presently sources its old trucks through dealers, assesses their condition, validates ownership documents, and purchases them following which the vehicle is re-conditioned and sold by the Company with a six or a 12 month warranty based on the model. The Company also helps facilitate the availability of affordable and value-added insurance cover to its customers by working in conjunction with its dealers to enable them to sell insurance (through licensed third party brokers) at the time the product is sold. In Fiscal 2012, 2013 and 2014, revenue from service offerings was Rs.8,266.77 lakhs, Rs.13,825.46 lakhs and Rs.10,248.62 lakhs respectively, representing 0.60%, 1.04% and 0.97%, respectively, of the Company's total revenue from operations. Warranty We provide warranties on our vehicles for a period of 18 months from the date of sale or 1,50,000 kilometers, whichever is earlier. The warranty covers manufacturing defects, and for proprietary parts that are sourced from third party suppliers, warranties of the relevant third party suppliers apply. We do not maintain any insurance coverage for spare parts. We provide warranties that cover engines sold and used in India against defects in workmanship and material under normal use and preventive maintenance service. We also offer the following warranties with respect to our engines:

Engine Type Warranty period Genset Application Engines Warranty is applicable for 27 months from the date of invoice from the factory, 24

months from the date of commissioning or 5,000 operational hours, whichever is earlier.


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Industrial Application Engines Warranty is applicable for 24 months from the date of invoice from the factory or 5,000 operational hours, whichever is earlier.

Marine Application Engines Warranty is applicable for 24 months from the date of sale of the engine by the Company to the original purchaser or 3,000 operational hours, whichever is earlier.

Leypower Genset Warranty is applicable for 30 months from the date of invoice from the factory, 24 months from the date of commissioning or 5,000 operational hours, whichever is earlier.

We also provide certain free service inspections in connection with our engines. In addition to the actual warranty expenses incurred, we make a provision in our financial statements for the estimated warranty expenses based on the unexpired warranty period for vehicles sold. We actively monitor products of significant value on which warranty claims are made and take any necessary corrective action. DISTRIBUTION CHANNELS AND CUSTOMERS Commercial Vehicles Commercial Vehicle Sales and Distribution Channels Our commercial vehicles are distributed through a nationwide network consisting of five zonal offices, 15 regional offices and 31 area offices located across India providing a comprehensive sales and after sales customer service network. The regional offices primarily make sales to our dealers and are responsible for processing our dealers' orders, vehicle preparation and delivery. As at March 31, 2014, we had 264 dealer branches in key market centers as part of our sales network. Dealers are chosen based on their financial strength, experience in the commercial vehicle industry and after-sales service and marketing capabilities. While our largest dealers are concentrated in southern and western parts of India, we have significantly expanded the number of dealers in northern and eastern parts of India in recent years in order to increase our market penetration in these regions. We enter into agreements with our dealers covering the allocated territories and providing the after-sales customer service obligations of such dealers. A significant proportion of our vehicles are sold directly to dealers from regional sales offices without credit and on a payment-on-delivery basis. In certain exceptional circumstances, we may strategically extend credit to certain dealers to incentivize such dealers as part of our market penetration strategy for a specific region; such credit periods typically range between 30 and 60 days. Our dealers usually carry very low levels of inventory and purchase vehicles and other products in anticipation of sales to end customers. Our dealers are typically equipped with workshop facilities in accordance with our dealership requirements and are required to stock adequate spare parts as well. As at March 31, 2014, the Company's distribution network across India comprised 264 dealer branches, a network of 159 ASCs, 64 containerized workshops and 152 retail stores which sell spare parts. In aggregate the Company had 639 customer touch-points across India in Fiscal 2014. We have also introduced various customer service initiatives such as our Tatkaal and Leyland Direct programs in order to develop and strengthen customer relationships and brand loyalty. Under our Tatkaal program, we endeavor to address customer service calls on any major highway in India and to restore their vehicle to operating condition within a fixed time.

Commercial Vehicle Customers End customers of our commercial vehicles include single truck operators, companies utilizing commercial vehicles for the transport of their products and operators of commercial vehicle fleets. Purchases in the commercial vehicle industry are generally financed by banks and finance companies.


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We also sell commercial vehicles directly to GoI entities, including State Transport Undertakings ("STUs") in India. We sell buses directly to STUs, which are typically the principal customers in terms of volume of units sold. Depending on various factors such as market condition, volume of supply and payment history, sales to STUs are made either on a payment-on-delivery basis or on a credit basis with credit periods ranging between 30 and 60 days. Engines Our engines are distributed through a network of 281 dealer outlets. These engine dealers are separate from our vehicle dealers. Substantially all engines are sold by us to dealers on credit terms ranging between 45 and 60 days, payment for which is backed by letters of credit opened by dealers or through a bill marketing scheme (i.e. financing post-sale operations against bill of exchange) in our favor, to facilitate financing for our engine dealer. Spare Parts Spare parts are supplied primarily through our vehicle dealers as well as through stockists who are traders in automobile parts. Spare parts are delivered to customers upon cash payment. However, spare parts are sold to STUs on a credit basis. We supply vehicle kits for logistics support to the GoI vehicle factory at Jabalpur which in turn assembles the vehicles. International Distribution and Sales Channel As at March 31, 2014, our products were sold in 34 countries. For Fiscal 2014, Sri Lanka, Bangladesh and UAE were our most significant export markets. Our vehicles are distributed through dealers in certain of our major markets. Dealers also provide an after-sales customer service network. We also have a spare parts warehouse in Sharjah UAE Free Trade Zone which serves as a hub for providing an after-sales customer service network in the region. MANUFACTURING FACILITIES We operate seven manufacturing facilities located in Tamil Nadu, Maharashtra, Rajasthan and Uttarakhand with an aggregate production capacity as of March 31, 2014 of 1,50,500 vehicles per year, based on two shifts working per day. We have two manufacturing facilities outside India.

The following table provides a brief description of our manufacturing facilities in India as at March 31, 2014: S. No Manufacturing Facility Location of the Facility Operations

1. Ennore Tamil Nadu Machining and assembly of - Neptune Engines H Series Engines Constant mesh gear boxes Front and rear axles

2. Hosur Unit-I Tamil Nadu

Manufactures - H Series engines P 15 engines

3. Hosur Unit-II Tamil Nadu Manufactures LCVs (Dost and Partner), logistics support vehicles for the Indian defence, chassis parts for kits. This unit also houses finishing and assembly facilities and painting facilities for cabins.


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4. Cab Panel Press Shop (Hosur) Tamil Nadu Cabin panel requirements of Hosur II, Ennore and Pant Nagar are taken care of by this unit

5. Bhandara Maharashtra Machining and assembly of synchromesh gear boxes

6. Alwar

Rajasthan Assembly of passenger chassis including CNG bus chassis, bus body building

7. Pant Nagar

Uttrakhand Vertically integrated plant which manufactures MHCVs and production of Neptune engines

Ennore The Ennore facility was set up by us in 1948. In Fiscal 2014, the Ennore facility accounted for more than one third of our total vehicle production in terms of number of units. The facilities include machining and assembly of Neptune engines, constant mesh gear boxes and front and rear axles, and assembly of MHCVs. The facility also manufactures Neptune engines, “H” Series engines and synchromesh gear boxes. The facility also includes certain advanced technologies such as automated test-beds, centralized chip handling and centralized cooling system. Hosur I, Hosur II and Cab Panel Press Shop The Hosur I facility was established in 1980, and is the engine manufacturing center for our “H” Series engines and P 15 engines used in LCVs. Both the high speed diesel and the CNG version of these engines are manufactured in Hosur I. Further, it also caters to the engine requirements of the Indian defence logistics sector. The Hosur II facility was established in 1994 and here we manufacture our new range of LCVs (Dost and Partner) and vehicles used for logistics support for the Indian defence logistics sector as well as chassis parts for kits. We have also upgraded the Hosur II facilities to manufacture a range of MHCVs as well. The Hosur II unit also includes finishing and assembly facilities like advanced painting facilities for cabins. The Cab Panel Press Shop (“CPPS”) facility at Hosur houses eight presses for stamping sheet metal and skin panels for commercial vehicles and other applications. The presses in this facility can be utilized for making panels of complex shapes and profiles. Cabin panel requirements of Hosur II, Ennore and Pant Nagar are taken care by CPPS. Bhandara The Bhandara facility was established in 1982. It is equipped with technology transmission systems and includes facilities for machining and assembly of synchromesh gearboxes. This facility also engages in vehicle assembly and has heat treatment facilities. Alwar The Alwar facility was established in 1982 and is a dedicated vehicle assembly unit with a focus on assembly of passenger chassis including CNG bus chassis. This facility includes a “U” shaped chassis assembly conveyor and an automated slate conveyor system for rear axle assembly. The manufacturing unit also has facilities to build bus bodies. Pant Nagar In 2010, the Company established its largest manufacturing facility in Pant Nagar, Uttarakhand, with a capacity to produce its entire range of vehicle products, including Neptune engines. The Pant Nagar manufacturing facility commenced operations in March 2010 and is vertically integrated incorporating all the major processes required for truck manufacturing. An integrated manufacturing facility allows the Company to achieve greater economies of scale and cost efficiencies, manage product flow


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and inventory and eliminate duplication of business functions and administrative expenses. The manufacturing facility has a capacity of 50,000 units per annum on a two shift basis The Pant Nagar facility also benefits from certain fiscal incentives from the state government and the GoI, e.g. we are exempt from excise duties levied on vehicles manufactured in the Pant Nagar facility until March 2020. In addition, 100% of the profits at the Pant Nagar facilities are tax exempt until Fiscal 2014 and 30% of its profits are tax exempt from Fiscal 2015 until Fiscal 2019. Ambattur In Fiscal 2014, the Company sold its Ambattur facility. United Arab Emirates We have entered into a joint venture with the Ras Al Khaimah investment authority, and our associate company operates a manufacturing facility in Ras Al Khaimah, UAE with a production capacity of 2,000 vehicles a year. This facility is operational since 2010. The buses manufactured in this facility are primarily supplied to the Middle East. United Kingdom We also operate another manufacturing facility in Leeds, UK through our associate company Optare Plc. to produce single deck and double decker buses. The facility has an assembly line bus body facility and is capable of assembling diesel, hybrid and electric buses. Installed Capacities As at March 31, 2014, our aggregate installed capacity for vehicle assembly in India was approximately 1,50,500 vehicles, mostly on a two shift basis, per year. Our capacity is dependent on a number of independent factors, including the number of staff members on the production line, the number of shifts undertaken, and the time periods when the machines are non-operational to allow for repair, maintenance and replacement. RAW MATERIALS AND SUPPLIERS The principal raw materials used in our manufacturing facilities include steel, aluminum and rubber. Principal components required for the production of commercial vehicles also include castings, forgings, steel sheets and plates, proprietary items such as tyres, batteries, axles, brake systems, power steering systems, fuel injection systems, turbo chargers, electrical components and plastic parts. While we manufacture certain engines, transmission boxes and cabins, we also source some of these requirements from third party suppliers or associate companies. SUPPLY CHAIN AND PROCUREMENT We have introduced various quality and cost control measures to ensure that suppliers meet our quality standards, while maintaining their competitive pricing and ensuring timely delivery of supplies. In order to manage increases in raw material costs, we have introduced various programs such as value engineering that takes a systematic approach to achieve lower costs without compromising the efficiency of the product, and also source steel and other principal raw materials from suppliers that offer competitive prices. We have reorganized our supply chain organization by introducing integrated strategic sourcing, procurement, storage and internal logistics functions within the sourcing and supply chain department. The supply chain teams are responsible for ensuring the quality, cost competitiveness and timely delivery of sourced raw materials and other parts to us. We also have an on-line supplier performance management system pursuant to which the performance of suppliers is tracked against the specific targets set for key supplier metrics such as quality, cost competitiveness, logistics, development facilities and management. We also enter into agreements with suppliers of major components and have established effective communication channels with our suppliers.


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REGULATION The commercial vehicle industry in India is subject to various environmental laws and regulations, among other matters, relating to vehicle emissions. We are also subject to various regulatory regimes including environmental regulations applicable to our manufacturing facilities and operations. For further information, see “Overview of the Indian Regulations and Policies” beginning on page 141. COMPETITION We face competition primarily from various Indian and international commercial vehicle manufacturers including Tata Motors Limited (“Tata Motors”), Volvo Eicher Motors Limited (“Eicher”), Daimler India Commercial Vehicles (“Daimler”), AMW Motors Limited and Mahindra Navistar Automotives Limited. Several international commercial vehicle manufacturers have increased or are expected to increase their participation in the Indian market through technology transfers, joint ventures or wholly-owned subsidiaries, such as Daimler and Mahindra Navistar. We have historically enjoyed a significant market share in southern and western India, and have significantly focused on increasing market penetration in northern and eastern India in recent years. In Fiscal 2013 and 2014, we were the second largest manufacturer of MHCVs in India. (Source: Copyright SIAM Report 2014). The following table sets forth, for each of the periods indicated, our market share in India for each of the categories presented: (In %) Fiscal 2012 Fiscal 2013 Fiscal 2014 MHCV Buses 41.9 40.5 38.6 MHCV Trucks 20.2 23.4 22.8 MHCV Total 23.3 26.4 25.8 (Source: Copyright SIAM Report 2014 and SIAM report dated April 10, 2013 ("SIAM Report 2013")) We also face direct competition from suppliers in the spare parts market. We believe that our product offerings in India are competitive. Our vehicles and other products are tailored specifically for the Indian market taking into consideration specific customer requirements such as fuel efficiency, price competitiveness, safety, comfort, durability, reliability and product quality able to withstand harsh climates and potential overloading. We believe that our nationwide after-sales customer service network provides us significant competitive advantage, and we have in recent years made significant investments in expanding and strengthening our dealership and after-sales service network. In terms of engines manufactured for industrial use, gensets, agricultural and marine applications, we face competition from Cummins India Limited, Mahindra & Mahindra Limited, Kirloskar Oil Engines Limited and Greaves Cotton Limited. EMPLOYEES We consider our human capital as a critical factor to our success. We have drawn up a comprehensive human resource strategy that address key aspects of human resource development. As at March 31, 2014, the Company had 11,552 full time employees. We had 4,746 executives as on March 31, 2014. In the third quarter of Fiscal 2014, we announced a voluntary retirement scheme (“VRS”) for certain class of employees to rationalize our personnel and employee resources. Pursuant to the VRS, 342 executives accepted the VRS scheme option resulting in a redundancy cost of Rs.4,674.94 lakhs in Fiscal 2014. This exercise is expected to result in significant reduction in our employee expenses in the coming years.


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Training and Development We are committed to building the competency of our employees and improving their performance through training and development. Our focus is on identifying gaps in our employees’ competency and preparing employees for changes in the competitive environment as well as to meet organizational challenges. Some of the focus areas in training are centered on leadership, innovation management and internalization in order to challenge our employees’ outlook as we continue to develop domestically and internationally. Development initiatives for our senior leadership were undertaken through various programs led by both internal and external faculties. We continue to be committed to providing our employees with support and growth opportunities, and have implemented various human resources strategies around talent acquisition, development and training. Key employee initiatives that we have introduced include an Emerging Leaders Program designed to identify and develop top performing employees into future leaders, the Chairman's Award to reward top performers, the RISE award which is a recognition of exemplary performance as well as our "IMPROVE” initiative which has been developed as a platform to showcase the best projects by our employees relating to productivity improvement, efficiency enhancement and cost reduction. We also provide our employees with medical benefits and retirement benefits and a pension fund is established at all the facilities. In addition, employees benefit from a superannuation fund, a provident fund and a gratuity fund. As at March 31, 2014, our employees, other than management, were organized into six labor unions, one in each of our manufacturing facilities in India, with the exception of the Pant Nagar facility. We have generally enjoyed cordial relations with our employees at our factories and offices. Our labor unions do not have any political affiliation and we believe that our relations with our unions and employees are good.

Employees' wages are paid in accordance with wage agreements that have varying terms (typically three years) at different locations. We have entered into wage agreements with labor unions at our Ennore, Hosur I, Hosur II, Cab Panel Press Shop, Bhandara and Alwar facilities. The expiration dates of the wage agreements with respect to various facilities are as follows:

Location Validity of the Wage Agreement Hosur Unit - I Valid from July 16, 2013 for a period of three years and

will continue thereafter until it is replaced by another agreement.

Hosur Unit - II Valid from July 22, 2013 for a period of three years and will continue thereafter until it is replaced by another agreement.

Cab Panel Press Shop (Hosur) Valid from September 25, 2013 for a period of three years and will continue thereafter until it is replaced by another agreement.

Ennore Valid from January 11, 2014 until January 10, 2017 and thereafter until it is replaced by another Agreement.

Alwar Valid from May 29, 2014 for a period of 3 years and will continue thereafter until it is replaced by another agreement.

Bhandara Valid from August 12, 2011 until August 11, 2014. Wage increases for Bhandara are to be in line with the wage increases of Hosur I.

We believe that we have a cordial industrial relation environment in all our manufacturing facilities. Further operational support has been provided for outsourcing low value-added activities and implementing other reforms that impact quality, cost cutting and productivity improvements across all facilities.


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INTELLECTUAL PROPERTY We create and own certain valuable intellectual property assets. We own or hold licenses to use certain patents, copyrights and trademarks on a global basis. Our intellectual property assets include:

Patents and patent applications related to our innovations and product offerings;

Trademarks related to our brands; and

Copyrights and trade secrets arising from the creative content and design of our product offerings.

We protect our competitive position by, among other methods, filing patent applications to protect technology and improvements that it considers important for the development of our products and services. As at March 31, 2014, we had five patents which are registered in India. In addition, we have 90 pending patent applications. We also own various trademarks and service marks that contribute to the identity and the recognition of our corporate brand, product and service brands globally. These trade and service marks are integral to our business, and the loss of any of these intellectual property rights could have a material adverse effect on our business. We believe that the Ashok Leyland and “L” fly wheel logos are significant to our business operations in India and elsewhere. We also retain copyrights of our creative design and aesthetic features in our products. We hold trade secrets, technology and know-how processes and related intellectual property rights that are not registered but are of material importance to the business. We adopt a number of protection procedures including among others, trade secret protection, the inclusion of proprietary statements in the documents we create and confidentiality and non-disclosure clauses in the relevant agreements. Access to sensitive know-how is also restricted to employees on a highly selective basis. Also from time to time, we encounter disputes over rights and obligations concerning intellectual property and we cannot provide assurance that we will prevail in any such intellectual property disputes and oppositions. RESEARCH AND DEVELOPMENT Our research and development capabilities are focused on innovating, developing and improving engine and vehicle technologies for our vehicles. The Company's center for product research and development near Chennai provides design, development and testing services for new products, as well as for upgrading of existing products. There are on-site styling studios, a computer aided engineering centre and design tools including, a CATIA design platform capable of three dimensional surface modeling, as well as PLM platforms for product life cycle management. A portfolio of testing facilities has been set up to simulate the conditions that the Company’s products will face while operating in its target markets, including India and other countries in the subcontinent, Africa and the Middle East. For instance, the six-poster road simulation laboratory is a track simulator for multi-axle vehicles which significantly reduces testing time. Most of the Company’s manufacturing facilities are TS16949:2009 and ISO 14001 certified for environmental standards. The Company, through Ashok Leyland (UK) limited has established a research and development centre at MIRA Technology Park in the UK.

In Fiscal 2013 and 2014, the Company incurred Rs.30,386.17 lakhs and Rs.25,623.91 lakhs respectively for research and development in their in-house R&D facilities. As at March 31, 2014, the Company had 850 employees in its research and development team.

The Company has also successfully developed an engine platform, Neptune, to comply with the Bharat III and IV emission standards. We also continue to develop engines to meet higher emission standards. Further we are conducting various research projects aimed at product development and improvement. During the past three Fiscals, we have also successfully developed the following key vehicle applications:

Key Vehicle Applications NGICV Series Vehicle (BOSS) P-15 Engines for Dost Vehicle 12m JAN BUS FE H6 225/180hpEuro4 FVDP-N Truck series (CAPTAIN) Neptune Engines series Next Generation Cabin (NGC)


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12mLUXURAE+3REH6225hp Diesel Euro3

11MFESLF Diesel AC/Non-AC for JNNURM 2

BSIII Lift Axle

LYNX BUS 8mSTAG FE H6176hpCNG Euro 4 EAGLE 814 PASSENGER

INSURANCE

We maintain insurance coverage for our manufacturing facilities as well as our assets at various other facilities like the warehouses, regional sales offices and yards. Depending on the risks associated with each type of asset, the assets are covered under appropriate types of insurance policies. Fixed assets and current assets at manufacturing plants and stocks at warehouses and regional sales offices are covered under standard fire and special perils insurance policy which covers loss/damage due to fire, explosions, lightning, act of god perils like storm, flood, cyclone and earthquake (including tsunami), aircraft damage, impact damage, riot strike and malicious damage, landslide, subsidence and rockslide and bush fire. We do not maintain insurance against terrorism as the rights are perceived to be minimal vis a vis the cost of insurance for terrorism. However, riot, strike and civil commotion are part of the fire insurance cover that we maintain. After analysis of risks associated with each category of fixed asset, we have taken insurance cover for replacement value against high risk assets while others are covered according to market value. In addition, current assets at warehouses and sales yards are also covered against burglary. We have discontinued loss of profits or business interruption cover several years ago in view of minimal losses in this segment. The insurance policy of the Company’s corporate office in Chennai is valid until March 2015. The Company has now also availed add on cover of “Rent for Alternate Accommodation” under this cover with effect from April 1, 2013. We have also availed of insurance cover for chassis in transit under comprehensive motor insurance. This cover provides insurance coverage in the event of third party injury/death as well as damage to chassis. We also maintain an insurance cover for extended warranty for our drive line. In addition to the insurance cover for its assets, we have also availed of insurance cover under comprehensive general liability policy, public liability act policy for our manufacturing locations where hazardous substances may be handled, directors’ and officers’ liability policy and fidelity guarantee policy. As part of employee benefits, we maintain group term insurance, group personal accident insurance, group mediclaim insurance, gratuity scheme and super annuation scheme. Our gratuity and superannuation schemes are provided together with life cover. We do not maintain any keyman insurance. We believe that the insurance coverage availed by us is reasonably sufficient to cover all anticipated risks associated with our operations, but however there can be no assurance that the insurances taken by us would be adequate to cover all risks and losses. To facilitate the processing of any insurance claims we have also engaged professional intermediaries who provide technical assistance in relation to claims and policy coverage. CORPORATE SOCIAL RESPONSIBILITY We participate in a variety of projects that are beneficial to the environment and the community, and have received various awards in recognition of these efforts. Our Hosur Unit I was awarded the CII Environmental Best Practices Award 2013, Environment, Health and Safety Award 2012, Golden Peacock Climate Security Award 2011, Greentech Environment Excellence Award 2010, Golden Peacock Environment Management Award 2009, CII – Water Efficient Unit Award 2008, National Award for Excellence for Water Management in 2008 and for Energy Management in 2007. Our Hosur Unit II was awarded the Greentech Environment Excellence Award 2013, Green Manufacturing Excellence Award 2013 and BEE – National Energy Conservation – Merit Award 2013. Similarly our Bhandara Unit was awarded the Prashansa Patra Safety Award by National Safety Council in 2012. We have trained commercial vehicle drivers at our driver training institutes in Namakkal (Tamil Nadu), Burari (near Delhi), Khaital (Rajastan), Chhindwara (Madhya Pradesh) and Chhatia (Orissa).


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CORPORATE RESTRUCTURING From Fiscal 2014, the Company has consolidated its 13 direct subsidiaries (excluding "held for sale" subsidiaries), as explained below), on a line by line basis and five joint ventures on a proportionate consolidation basis and the Company taken into consideration the share of its profits/losses of its four associates. In doing so, three of our subsidiaries viz., Avia Ashok Leyland Motors s.r.o, Albonair GmbH and Albonair India have been excluded from the consolidation as these entities are “held for sale” subsidiaries. Amalgamation of Ashley Holdings Limited, Ashley Investments Limited and Ashok Leyland Project Services Limited with Ashley Services Limited Under a scheme of amalgamation approved by the High Court of Madras by its order dated July 31, 2013 (the “Order”), Ashley Holdings Limited, Ashley Investments Limited and Ashok Leyland Project Services Limited (collectively, the “Transferor Companies”) were amalgamated into Ashley Services Limited with effect from April 1, 2013 and each of Ashley Holdings Limited, Ashley Investments Limited and Ashok Leyland Project Services Limited were dissolved without winding-up. Accordingly, the entire business and whole of the undertaking of the Transferor Companies, including all their assets and properties of whatsoever nature, employees, licenses, agreements or any rights devolving pursuant to such agreements, or holding of investments to appoint directors, all permits, and approvals were transferred and/or deemed to be transferred to and vested in Ashley Services Limited so as to become the properties and assets of Ashley Services Limited. The Order stated that transfer or vesting of the assets of the Transferor Companies shall be subject to the existing charges or hypothecation or mortgages over or in respect of the assets or any part of such assets of the Transferor Companies. Also the liabilities of the Transferor Companies were transferred to and vested in Ashley Services Limited. Further the equity shares held by each of the Transferor Companies in each of the other Transferor Companies stood cancelled. In a subsequent development, Ashley Services Limited became a wholly owned subsidiary of our Company with effect from April 1, 2013. Further on October 29, 2013, a Scheme of Arrangement between Ashley Services Limited and its shareholders and creditors was approved by the High Court of Madras. Pursuant to this scheme of arrangement, a certain portion of the capital reserve amount under the capital reserve account of ASL was required to be adjusted/set-off against a diminution loss recorded in the balance sheet and profit and loss of ASL. Amalgamation of Ashley Services Limited with the Company The High Court of Madras by its order dated March 21, 2014 (the “Order 2”) further approved the scheme of amalgamation of Ashley Services Limited with the Company with effect from July 1, 2013 and the dissolution of Ashley Services Limited without winding-up. Accordingly, the entire business and whole of the undertaking of Ashley Services Limited, including all its assets and properties of whatsoever nature, employees, licenses, agreements or any rights devolving pursuant to such agreements, or holding of investments to appoint directors, all permits, and approvals were transferred and/or deemed to be transferred to and vested in the Company so as to become the properties and assets of the Company. The Order 2 stated that the transfer or vesting of the assets of Ashley Services Limited shall be subject to the existing charges or hypothecation or mortgages over or in respect of the assets or any part of such assets of Ashley Services Limited. Also the liabilities of Ashley Services Limited were transferred to and vested in the Company. For further details in relation to accounting treatment in relation to the amalgamation, see "Financial Statements" beginning on F-1. This scheme became effective on March 27, 2014 on the filing of the Order 2 with the RoC. Each of the Madras Stock Exchange Limited, the BSE Limited and the National Stock Exchange of India Limited by their letters dated December 19, 2013, January 23, 2014 and January 22, 2014, respectively have given their no-objection in relation to the Scheme. Held for Sale Subsidiaries The Board of Directors on May 22, 2014 resolved to sell three of the Company's subsidiaries viz., Avia Ashok Leyland Motors s.r.o, Albonair GmbH and Albonair India Private Limited. The decision of the Board of Directors to sell these subsidiaries was to achieve (i) ease of management; (ii) efficiency in fund raising; (iii) reduction in the number of companies; (iv) ease of management; (v) streamlining the holding in various operating companies in the group and (vi) consolidate the


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talent pool. These subsidiaries were classified as "held for sale" subsidiaries since it was intended that they would be sold within 12 months. The "held for sale" subsidiaries are classified as a current investment in accordance with Accounting Standard (AS 13) for which its carrying amount would be the lower of cost and fair value. It would be possible for the "held for sale" subsidiaries to be reclassified should the Board of Directors consider that the reasons for the such subsidiaries to be classified as a current investment in the "held for sale" category no longer exists.

CERTAIN SUBSIDIARIES

Ashok Leyland Nissan Vehicles Ltd. The Company entered into a heads of agreement with Nissan Motor Co. Ltd. on August 29, 2007 and a Master Cooperation Agreement on October 29, 2007 to develop, manufacture and sell LCVs, pursuant to which the parties entered into a joint venture agreements dated May 26, 2008 to establish Ashok Leyland Nissan Vehicles Ltd. The Company holds 51% of the shares of Ashok Leyland Nissan Vehicles Ltd. ("Joint Venture Company"). The Joint Venture Company has access to Nissan's design, production and development technologies for LCVs. The vehicle manufacturing joint venture agreement prohibits the parties from entering into any business in relation to LCVs in India, either by itself or through its affiliates or other joint ventures, during the subsistence of the joint venture agreement. Further the Company and Nissan Motor Co. Ltd have entered into a contract manufacturing arrangement, whereby the Company manufactures LCVs at its Hosur II facility for the Joint Venture Company. All sales of the LCVs from the Joint Venture Company originate in the state of Tamil Nadu, which offers tax incentives on sales made within the state. The Joint venture Company sells the LCVs directly to customers in the state of Tamil Nadu and the Company for trade sales outside of the state of Tamil Nadu. Through this sales structure, the Joint venture Company is able to enjoy tax savings and offer LCVs at competitive prices.

Hinduja Leyland Finance Limited (HLFL)

As at March 31, 2014, the Company held 65.84% of the shares in HLFL, a non-banking finance company, which operates in the vehicle financing business. Through HLFL we are able to provide our dealers with commercial vehicle financing solutions which they can offer to their customers. We believe this an important value added service which we provide to our dealers.

Gulf Ashley Motor Limited (GAML)

As at March 31, 2014, the Company held 91.53% of the shares in GAML as at March 31, 2014. GAML operates Ashok Leyland authorized dealerships in the states of Jharkhand, Assam and Chhattisgarh.

Optare Plc. (Optare)

As at March 31, 2014, the Company held 75.11% of the shares of Optare Plc. Optare Plc. is incorporated in the UK. Optare's principal business is designing, manufacturing and selling single deck and double deck buses. Optare owns a manufacturing facility in Leeds. The facility has an assembly line bus body facility and is capable of assembling diesel, hybrid and electric buses.

Associates

Ashley Aviation Limited (AAL)

As at March 31, 2014, the Company held 49% of the shares in AAL. AAL's operates in the aviation business and provides leasing and chartering services for aircrafts and helicopters and allied air vehicles in India and internationally.


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Ashok Leyland Defence Systems (ALDS) As at March 31, 2014, the Company held 26.00% of the shares in ALDS. ALDS was incorporated to promote the Company’s participation in the growing privatization of defence procurement. ALDS focuses on helping the Company expand its business to a wider class of specialized products meeting the growing needs of the Indian armed forces and addressing export opportunities.

STRATEGIC RELATIONSHIPS We have entered into arrangements with our joint venture partners and associates to blend their expertise and experience in the international commercial vehicle, construction equipment and auto ancillary businesses with our knowledge and expertise in India. Joint Ventures We have entered into joint ventures with other entities with the objective of enhancing our product portfolio and sourcing technological expertise, to develop and launch new products and source technological expertise for our existing products. Our significant joint ventures and description of the main products offered through each Joint Venture is discussed below: Ashok Leyland John Deere Construction Equipment Company Private Limited

The Company entered into a joint venture agreement with John Deere Asia (Singapore) on September 30, 2008 to establish Ashok Leyland John Deere Construction Equipment Company Private Limited to manufacture, market and sell construction equipment. The Company manufactures and supplies the engines for the construction equipment. The Company manufactures and supplies the engines for the construction equipment. The joint venture agreement has a 20 year initial term, after which it may be renewed by the mutual consent of the parties. This joint venture manufactures construction equipment, like "435 Backhoe Loader", a construction tipper with more cabin space and improved safety features and it also supplies engines for this product.

Ashley Alteams India Limited The Company has entered into a joint venture agreement with Alteams Oy on July 3, 2007 to create Ashley Alteams India Limited for the development of HPDC aluminum components through the joint venture entity. Under this agreement, ALTEAMS OY is required to license its technology on an ongoing basis to Ashley Alteams India Limited. ALTEAMS OY provides its technical services to the joint venture free of charge for the initial five years. ALTEAMS OY is required to manufacture or sell HPDC aluminum components parts in India only through the joint venture entity. Correspondingly, the Company has undertaken not to manufacture any HPDC aluminum components in India. At any time after the lock-in period of five years, either party may "bid" for the other party's entire shareholding by giving 21 days written notice at a particular valuation.

Nissan Ashok Leyland Technologies Ltd. The Company entered into a heads of agreement with Nissan Motor Co. Ltd. on August 29, 2007 and a Master Cooperation Agreement on October 29, 2007 to develop, manufacture and sell LCVs, pursuant to which the Company and Nissan Motor Co. Ltd. entered into joint venture agreements dated May 26, 2008 to establish Nissan Ashok Leyland Technologies Private Ltd. for the purposes of designing and developing LCVs and their parts and components, LCV power trains, and the parts and components related to such LCV power trains.

Nissan Ashok Leyland Powertrain Ltd. The Company entered into a heads of agreement with Nissan Motor Co. Ltd. on August 29, 2007 and a Master Cooperation Agreement on October 29, 2007 to develop, manufacture and sell LCVs, pursuant to which the Company


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and Nissan Motor Co. Ltd. entered into joint venture agreements dated May 26, 2008 to establish Nissan Ashok Leyland powertrain Ltd. for the purposes of developing LCV powertrains and their components.

Automotive Infotronics Limited

The Company formed an equal joint venture with Continental AG for developing and adapting cost efficient electric / electronic automotive products. This JV is currently under liquidation and a liquidator has been appointed in March 2014.

Other Investments The Company has made investments in certain entities to support our business. These include: Lanka Ashok Leyland Plc (LAL)

The Company held 27.85% of the shares in LAL as at March 31, 2014. LAL is a venture between Lanka Leyland Ltd (a wholly owned company of Government of Sri Lanka) and the Company to carry out the business of importation of Ashok Leyland commercial vehicles in Sri Lanka and to sell such vehicles and provide after sales support.

Ashok Leyland (UAE) LLC (AL UAE)

The Company held 49% of the shares in AL UAE as at March 31, 2014. AL UAE is a venture established with the Ras Al Khaimah Investment Authority. AL UAE owns an assembly facility for buses in Ras Al Khaimah. The manufacturing facility has the capacity to assemble 2,000 vehicles per year. Most of the buses manufactured by AL UAE are supplied to customers based in the Middle East.

In addition, the Company has also made minority investments in companies which are involved in fields related to the business including Defiance Technologies Limited and Irizar – TVS Limited, Ashok Leyland (UK) Limited.


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OVERVIEW OF THE INDIAN REGULATIONS AND POLICIES The following description is a summary of relevant regulations and policies applicable to the Company. This description is based on the current provisions of Indian law, which are subject to change or modification or interpretation by subsequent legislative, regulatory, administrative or judicial decisions. The laws set out herein below and their description are not exhaustive, and are only intended to provide general information to Investors and is neither designed nor intended to be a substitute for professional legal advice. Applicable Legislation The Company operates in the automotive sector in India and the business undertaken is regulated by various general and sector-specific laws and regulations, as amended, in India. Some of the key aspects of industry regulation in the automotive sector in India are discussed below. Overview of legislative and policy framework governing automotive sector in India Motor Vehicles Act, 1988 (“Motor Vehicles Act”) The main statutory regulation governing motor vehicles in India is the Motor Vehicles Act and the Central Motor Vehicles Rules promulgated under the Motor Vehicles Act. The Motor Vehicles Act empowers the Central Government to frame rules regulating the construction, equipment and maintenance of motor vehicles and trailers. These powers extend to the regulation of (a) the width, height, length and overhand of vehicles and of the loads carried, (b) the size, nature, maximum retail price and condition of tyres including embossing thereon of date and year of manufacture and the maximum load carrying capacity, (c) brakes and steering gear, (d) the use of safety glasses including prohibition of the use of tinted safety glasses, (e) signalling appliances, lamps and reflectors, (f) speed governors, (g) the emission of smoke, visible vapour, sparks, ashes, grit or oil, (h) the reduction of noise emitted by or caused by vehicles, (i) the embossment of chassis number and engine number and the date of manufacture, (j) safety belts, handle bars of motor cycles, auto-dippers and other equipment essential for safety of drivers, passengers and other road users, (k) standards of the components used in the vehicle as inbuilt safety devices, (l) provision for transportation of goods of dangerous or hazardous nature to human life, (m) standards for emission of air pollutants, (n) installation of catalytic convertors in the class of vehicles to be prescribed, (o) the placement of audio-visual or radio or tape recorder type of devices in public vehicles, (p) warranty after sale of vehicle and norms therefor, (q) maintenance of motor vehicles. In addition, the Motor Vehicles Act empowers the State Government to frame rules regulating (a) seating arrangements in public service vehicles and the protection of passengers against the weather, (b) prohibiting or restricting the use of audible signals at certain times or in certain places, (c) prohibiting the carrying of appliances likely to cause annoyance or danger, (d) the periodical testing and inspection of vehicles by prescribed authorities and fees to be charged for such test (e) the particulars other than registration marks to be exhibited by vehicles and the manner in which they shall be exhibited and (f) the use of trailers with motor vehicles. The Motor Vehicles Act also provides for punishment for offences relating to construction and maintenance of vehicles. The Central Motor Vehicle Rules, 1989 Chapter V of the Central Motor Vehicle Rules lays down provisions relating to construction, equipment and maintenance of motor vehicles. Among specifications pertaining to dimensions, steering gears, indicators, reflectors, lights, horns, safety belts and others, the Motor Vehicle Rules govern emission standards for vehicles operating on compressed natural gas, petrol, liquefied petroleum gas and diesel. Bharat Stage IV Emission Norms (equivalent to Euro IV norms) have been made to all 4 wheelers as of April 1, 2010 in the cities of Delhi/National Capital Region, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, including, Secunderabad, Ahmedabad, Pune, Surat, Kanpur, Solapur, Lucknow and Agra. Bharat Stage III Emission Norms (Equivalent to Euro III norms) were made applicable for the rest of the country with effect from October 1, 2010. Manufacturers must comply with the emission standards as laid down in the Motor Vehicle Rules from time to time and are required to certify such compliance.


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Additionally, pursuant to the Central Motor Vehicle Rules, every manufacturer must also submit the prototype of every vehicle to be manufactured by it for testing by the Automotive Research Association of India, Pune, or such other agencies as may be specified by the central government for granting a certificate by that agency as to the compliance of provisions of the Motor Vehicles Act and the Motor Vehicle Rules. The Central Motor Vehicle Rules also require the manufacturers to comply with notifications in the Official Gazette, issued by central government to use such parts, components or assemblies in manufacture of such vehicle, of such standards as may be specified or the relevant standards as specified by the Bureau of Indian Standards. Automotive Mission Plan, 2006-16 The Automotive Mission Plan (“Plan 2006-16”) laid down by the Ministry of Heavy Industries and Public Enterprises, Government, in December 2006, consists of recommendations to the task force of the Development Council on Automobile and Allied Industries constituted by the Government of India, in relation to the preparation of the mission plan for the Indian automotive industry. Plan 2006-16 recommends the adoption of appropriate tariff policy to attract more investment into the automobile industry, development of road, rail and port infrastructure, improvement in power generation through capacity enhancement and by decontrolling the Electricity Act to set up captive power plants which will facilitate faster growth of automotive sector both domestically and internationally. Plan 2006-16 recommends that a negative list of items, such as no duty concession for import of used/remanufactured vehicles, or treatment of remanufactured automotive products as old products, should be negotiated for free trade agreements or regional trade agreements on a case to case basis with other countries. Policy initiatives such as encouragement and collaboration of the automotive industry with research and academic institutions, tax concessions and incentives to enhance competitiveness in manufacturing and promotion of research and technology development, development of alternate fuel was also recommended by the Plan 2006-16. Plan 2006-16 also recommends, among others, the creation of Special Auto Component parks and creation of virtual special economic zones which would enjoy certain exemptions on sales tax, excise and customs duty. Strengthening of inspection and certification system by encouraging public private partnership and rationalization of the motor vehicles regulations are also among the major recommendations of the plan. A committee was identified under the chairmanship of the Secretary, Heavy Industries and Public Enterprises consisting of all stake holders including representatives of the Ministry of Finance, Government of India, representatives of ministries of environment, commerce, industrial policy and promotion, labour, shipping, railways, human resource development, science and technology, new and renewable energy, petroleum and natural gas of the Government of India, and representatives of the automotive industry, to monitor implementation and progress of the Plan 2006-16. The National Auto Policy 2002 The National Auto Policy 2002 was introduced by the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises of the Government in March 2002, with the aim, among others, to promote a globally competitive automotive industry and emerge as a global source for auto components, assist development of vehicles propelled by alternate energy sources, development of domestic safety and environmental standards at par with international standards and a key center for manufacturing tractors and two wheelers in the world. Emission Norms and Safety Standards in India With effect from April 1, 2010, India migrated its emission norms to the Bharat Stage IV (equivalent to Euro IV) in 12 metro cities. On June 1, 2010 Bharat Stage IV Emission Norms (equivalent to Euro IV norms) were made applicable to the cities of Solapur and Lucknow. Bharat Stage III Emission Norms (equivalent to Euro III norms) are applicable to the rest of the country. India has been a signatory to the 1998 UNECE Agreement on Global Technical Regulations (GTR) since April 22, 2006 India has a well-established regulatory framework administered by the Ministry of Shipping, Road Transport and Highways, Government of India (the “Ministry” or “MORTH”). The Ministry issues notifications under the Motor Vehicles Rules and the Motor Vehicles Act. Vehicles manufactured in the country are required to comply with relevant Indian standards and automotive industry standards.


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Environmental Regulations Manufacturing units or plants must ensure compliance with environmental legislation, such as the Water (Prevention and Control of Pollution) Act 1974, as amended, the Air (Prevention and Control of Pollution) Act, 1981, as amended, the Environment Protection Act, 1986, as amended and the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008, as amended. The basic purpose of these statutes is to control, abate and prevent pollution. In order to achieve these objectives, Pollution Control Boards (“PCBs”), which are vested with diverse powers to deal with water and air pollution, have been set up in each state. The PCBs are responsible for setting the standards for maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking inspection to ensure that units or plants are functioning in compliance with the standards prescribed. These authorities also have the power of search, seizure and investigation. All of the Company’s plants are required to obtain consent orders from the PCBs, which are indicative of the fact that the plant in question is functioning in compliance with the pollution control norms. These consent orders are required to be renewed. In addition, pursuant to notification dated September 14, 2006 issued by the Ministry of Environment and Forests, Government of India (“MoEF”). The MoEF conducts environment impact assessments. The MoEF receives proposals for expansion, modernization of existing projects or activities and construction of new projects or activities, and then the impact which such projects would have on the environment is assessed by the MoEF before it grants clearances for the proposed projects. Foreign ownership restrictions in automotive sector Under the Consolidated Foreign Direct Policy issued by the Department of Industrial Policy and Promotion, Ministry of Finance, GoI on April 17, 2014 (the “FDI Policy”), unless specifically restricted, foreign investment is freely permitted in all sectors of the Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. Under the current FDI policy, 100% foreign direct investment in the automobile manufacturing sector is permitted under the automatic route. Indian Taxes Section 80IC of the Income Tax Act provides for certain deduction from income tax of profits and gains made from undertaking in certain special category states. Pantnagar plant of Company in the state of Uttarakhand, which started its operation from 2010, is availing benefits under the said section. The following deductions are available as per this section

(1) 100% of profits and gains are tax exempt until Fiscal Year 2014 (2) 30% of profits and gains are tax exempt until Fiscal Year 2019

Excise Duty Central Excise Excise duty imposes a liability on a manufacturer to pay excise duty on production or manufacture of goods in India. The Central Excise Act, 1944 is the principal legislation in this respect, which provides for the levy and collection of excise and also prescribes procedures for clearances from factory once the goods have been manufactured etc. Additionally, the Central Excise Tariff Act, 1985 prescribes the rates of excise duties for various goods. In the Indian Union Interim Budget 2013-14, effective February 17, 2014, the Government decreased the excise duty rate for Fully built passenger buses and fully built trucks from 12% to 8%. Similarly, Passenger chassis (MDV, LCV, HCV) revised from 14% to 10% and goods chassis (MDV, LCV, HCV including three axled) revised from 13% to 9%. The Company’s Pantnagar Unit started commercial production on March 25, 2010, and is eligible for full exemption from excise duties in respect of the goods cleared from that the Pantnagar Unit for a period of 10 years from the date of commencement of commercial production i.e., up to March 24, 2020. Further, the excise duty for marine, auto and industrial engines has been revised downwards from 12% to 10% effective


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February 17, 2014. Excise duty rates for motor vehicle parts remains unchanged. Education cess, Secondary and Higher Education cess, and automobile cess levied at 2%, 1% and 0.125% respectively continue to be applicable. Value Added Tax Value Added Tax (“VAT”) is a system of multi-point levy on each of the entities in the supply chain with the facility of set-off input tax whereby tax is paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the value addition in the hands of each of the entities is subject to tax. VAT is based on the value addition of goods, and the related VAT liability of the dealer is calculated by deducting input tax credit for tax collected on the sales during a particular period. VAT is essentially a consumption tax applicable to all commercial activities involving the production and distribution of goods, and each state in India that has introduced VAT has its own VAT Act, under which, persons liable to pay VAT must register themselves and obtain a registration number. VAT has been implemented throughout India. VAT enables set-off from sales tax paid on inputs by traders and manufacturers against the sales tax collected by them on behalf of the government, thereby eliminating the cascading effect on taxation. Two main brackets of 4% and 12.5% along with special brackets of 0%, 1% and 20% were announced in the initial stage of VAT implementation for various categories of goods and commodities sold in the country, and certain states have introduced additional VAT of 1% and 3% on specified commodities, including automobiles. In one of the states, surcharge of 10% on VAT has been introduced on automobiles. In the course of time, VAT rates have been increased from 4% to 5% and 12.5% to 14.5% / 15.0%. Central Sales Tax, however, continues to exist, although it is proposed to be abolished in a phased manner. Since its implementation, VAT has had a positive impact on us. Prior to the implementation of VAT, sales tax formed part of the total cost of material. However, the implementation of VAT would result in savings on sales tax component, as VAT paid on inputs can be set off against tax paid on outputs. In the Indian Union Budget 2009-2010, the Central Sales Tax rate was reduced to 2%. Overview on certain employment and labours laws applicable to our Company The Factories Act, 1948 The Factories Act seeks to regulate labour employed in factories and makes provisions for the safety, health and welfare of the workers. The Factories Act defines a ‘factory’ to mean any premises, which employs 10 or more workers and in which manufacturing processes are carried on with the aid of power, or any premises, which employs 20 or more workers and in which manufacturing processes are carried no without the aid of power. Each State Government has set out rules in respect of the submission of plans and its prior approval for the establishment of factories and registration and licensing of factories. The Factories Act also provides for the mechanisms for safety of certain equipment used in factories, procedures for periodic examination of equipment such as plant and machinery at pressure plants and lifting tackles, regulation of working conditions within the factories and includes specific provisions applicable to employment of women and young children employed in factories. The Employees’ Compensation Act, 1923 The EC Act aims at providing financial protection to employees (for their dependents in the event of fatal accidents) by means of payment of compensation by the employers, if personal injury is caused to them by accidents arising out of and in the course of their employment. The EC Act makes it obligatory for the employers brought within the ambit of the Act to furnish, to the State Governments/Union Territory Administrations, annual returns containing the number of compensated accidents and the amount of compensation paid. The Payment of Wages Act, 1936 The Payment of Wages Act is enacted to regulate the period and payment of wages, overtime wages and deductions from wages and also to regulate the working hours, overtime, weekly holidays of certain classes of employed persons. The Payment of Wages Act contains provisions fixing the payment of wages to workers and ensuring that such payments are disbursed by the employers within the stipulated time frame and without any unauthorized deductions.


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The Payment of Bonus Act, 1965 Under the Payment of Bonus Act an employee in a factory who has worked for at least 30 working days in a year is eligible to be paid bonus. ‘Allocable surplus’ is defined as 67% of the available surplus in the financial year, before making arrangements for the payment of dividend out of the profit of a company. A minimum bonus must be paid irrespective of the existence of any allocable surplus. If the allocable surplus exceeds the minimum bonus payable, then the employer must pay bonus proportionate to the salary or wage earned during that period, subject to a maximum of 20% of such salary or wage. Contravention of the Payment of Bonus Act by a company is punishable by proceedings for imprisonment up to six months or a fine up to Rs. 1,000 or both against those individuals in charge at the time of contravention of the Payment of Bonus Act. The Minimum Wages Act, 1948 State Governments may stipulate the minimum wages applicable to a particular industry. The minimum wages generally consist of a basic rate of wages, cash value of supplies of essential commodities at concession rates and a special allowance, the aggregate of which reflects the cost of living index as notified in the Official Gazette. Workers are to be paid for overtime at overtime rates stipulated by the appropriate State Government. Any contravention may result in imprisonment of up to six months or a fine of up to Rs. 500. State specific Shops and Commercial Establishments Acts as applicable Under various state laws dealing with shops and establishments, any shop or commercial establishment has to obtain a certificate of registration from the supervising inspector and has to comply with certain rules laid down therein. These statutes and rules and regulations framed thereunder regulate the opening and closing hours of shops and commercial establishments, daily and weekly work hours, closing dates and holidays, health and safety of persons working in shops and commercial establishments, payment of wages, maintenance of records and registers by the employers, among others.


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BOARD OF DIRECTORS AND MANAGEMENT Overview Our Board currently consists of (11) Directors and one Alternate Director. Our senior management team is under the overall supervision and control of our Board, and is responsible for our day-to-day operations. Our Articles of Association provide that the number of directors shall not be less than seven or more than 15. Further, our Articles of Association provides that one-third of the strength of the Board of Directors shall be liable to retire by rotation at every AGM. A retiring Director shall be eligible for re-appointment. The quorum for meetings of the Board is one third of the total number of Directors (any fraction contained in that one-third being rounded off as one) or two (2) Directors, whichever is higher. Where the number of interested Directors exceeds or is equal to two-third of the total number of Directors, the number of remaining Directors i.e., the number of directors who are not interested and are present at the meeting, not being less than two (2), shall be the quorum during such time. The Companies Act, 2013, provides that not less than two-thirds of the total number of directors, excluding the independent directors, shall be liable to retire by rotation. One-third of the directors shall automatically retire every year at the annual general meeting and shall be eligible for re-appointment. The directors to retire by rotation shall be decided based on those who have been longest in office, and as between persons appointed on the same day, the same shall be decided by mutual agreement or by draw of lots. The independent directors may be appointed for a maximum of two terms of up to five consecutive years each; however, such directors are eligible for re-appointment after the expiry of three years of ceasing to be an independent director provided that such directors are not, during the three year period, appointed in or associated with the company in any other capacity, either directly or indirectly. Any reappointment of independent directors, inter alia, shall be on the basis of performance evaluation report and requires the approval of the shareholders by way of a special resolution. Directors The following table sets forth details regarding the Board as on the date of this Placement Document: Sr. No.

Name, Address, Occupation, DIN, Term and Nationality

Age Designation

1. Dheeraj G. Hinduja Address: 24, Carlton House Terrace, London, SW153AP , United Kingdom Occupation: Industrialist DIN: 00133410 Term: Liable to retire by rotation Nationality: British

43 Chairman

2. R. Seshasayee Address: Ashley House, 6 Boat Club II Avenue, R A Puram, Chennai- 600028, Tamil Nadu, India Occupation: Service DIN: 00047985 Term: Liable to retire by rotation Nationality: Indian

66 Non- Executive Vice Chairman

3. Vinod K. Dasari Address: No.1, 2nd Cross Street, Dhandayudhapani Nagar, Kotturpuram, Chennai- 600085, Tamil Nadu, India

48 Managing Director


147

Sr. No.


Age Designation

Occupation: Service DIN: 00345657 Term: April 1, 2014 to March 31, 2017 Nationality: American

4. A. K. Das Address: 61-A, Atlas Apartments, J. Mehta Road, Mumbai- 400006, Maharashtra, India Occupation: Service DIN: 00122913 Term: Liable to retire by rotation Nationality: Indian

74 Non-Executive Director

5. F. Sahami Address: Dene House, 7 The Barton, Cobham Surrey, KT 112NJ, United Kingdom Occupation: Service

DIN: 00151966 Term: Liable to retire by rotation Nationality: British

77 Non-Executive Director

6. Sanjay K. Asher Address: 32, Mody Street, Fort, Mumbai- 400001, Maharashtra, India Occupation: Professional DIN: 00008221 Term: N.A. Nationality: Indian

50 Independent Non-Executive Director

7. Jean Brunol

Address: 34 BD, Victor Hugo, Neuilly Sur, Seine- 92200, , France Occupation: Professional

DIN: 03044965 Term: N.A.

Nationality: French


8. D. J. Balaji Rao 75 Independent Non-Executive Director


148

Sr. No.


Age Designation

Address: D-103, Adarsh Residency, 47th Cross, 2nd Main, Jayanagar, 8th Block, Bangalore- 560082, Karnataka, India Occupation: Retired

DIN: 00025254 Term: N.A.

Nationality: Indian 9. Dr. Andreas H. Biagosch

Address: Irmgardstr, 10, Munchen- 81479, Germany Occupation: Professional

DIN: 06570499 Term: N.A.

Nationality: German


10. Anil Harish

Address: 13, C.C.I. Chambers, 1st Floor, Dinshaw Wacha Road, Mumbai- 400020, Maharashtra, India Occupation: Professional

DIN: 00001685 Term: N.A.

Nationality: Indian


11. Shardul S. Shroff

Address: S - 270, Greater Kailash,, Part 2, New Delhi- 110048, Delhi, India Occupation: Professional

DIN: 00009379 Term: N.A.

Nationality: Indian


12. Y.M. Kale

Address: 2, Sumit, 31, Carmichael Road,, Dr..G. Deshmukh Marg, Mumbai- 400026, Maharashtra, India Occupation: Service

DIN: 00013782

67 Alternate Director to Dheeraj G. Hinduja


149

Sr. No.


Age Designation

Term: N.A.

Nationality: Indian Dheeraj G. Hinduja - Chairman Mr. Dheeraj G. Hinduja was appointed as our Chairman in 2010. He holds a master’s degree in business administration from the Imperial College of Science, Technology and Medicine, University of London and a bachelor’s degree in science with specialisation in economics & history from the University College, London. Mr. Hinduja is the third generation of the Hinduja family, which has diversified business interests all over the world. He has experience at strategic and leadership levels covering a variety of businesses. He has been leading the human resources functions of the entire Hinduja Group. R. Seshasayee – Non-Executive Vice Chairman Mr. R. Seshasayee was appointed as our Executive Vice Chairman in 2011, after having served as our Managing Director since 1998. Thereafter, he was appointed as Non-Executive Vice Chairman in 2013. He is the chairman of IndusInd Bank Limited. Mr. Seshasayee was the president of the Confederation of Indian Industry (CII) in 2006-2007. He was also the president of the Society of Indian Automobile Manufacturers. He has served as a member/chairman of various trade and professional committees at national and international levels. Vinod K. Dasari - Managing Director Mr. Vinod K. Dasari was appointed as a Managing Director in 2011 and re-appointed in 2014. He holds a master’s degree in business administration from the J. L. Kellogg Graduate School of Management, Northwestern University and a master’s degree in engineering management from Robert R. McCormick School of Engineering and Applied Science, Northwestern University. He has previously served in different capacities in various companies in India and the U.S.A. He is presently the President of the Automotive Research Association of India (ARAI) and Vice-President of Society of Indian Automobile Manufacturers (SIAM). A. K. Das - Non Executive Director Mr. A.K. Das was appointed as a Director in 1994. He is associated as a director/chairman of various other companies in India. He has experience in international trade and commerce, including handling international trade operations. F. Sahami - Non-Executive Director Mr. F. Sahami was appointed as a Director in 1988. He holds a bachelor’s degree of science in economics from Queen’s University of Belfast. He is a fellow member of the Institute of Chartered Accountants in England and Wales with experience in international audit, accounting and financial management, having served in the Middle East and Europe. Sanjay K. Asher - Independent Non-Executive Director Mr. Sanjay K. Asher was appointed as a Director in 2010. He holds bachelor’s degrees in commerce and law from the University of Bombay. He is a qualified chartered accountant. He has been a practicing advocate since 1989 with M/s. Crawford Bayley & Co. He was admitted as a solicitor in the year 1993 and is a partner of M/s. Crawford Bayley & Co. Jean Brunol - Independent Non-Executive Director Mr. Jean Brunol was appointed as a Director in 2010. He holds a doctorate of sciences in physics from the University of Paris and a bachelor's degree from the Ecole Normale Superieure de Saint-Cloud, Lyon. He has international experience across several industries. He has delivered numerous publications in scientific journals.


150

D. J. Balaji Rao - Independent Non-Executive Director Mr. D. J. Balaji Rao was appointed as a Director in 2002. He holds a bachelor’s degree in mechanical engineering from the University of Madras and has attended advanced management program at European Institute of Business Administration in France. He is an associate member of the Indian Institution of Industrial Engineering. He is currently the non-executive chairman of 3M India Limited and an independent director on the boards of eight other listed companies in India. Dr. Andreas H. Biagosch – Independent Non- Executive Director Dr. Andreas Biagosch was appointed as a Director in 2013. He holds a doctorate degree in engineering from Technical University of Munich. He has experience in automotive, aerospace and defense and other high-tech sectors. Anil Harish - Independent Non-Executive Director Mr. Anil Harish was appointed as a Director in 2009. He is a partner of M/s. D. M. Harish & Co., a law firm in India. He holds a master’s degree in law from the School of Law, University of Miami and a bachelor’s degree in law from Government Law College, University of Bombay. He was a member of the managing committee of Indian Merchants’ Chamber and of several other organisations. He is a member of the executive committee of the Society of Indian Law Firms. He has experience in real estate, taxation and collaboration and has addressed various seminars at both national and international levels. Shardul S. Shroff - Independent Non-Executive Director Mr. Shardul S. Shroff was appointed as a Director in 2006. He has been a practising lawyer since 1980 with Amarchand & Mangaldas & Suresh A. Shroff, a law firm in India. He holds a bachelor’s degree in commerce from University of Bombay and in law from Government Law College, Mumbai. He has experience in the areas of corporate and commercial laws, joint ventures, project finance, corporate and structured finance, insurance, telecom, mergers & acquisitions, disinvestments and corporate advisory work across sectors. Mr. Shroff has been a member of several committees appointed by the Government of India on diverse areas like the Companies Act, 1956, the Takeover Code and corporate insolvency laws like the JJ Irani Committee. Y.M. Kale – Alternate Director to Dheeraj G. Hinduja Mr. Y. M. Kale was appointed an Alternate Director to Mr. Dheeraj G. Hinduja in 2003. He is a fellow member of the Institute of Chartered Accountants in England and Wales and is a fellow member of the Institute of Chartered Accountants in India (ICAI). He served as the president of the ICAI. He has been the chairman of ICAI’s accounting standards board as well as audit practices committee and was on the apex ICAI council. The RBI had appointed Mr. Kale as a member of the Department of Banking Operations and Development Working Group on revised formats for published accounts of banks. He was also chairman of a committee for setting accounting norms for trading members of the NSE. Mr. Kale is a director in our group companies. He is a Life Member of the All India Federation of Tax Practitioners. Relationship with other Directors None of the Directors are related to each other. Borrowing powers of the Board As on March 31, 2014, the Board of Directors is authorised to borrow money upon such terms and conditions as the Board may think fit and may exceed the aggregate of the paid up share capital and free reserves, provided that the aggregate amount of its borrowings shall not exceed Rs. 8,00,000 lakhs. Interest of Directors All of the Directors, other than the Managing Director, may be deemed to be interested to the extent of fees payable to them for attending Board or Board committee meetings as well as to the extent of reimbursement of expenses payable to them. The


151

Managing Director may be deemed to be interested to the extent of remuneration paid to him for services rendered as the officer of our Company. Further, Mr. Dheeraj G Hinduja and Mr. R Seshasayee have waived off their Sitting Fee payable to them until further notice from them in this regard. All of the Directors may also be regarded as interested in any Equity Shares held by them (as detailed below) and also to the extent of any dividend payable to them and other distributions in respect of such Equity Shares held by them: Name of the Director Number of Equity Shares held as on

June 20, 2014 Percent of Total Number of Outstanding Equity Shares

Mr. R Seshasayee 22,472 Negligible Mr. Vinod K. Dasari 2,60,000 0.01 As on June 20, 2014 no other Director held any Equity Shares. Except as otherwise stated in this Placement Document, our Company has not entered into any contract, agreement or arrangement during the preceding two years from the date of this Placement Document in which any of the Directors are interested, directly or indirectly, and no payments have been made to them in respect of any such contracts, agreements, arrangements which are proposed to be made with them. Further, no Director has taken any loans from our Company except Mr. Vinod K. Dasari who has availed a loan of Rs. 0.05 lakhs as on May 31, 2014. Remuneration of Managing Director Pursuant to a resolution passed by the Board of Directors at the meeting held on March 12 and March 13, 2014, Mr. Vinod K. Dasari was appointed as Managing Director for a period of three years with effect from April 01, 2014. The details of remuneration which will be paid to Mr. Vinod K. Dasari for the Fiscal year ended March 31, 2015 is approved by the Board of Directors in their meeting held on March 13, 2014 are as under: Particulars Remuneration Basic salary, perquisites, allowances and retiral benefits Rs. 285.00 lakhs Commission As may be decided by the Nomination & Compensation Committee Other perquisites Company furnished and maintained accommodation At actual His salary includes perquisites and allowances, provident and superannuation fund, gratuity and commission. Mr. Vinod K. Dasari has been paid a remuneration of Rs. 33.96 lakhs (including salary and other benefits) for the current Financial Year 2015 (to the extent applicable), i.e., for period between April 1, 2014 and June 20, 2014. The remuneration paid by our Company to its Executive Directors in the Fiscal year ended March 31, 2014, 2013 and 2012 is stated below:

In Rs.

Particulars Fiscal 2014 Fiscal 2013 Fiscal 2012 Mr. Vinod K.

Dasari* (Managing Director)

Mr. Vinod K. Dasari

(Managing Director)

Mr. R Seshasayee#

Executive Vice Chairman

Mr. Vinod K. Dasari

(Managing Director)

Mr. R Seshasayee#


(a) Fixed Component Salary 69,72,000 63,36,000 69,33,600 57,60,000 64,20,000 Special Allowance 61,60,770 63,36,000 69,33,600 57,60,000 64,20,000 Perquisites & Other Allowance**

62,33,381 55,29,121 1,00,85,017 33,74,919 82,16,853

(b) Variable Component


152

Particulars Fiscal 2014 Fiscal 2013 Fiscal 2012 Mr. Vinod K.

Dasari* (Managing Director)

Mr. Vinod K. Dasari

(Managing Director)

Mr. R Seshasayee#


Mr. Vinod K. Dasari

(Managing Director)

Mr. R Seshasayee#


-Commission Nil 69,73,200 76,08,000 72,90,000 81,00,000 c) Contribution to Provident Fund and Superannuation Fund

18,82,440 27,56,320 30,12,072 26,48,700 29,48,400

Total 2,12,48,591 2,79,30,641 3,45,72,289 2,48,33,619 3,21,05,253* Remuneration paid to Mr. Vinod K. Dasari is subject to the approval of Central Government. Presently, an application with regard to the same is pending before the Central Government. ** Certain perquisites are valued as per the Income Tax Rules. # Presently, he is a Non-Executive Vice-Chairman of our Company. Non-Executive Directors’ Compensation The following table sets forth all compensation paid by our Company to the Non-Executive Directors for the current Financial Year 2015 (to the extent applicable), i.e., for period between April 1, 2014 and June 20, 2014: Name of Director Sitting Fee (Rs.) Total (Rs.)Mr. Dheeraj G. Hinduja# N.A. N.A. Mr. D. J. Balaji Rao 1,00,000 1,00,000 Mr. F. Sahami 40,000 40,000 Mr. Shardul S. Shroff Nil Nil Mr. Jean Brunol Nil Nil Mr. Sanjay K. Asher 40,000 40,0000 Mr. Anil Harish Nil Nil Mr. A. K. Das 40,000 40,000 Dr. Andreas H. Biagosch 40,000 40,000 Mr. R. Seshasayee# N.A. N.A. # Based on the advice received from Mr. Dheeraj G Hinduja and Mr. R Seshasayee for waiver of Sitting Fee payable to them, the Board of Directors at their meeting held on November 6, 2013, approved waiver of their sitting fee for attending the meeting of the Board and Committee as relevant until further notice from them. The following table sets forth all compensation paid by our Company to the Non-Executive Directors for Fiscal 2014, Fiscal 2013 and Fiscal 2012: Fiscal 2014 Fiscal 2013 Fiscal 2012 Name of Director

Sitting Fee

(Rs.)

Commission (Rs.)

Total (Rs.)

Sitting Fee

(Rs.)

Commission (Rs.)

Total (Rs.)

Sitting Fee

(Rs.)

Commission (Rs.)

Total (Rs.)

Mr. Dheeraj G. Hinduja#

1,00,000 – 1,00,000 3,00,000 - 3,00,000 3,20,000 - 3,20,000

Mr. D. J. Balaji Rao

3,80,000 – 3,80,000 3,80,000 13,20,000 17,00,000 3,40,000 12,09,000 15,49,000

Mr. F. Sahami

2,20,000 – 2,20,000 2,00,000 7,90,000 9,90,000 2,00,000 11,00,000 13,00,000

Mr. Shardul S. Shroff

20,000 – 20,000 60,000 2,60,000 3,20,000 40,000 1,50,000 1,90,000

Mr. Jean Brunol

2,40,000 – 2,40,000 2,60,000 21,50,000 24,10,000 2,00,000 23,50,000 25,50,000

Mr. Jorma Antero Halonen*

– – – 1,00,000 31,00,000 32,00,000 1,00,000 31,00,000 32,00,000

Mr. Sanjay K. Asher

2,20,000 – 2,20,000 2,80,000 7,40,000 10,20,000 1,40,000 7,05,000 8,45,000


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Fiscal 2014 Fiscal 2013 Fiscal 2012 Name of Director

Sitting Fee

(Rs.)

Commission (Rs.)

Total (Rs.)

Sitting Fee

(Rs.)

Commission (Rs.)

Total (Rs.)

Sitting Fee

(Rs.)

Commission (Rs.)

Total (Rs.)

Mr. Anil Harish

3,00,000 – 3,00,000 2,00,000 8,80,000 10,80,000 1,80,000 11,10,000 12,90,000

Mr. A. K. Das

1,60,000 – 1,60,000 1,80,000 7,40,000 9,20,000 2,00,000 10,00,000 12,00,000

Dr. Andreas H. Biagosch

1,20,000 – 1,20,000 N.A. N.A. N.A. N.A. N.A N.A

Mr. R. Seshasayee#

1,40,000 – 1,40,000 - - - - - -

Dr.. V. Sumantran** #

80,000 – 80,000 2,60,000 92,00,000 94,60,000 3,40,000 1,80,00,000 1,83,40,000

# Based on the advice received from Mr. Dheeraj G Hinduja, Mr. R Seshasayee and Mr. V Sumantran for waiver of Sitting Fee payable to

them, the Board of Directors at their meeting held on November 6, 2013, approved waiver of their sitting fee for attending the meeting of the Board and Committee as relevant until further notice from them.

* He has ceased to be Director w.e.f. July 07, 2013. ** He has ceased to be Director w.e.f March 31, 2014. The criteria for making payment of remuneration to the Non-executive Directors are as follows: a. As on March 31, 2014 an amount of Rs. 20,000 per meeting was paid towards sitting fee for attending meetings of the

Board, Committee of Directors and the Audit Committee, to the non-executive Directors in accordance with Rule 10B of the Companies (Central Government’s) General Rules & Forms, 1956, as amended.

b. Other than the sitting fees, reimbursement of expenses for attending the meetings of the Board and its committees. Although commission not exceeding 1% of the net profits of our Company was approved by the shareholders, no

commission was paid to Non-Executive Directors for the Fiscal year 2014. Corporate Governance Our Company is required to comply with applicable corporate governance requirements, including the Listing Agreements with the Stock Exchanges and the ICDR Regulations in respect of the constitution of the Board and committees thereof. The corporate governance framework of our Company is based on an effective, independent Board of Directors, separation of the supervisory role of the Board of Directors from the executive management team and proper constitution of the committees of the Board of Directors. The Board of Directors functions either as a full Board or through various committees constituted to oversee specific operational areas. The executive management of our Company provides the Board of Directors with detailed reports on the performance of our Company periodically. Although our Company has been complying with the requirements of the applicable regulations, including the Listing Agreement with the Stock Exchanges and the SEBI guidelines, we are currently in the process of complying with other corporate governance requirements under the Companies Act, 2013. Also, our Company will be required to comply with new corporate governance requirements under clause 49 of the Listing Agreement with effect from October 01, 2014. Committee of the Board of Directors The Board of Directors has four committees, which have been constituted and function in accordance with the relevant provisions of the Listing Agreement: (i) Audit Committee, (ii) Nomination & Compensation Committee and (iii) Shareholders / Investors Grievance Committee. Also, the Board of Directors has constituted inter-alia Committee of Directors- Fund Raising for the purposes of this Issue.


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The following table sets forth the details of the members of the aforesaid committees: Committee Members Audit Committee Mr. Anil Harish (Chairman), Mr. D. J. Balaji Rao, Mr. F. Sahami and Mr. Sanjay K.

Asher. Nomination & Compensation Committee Mr. D.J. Balaji Rao (Chairman), Mr. Dheeraj G. Hinduja, Mr. Anil Harish and Mr.

A. K. Das. Shareholders / Investors Grievance Committee Mr. Sanjay K. Asher (Chairman), Mr. D. J. Balaji Rao and Mr. R. Seshasayee. Committee of Directors-Fund Raising Mr. R. Seshasayee, Mr. Vinod K. Dasari, Mr. F. Sahami and Mr. D. J. Balaji Rao. Senior Managerial Personnel Under the provisions of the Companies Act, the management of the whole of the affairs of a company is entrusted to a managing director who exercises his powers subject to the superintendence, control and direction of the board of directors. The table below sets out the names of our senior managerial personnel and their current responsibilities. Name Designation Year of joiningGopal Mahadevan Chief Financial Officer 2013 Anuj Kathuria Executive Director, Operations 2010 Anup Bhat Head – After Market 2000 Belsare C.G. Executive Director, Power Solutions Business 2006 Nitin Seth Executive Director, LCV and Defence 2010 Rajive Saharia Executive Director, Head – Global Truck Business 2007 Venkat Subramaniam B. Executive Director, Corporate Strategy and Planning 2003 Balachandar N.V. Executive Director, Human Resources 2012 N. Ramanathan Company Secretary and Compliance Officer 2013 All the senior management personnel are permanent employees of our Company. Remuneration of Senior Managerial Personnel For the Fiscal year ended March 31, 2014 the aggregate remuneration paid and benefits in kind granted to senior managerial personnel (excluding the Managing Director) was Rs. 867.09 lakhs. Interests of Senior Managerial Personnel The senior managerial personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment. Further, none of our senior managerial personnel held any Equity Shares as on June 20, 2014. Employees’ Stock Option Plan Our Company has no employees’ stock option plan in force as on date of this Placement Document. Loans to Senior Managerial Personnel As on May 31, 2014, there is an amount of Rs. 3.43 lakhs which is due in aggregate to our Company, from senior managerial personnel in the nature of loans and advances pursuant to their terms of employment. Our Company has not given any guarantees in favour of any Director or any member of our senior managerial personnel. Related Party Transactions Related party transactions entered by our Company during the last three Financial Years are determined in accordance with Accounting Standard 18 issued by the ICAI. For further details, see the section “Financial Statements – Related Party Transactions” beginning on page F-1.


155

Prevention of Insider Trading Policy In compliance with the Insider Trading Regulations, our Company has formulated, adopted and implemented the “Model Code of Conduct for Prevention of Insider Trading for Ashok Leyland Limited”. Other Confirmations None of our Directors, nor Hinduja Automotive Limited (our Promoter) nor any Senior Managerial Personnel of our Company has any financial or other material interest in this Issue and there is no effect of such interest in so far as it is different from the interests of other persons. ORGANIZATION STRUCTURE

Note: The above chart on our organization structure includes the senior managerial personnel enlisted under the section “Board of Directors and Management” beginning on page 146.


156

PRINCIPAL SHAREHOLDERS The table below represents the shareholding pattern of our Company in accordance with clause 35 of the Listing Agreement, as on March 31, 2014: Category of Shareholder No. of

Shareholders Total No. of

Shares Total No. of

Shares held in Dematerialized

Form

Total Shareholding as a % of Total No. of

Shares

Shares pledged or otherwise

encumbered

As a % of (A+B)

As a % of

(A+B+C)

Number of shares

As a % of Total

No. of Shares

(A) Shareholding of Promoter and Promoter Group

Indian a. Individual/Hindu Undivided Family

b. Central Government/ State Governments

c. Bodies Corporate d. Financial Institutions / Banks

e. Any other (Specify) Sub Total A(1) 0 0 0.00 0.00 0.00Foreign a. Individual (Non resident Individuals / Foreign individuals)

b. Bodies Corporate** 2

1,10,46,46,899

1,10,46,46,899

47.85

41.52

14,49,04,064

13.12

c. Institutions d. Qualified Foreign Investor

e. Any other (Specify) Sub Total A(2) 2 1,10,46,46,899 1,10,46,46,899 47.85 41.52 14,49,04,064 13.12Total shareholding of Promoter and Promoter Group (A)= (A)(1) +(A)(2)

2

1,10,46,46,899 1,10,46,46,899 47.85 41.52

14,49,04,064

13.12(B) Public Shareholding (I) Institutions a. Mutual Funds/ UTI 38 4,37,49,896 4,36,70,676 1.90 1.64 b. Financial Institutions / Banks 41

24,49,71,581

24,49,36,791

10.61

9.21

c. Central Government/ State Governments 3

22,18,720

18,58,720

0.10

0.08

d. Venture capital Funds e. Insurance Companies

6

6,27,70,449

6,27,69,449

2.72

2.36

f. Foreign Institutional Investors 140

33,85,04,037

33,84,07,397

14.66

12.72

g. Foreign Venture Capital Investors

h. Qualified Foreign Investor

i. Any other (Specify) - Foreign Banks 1

1,000

1,000

0.00

0.00


157

Sub Total B(1) 229 69,22,15,683 69,16,44,033 29.99 26.02 B (2) Non-Institutions a. Bodies Corporate 1,673 16,58,72,279 16,53,11,201 7.19 6.23 b. Individuals (i) Individual Shareholders holding Nominal Share Capital upto Rs.1 Lakh 3,02,397

28,21,32,727

25,67,23,736

12.22

10.60

(ii) Individual Shareholders holding Nominal Share Capital in excess of Rs.1 Lakh 81 1,92,34,785 1,82,14,125 0.83 0.72

c. Qualified Foreign Investor d. Any other -Clearing Members 875

2,32,44,617

2,32,44,617

1.01

0.87

- Trusts 23 8,89,573 8,89,573 0.04 0.03 - Corporate Body -

Foreign Bodies 3 1,09,388 1,09,388 0.00 0.00

- NRI 3,822 1,74,23,672 1,73,54,952 0.75 0.65 - OCB 1 2,000 2,000 0.00 0.00 - Foreign Nationals 3 1,60,400 1,60,400 0.01 0.01 - Limited Liability

partner ship 2

580

580

0.00

0.00

- Unclaimed Securities Sus A/c 1

24,98,391

24,98,391

0.11

0.09

Sub Total B(2) 3,08,881 51,15,68,412 48,45,08,963 22.16 19.23 Total Public Shareholding (B)= (B)(1)+(B)(2) 3,09,110 1,20,37,84,095 1,17,61,52,996 52.15 45.24 N.A. N.A.

TOTAL (A) + (B) 3,09,112

2,30,84,30,994 2,28,07,99,895 100.00 86.76

14,49,04,064

6.28

Shares held by Custodians and against which Depository Receipts have been issued (1) Promoter and Promoter Group 1 32,92,00,140 32,92,00,140

12.37

32,92,00,140

100.00

(2) Public 1 2,30,45,500 2,29,57,000 0.87 Sub Total C 2 35,22,45,640 35,21,57,140 13.24 32,92,00,140 93.46 Grand Total (A) + (B) + ( C)** 3,09,114 2,66,06,76,634 2,63,29,57,035 100.00 100.00 47,41,04,204 17.82

** GDR held by Hinduja Automotive Limited - 54,86,669 The total Promoter Holding is 1,433,847,039 shares – 53.89% of the paid up capital The following table contains information as on March 31, 2014 concerning persons belonging to the Promoter and Promoter Group category: Sl. No. (I)

Name of the Shareholder (II)

Details of Shares held Encumbered shares (*) Total Shares (including underlying shares assuming full

conversion of warrants and Convertible securities) as a % of

diluted share capital No. of Shares

held (III)

As a % of (A+B+C)

(IV)

Number of shares

(V)

As a % (VI) =

(V)/ (III) *100

As a % of Grand Total

(A+B+C)

1. Hinduja Automotive

1,10,46,46,899 41.52 14,49,04,064 13.12 5.45 41.52


158

Ltd.** Total 1,10,46,46,899

41.52

14,49,04,064

13.12 5.45 41.52

*The term “encumbrance” has the same meaning as assigned to it in regulation 28(3) of the SAST Regulations, 2011 ** Hinduja Automotive Limited (Promoter) is holding shares in two separate demat accounts. The following table contains information as on March 31, 2014 concerning each person in the “Public” category, who holds more than 1% or more of the Total number of Shares:

Sl. No.

Name of the Shareholder

No. of Shares held

Shares as % of Total No. of

Shares

Total shares (including underlying shares assuming full conversion of warrants and convertible securities) as a

% of diluted share capital 1. Life Insurance

Corporation of India 24,05,15,574 9.04 9.04

2. Baytree Investments (Mauritius) Pte Ltd

4,63,50,000 1.74 1.74

3. Matthews India Fund 2,96,22,554 1.11 1.11 4. General Insurance

Corporation Of India 3,03,20,000

1.14 1.14

5. HDFC Standard Life Insurance Company Limited

4,13,07,026

1.55

1.55

Total 38,81,15,154 14.59 14.59 The following table contains information as on March 31, 2014 concerning persons (together with PAC) belonging to the category “Public” and holding more than 5% of the total number of Equity Shares:

Sl. No.

Name(s) of the shareholder(s) and the Persons Acting in Concert

(PAC) with them

No. of Shares held

Shares as % of Total No. of

Shares

Total shares (including underlying shares assuming full conversion of warrants and

convertible securities) as a % of diluted share capital

1 Life Insurance Corporation of India 24,05,15,574 9.04 9.04 Total 24,05,15,574 9.04 9.04

Details of Depository Receipts (DRs) as on March 31, 2014

Sl. No.

Type of Outstanding DR (ADRs, GDRs, SDRs, etc.)

No. of outstanding DRs

No. of Shares Underlying

Outstanding DRs

Shares Underlying Outstanding DRs as % of Total No. of Shares

1 GDR 58,70,761 35,22,45,640 13.24

Total 58,70,761 35,22,45,640 13.24

Details of holding of Depository Receipts (DRs), where underlying shares held by 'promoter / promoter group' are in excess of 1% of the total number of shares as on March 31, 2014. Sl. No. Name of the DR Holder

Type of Outstanding DR (ADRs, GDRs, SDRs, etc.)

No. of Shares Underlying

Outstanding DRs

Shares Underlying Outstanding DRs as % of Total No. of Shares

1 Hinduja Automotive Ltd (Held by Amas Bank (Switzerland) Ltd - GDR A/c Ashok Leyland Ltd

GDR 32,92,00,140 12.37

Total 32,92,00,140 12.37


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ISSUE PROCEDURE

The following is a summary intended to present a general outline of the procedure relating to the application, payment, Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure followed in the Issue may differ from the one mentioned below, and investors are presumed to have apprised themselves of the same from our Company or the Joint Global Coordinators and Book Running Lead Managers. Investors are advised to inform themselves of any restrictions or limitations that may be applicable to them. See the sections “Distribution and Solicitation Restrictions” and “Transfer Restrictions” beginning on pages 169 and 175 respectively. Qualified Institutions Placement The Issue is being made to QIBs in reliance upon Chapter VIII of the ICDR Regulations and Private Placement Regulations, through the mechanism of a QIP. Under Chapter VIII of the ICDR Regulations and Private Placement Regulations, a company may issue equity shares to QIBs provided that certain conditions are met by the company. Certain of these conditions are set out below: the shareholders of the issuer have passed a special resolution approving such QIP. Such special resolution must specify

(a) that the allotment of securities is proposed to be made pursuant to the QIP; and (b) the Relevant Date; equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, are listed on a

recognised stock exchange in India having nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the above-mentioned special resolution;

the aggregate of the proposed issue and all previous QIPs made by the issuer in the same financial year does not exceed five times the net worth (as defined in the ICDR Regulations) of the issuer as per the audited balance sheet of the previous financial year;

the issuer shall be in compliance with the minimum public shareholding requirements set out in the SCRR; the issuer shall have completed allotments with respect to any prior offer or invitation made by the issuer or shall have

withdrawn or abandoned any prior invitation or offer made by the issuer; the issuer shall offer to each Allottee at least such number of the securities in the issue which would aggregate to at least

Rs. 20,000 calculated at the face value of the securities. At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or any part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs. Bidders are not allowed to withdraw their Bids after the Issue Closing Date. Additionally, there is a minimum pricing requirement under the ICDR Regulations. The Floor Price shall not be less than the average of the weekly high and low of the closing prices of the Equity Shares of the same class of the Equity Shares of the Issuer quoted on the stock exchange during the two weeks preceding the Relevant Date. However, a discount of up to 5% of the Floor Price is permitted in accordance with the provisions of the ICDR Regulations. The “Relevant Date” referred to above, for Floor Price, will be the date of the meeting in which the Board of Directors or any committee duly authorised by the Board of Directors decides to open the Issue and “stock exchange” means any of the recognised stock exchanges in India on which the equity shares of the issuer of the same class are listed and on which the highest trading volume in such equity shares has been recorded during the two weeks immediately preceding the Relevant Date. Our Company has applied for and received the in-principle approval of the Stock Exchanges under Clause 24 (a) of its Listing Agreements for the listing of the Equity Shares on the Stock Exchanges. Our Company has also delivered a copy of this Placement Document to and has filed a copy of the Preliminary Placement Document with the Stock Exchanges. Our Company shall also make the requisite filings with the RoC and SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014. The Issue has been authorized by (i) the Board pursuant to a resolution passed on May 10, 2013, and (ii) the shareholders, pursuant to a resolution passed under Section 81(1A) of the Companies Act, 1956 on July 16, 2013.


160

The Equity Shares will be Allotted within 12 months from the date of the shareholders’ resolution approving the QIP and within 60 days from the date of receipt of subscription money from the successful Bidders. For details of refund of application money, please see the section “Issue Procedure – Pricing and Allocation – Designated Date and Allotment of Equity Shares” beginning on page 167. The Equity Shares issued pursuant to the QIP must be issued on the basis of the Preliminary Placement Document and this Placement Document that contains all material information including the information specified in Schedule XVIII of the ICDR Regulations and the requirements prescribed under Form PAS-4. The Preliminary Placement Document and this Placement Document are private documents provided to only select investors through serially numbered copies and are required to be placed on the website of the concerned Stock Exchanges and of our Company with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to the public or to any other category of investors. The minimum number of allottees for each QIP shall not be less than:

two, where the issue size is less than or equal to Rs. 250 million; and five, where the issue size is greater than Rs. 250 million.

No single allottee shall be allotted more than 50 % of the issue size. QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee. For details of what constitutes “same group” or “common control”, please see the section “Issue Procedure— Application Process—Application Form” beginning on page 163. Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment except on the floor of a recognised stock exchange in India. Allotments made to VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements. The Equity Shares offered hereby have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons reasonably believed to be Qualified Institutional Buyers (as defined in Rule 144A under the U.S. Securities Act) pursuant to Section 4(a)(2) under the U.S. Securities Act, and (b) outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act. For a description of certain restrictions on transfer of the Equity Shares, please see “Transfer Restrictions” beginning on page 175. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. Issue Procedure 1. Our Company and Joint Global Coordinators and Book Running Lead Managers shall circulate serially numbered copies

of the Preliminary Placement Document and the serially numbered Application Form, either in electronic or physical form, to the QIBs and the Application Form will be specifically addressed to such QIBs. In terms of Section 42(7) of the Companies Act, 2013, our Company shall maintain complete records of the QIBs to whom the Preliminary Placement Document and the serially numbered Application Form have been dispatched. Our Company will make the requisite filings with the RoC and SEBI within the stipulated time period as required under the Companies Act, 2013.

2. Unless a serially numbered Preliminary Placement Document along with the serially numbered Application Form is

addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person and any application that does not comply with this requirement shall be treated as invalid.


161

3. QIBs may submit an Application Form, including any revisions thereof, during the Bidding Period to the Joint Global Coordinators and Book Running Lead Managers.

4. Bidders will be required to indicate the following in the Application Form:

name of the QIB to whom Equity Shares are to be Allotted; number of Equity Shares Bid for; price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate that they

are agreeable to submit a Bid at “Cut-off Price”; which shall be any price as may be determined by our Company in consultation with the Joint Global Coordinators and Book Running Lead Managers at or above the Floor Price or the Floor Price net of such discount as approved in accordance with ICDR Regulations;

details of the depository account to which the Equity Shares should be credited; and a representation that it is either (i) outside the United States, or (ii) an institutional investor meeting the requirements

of a “qualified institutional buyer” as defined in Rule 144A, and (iii) it has agreed to certain other representations set forth in the Application Form.

Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign individual will be considered as an individual QIB and separate Application Forms would be required from each such sub-account for submitting Bids. 5. Once a duly completed Application Form is submitted by a QIB, such Application Form constitutes an irrevocable offer

and cannot be withdrawn after the Issue Closing Date. The Issue Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice of such date after receipt of the Application Form.

6. The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names of the

concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI. Upon receipt of the Application Form, after the Issue Closing Date, our Company shall determine the final terms, including the Issue Price of the Equity Shares to be issued pursuant to the Issue in consultation with the Joint Global Coordinators and Book Running Lead Managers. Upon determination of the final terms of the Equity Shares, the Joint Global Coordinators and Book Running Lead Managers will send the serially numbered CAN along with this Placement Document to the QIBs who have been Allocated the Equity Shares. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the QIB to pay the entire Issue Price for all the Equity Shares Allocated to such QIB. The CAN shall contain details such as the number of Equity Shares Allocated to the QIB and payment instructions including the details of the amounts payable by the QIB for Allotment of the Equity Shares in its name and the Pay-In Date as applicable to the respective QIB. Please note that the Allocation will be at the absolute discretion of our Company and will be based on the recommendation of the Joint Global Coordinators and Book Running Lead Managers.

7. Pursuant to receiving a CAN, each successful Bidder shall be required to make the payment of the entire application

monies for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer to our Company’s designated bank account by the Pay-In Date as specified in the CAN sent to the respective successful Bidder. No payment shall be made by successful Bidder in cash. Please note that any payment of application money for the Equity Shares shall be made from the bank accounts of the relevant QIBs applying for the Equity Shares. Monies payable on Equity Shares to be held by joint holders shall be paid from the bank account of the person whose name appears first in the application. Pending Allotment, all monies received for subscription of the Equity Shares shall be kept by our Company in a separate bank account with a scheduled bank and shall be utilised only for the purposes permitted under the Companies Act, 2013.

8. Upon receipt of the application monies from the QIBs, our Company shall Allot Equity Shares as per the details in the

CANs sent to the successful Bidder.


162

9. After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository participant accounts of the successful Bidders, our Company shall apply to the Stock Exchanges for listing approvals. Our Company will intimate to the Stock Exchanges the details of the Allotment and apply for approvals for listing of the Equity Shares on the Stock Exchanges prior to crediting the Equity Shares into the beneficiary account maintained with the Depository Participant by the successful Bidder.

10. After receipt of the listing approvals of the Stock Exchanges, our Company shall credit the Equity Shares Allotted

pursuant to this Issue into the Depository Participant accounts of the respective Allottees. 11. Our Company will then apply for the final trading approvals from the Stock Exchanges. 12. The Equity Shares that would have been credited to the beneficiary account with the Depository Participant of the QIBs

shall be eligible for trading on the Stock Exchanges only upon the receipt of final trading and listing approvals from the Stock Exchanges.

13. Upon receipt of intimation of final trading and listing approval from the Stock Exchanges, our Company shall inform the

Allottees of the receipt of such approval. Our Company and the Joint Global Coordinators and Book Running Lead Managers shall not be responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay or non-receipt. Final listing and trading approvals granted by the Stock Exchanges are also placed on their respective websites. QIBs are advised to apprise themselves of the status of the receipt of the permissions from the Stock Exchanges or our Company.

Qualified Institutional Buyers Only QIBs as defined in Regulation 2(1)(zd) of the ICDR Regulations and not otherwise excluded pursuant to Regulation 86(1)(b) of the ICDR Regulations are eligible to invest. Currently, under Regulation 2(1)(zd) of the ICDR Regulations, a QIB means:

alternative investment funds registered with SEBI Eligible FPIs; foreign venture capital investors registered with SEBI; insurance companies registered with Insurance Regulatory and Development Authority; insurance funds set up and managed by army, navy or air force of the Union of India; insurance funds set up and managed by the Department of Posts, India; multilateral and bilateral development financial institutions; Mutual Fund; pension funds with minimum corpus of Rs. 250 million; provident funds with minimum corpus of Rs. 250 million; public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the Companies

Act, 2013); scheduled commercial banks; state industrial development corporations; the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the

Government published in the Gazette of India; and venture capital funds registered with SEBI;

FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs are permitted to participate through the portfolio investment scheme under Schedule 2 and Schedule 2A of FEMA 20 respectively, in this Issue. FIIs and Eligible FPIs are permitted to participate in the Issue subject to compliance with all applicable laws and such that the shareholding of the FPIs do not exceed specified limits as prescribed under applicable laws in this regard. In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to exceed 10% of our post-Issue Equity Share capital. Further, in terms of the FEMA 20, the total holding by each FPI shall be below 10% of the total paid-up Equity Share capital of our Company and the total holdings of all FPIs put together shall not exceed 24% of the paid-up


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Equity Share capital of our Company. The aggregate limit of 24% may be increased up to the sectoral cap by way of a resolution passed by the Board of Directors followed by a special resolution passed by the shareholders of our Company. With the approval of our Board dated June 8, 2006 and a special resolution of our Equity Shareholders dated August 1, 2006, the FII investment limit has been raised up to 40% of the issued and paid-up capital of the Company. Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which may be specified by the Government from time to time. An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of the block of three years for which fees have been paid as per the SEBI FII Regulations. An FII or sub-account (other than a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until the expiry of its registration as a FII or sub-account, or until it obtains a certificate of registration as FPI, whichever is earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may, subject to payment of conversion fees under the SEBI FPI Regulations, participate in the Issue. An FII or sub-account shall not be eligible to invest as an FII after registering as an FPI under the SEBI FPI Regulations. In terms of the FEMA 20, for calculating the aggregate holding of FPIs in a company, holding of all registered FPIs as well as holding of FIIs (being deemed FPIs) shall be included. The FPI regime has recently come into effect from June 1, 2014. FPI’s investing in this Issue should ensure that they are eligible under the applicable law or regulation to apply in this Issue. Under Regulation 86(1)(b) of the ICDR Regulations, no Allotment shall be made pursuant to the Issue, either directly or indirectly, to any QIB being, or any person related to, the Promoter. QIBs which have all or any of the following rights shall be deemed to be persons related to the Promoter: rights under a shareholders’ agreement or voting agreement entered into with the Promoter or persons related to the

Promoter; veto rights; or a right to appoint any nominee director on the Board. Provided, however, that a QIB which does not hold any shares in our Company and which has acquired the aforesaid rights in the capacity of a lender shall not be deemed to be related to the Promoter. Our Company and the Joint Global Coordinators and Book Running Lead Managers are not liable for any amendment or modification or change to applicable laws or regulations, which may occur after the date of this Placement Document. QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to apply. QIBs are advised to ensure that any single application from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Placement Document. Further, QIBs are required to satisfy themselves that their Bids would not eventually result in triggering a tender offer under the Takeover Code. Note: Affiliates or associates of the Joint Global Coordinators and Book Running Lead Managers who are QIBs may participate in the Issue in compliance with applicable laws. Application Process Application Form QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by our Company and the Joint Global Coordinators and Book Running Lead Managers in either electronic form or by physical delivery for the purpose of making a Bid (including revision of a Bid) in terms of the Preliminary Placement Document. By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to the terms of the Preliminary Placement Document, the QIB will be deemed to have made the following representations and warranties and


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the representations, warranties and agreements made under the sections “Notice to Investors”, “Representations by Investors”, “Distribution and Solicitation Restrictions” and “Transfer Restrictions”: 1. The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the ICDR Regulations and is not excluded under

Regulation 86 of the ICDR Regulations, has a valid and existing registration under the applicable laws in India (as applicable) and is eligible to participate in this Issue;

2. The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or indirectly and its

Application Form does not directly or indirectly represent the Promoter or Promoter Group or persons related to the Promoter;

3. The QIB confirms that it has no rights under a shareholders’ agreement or voting agreement with the Promoter or

persons related to the Promoter, no veto rights or right to appoint any nominee director on the Board other than those acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoter;

4. The QIB acknowledges that it has no right to withdraw its Application after the Issue Closing Date; 5. The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one year from

Allotment, sell such Equity Shares otherwise than on the Stock Exchanges; 6. The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further confirms that the

holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations applicable to the QIB;

7. The QIB confirms that its Bids would not eventually result in triggering a tender offer under the Takeover Code; 8. The QIP confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to it pursuant to the

Issue, together with other Allottees that belong to the same group or are under common control, shall not exceed 50% of the Issue Size. For the purposes of this representation:

The expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies under the same

group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code; 9. The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account maintained with the

Depository Participant until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges.

QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PAN, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB. Demographic details such as address and bank account will be obtained from the Depositories as per the Depository Participant account details given above. The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the QIB to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding contract on the QIB upon issuance of the CAN by our Company in favour of the QIB.


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Submission of Application Form All Application Forms must be duly completed with information including the number of Equity Shares applied for. All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter shall be submitted to the Joint Global Coordinators and Book Running Lead Managers either through electronic form or through physical delivery at the following address: Name Address Contact

Person Email Phone

(Telephone and Fax)

Citigroup Global Markets India Private Limited

1202, 12th Floor, First International Finance Centre, G Block, Bandra Kurla Complex, Bandra East, Mumbai - 400051, India

Natwar Parmar

[email protected] Tel: +91 22 6175 9976 Fax: +91 22 6175 9898

Axis Capital Limited

Axis House , Level 1 , C – 2 Wadia International Center , P.B.Marg , Worli, Mumbai – 400 025, India

G. Venkatesh


Kotak Mahindra Capital Company Limited

27 BKC, 1st Floor, Plot No. C-27, “G” Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400051,India

Karl Sahukar


Ambit Corporate Finance Private Limited

Ambit House, 449, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, India

Sameer Parkar


The Joint Global Coordinators and Book Running Lead Managers shall not be required to provide any written acknowledgement of receipt of the Application Form. Permanent Account Number or PAN Each QIB should mention its PAN allotted under the IT Act in the Application Form. Applications without this information will be considered incomplete and are liable to be rejected. QIBs should not submit the GIR number instead of the PAN as the Application Form is liable to be rejected on this ground. Pricing and Allocation Build-up of the Book The QIBs shall submit their Bids (including the revision of bids) within the Bidding Period to the Joint Global Coordinators and Book Running Lead Managers. Such Bids cannot be withdrawn after the Issue Closing Date. The book shall be maintained by the Joint Global Coordinators and Book Running Lead Managers. Price Discovery and Allocation Our Company, in consultation with the Joint Global Coordinators and Book Running Lead Managers, shall determine the Issue Price, which shall be at or above the Floor Price. However, our Company may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85 of the ICDR Regulations.


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After finalization of the Issue Price, our Company shall update the Preliminary Placement Document with the Issue details and file the same with the Stock Exchanges as this Placement Document. Method of Allocation Our Company shall determine the Allocation in consultation with the Joint Global Coordinators and Book Running Lead Managers on a discretionary basis and in compliance with Chapter VIII of the ICDR Regulations. Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand. The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of 10 % of the Issue Size shall be undertaken subject to valid Bids being received at or above the Issue Price. THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE JOINT GLOBAL COORDINATORS AND BOOK RUNNING LEAD MANAGERS IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS. QIBS MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE DISCRETION OF THE COMPANY IN CONSULTATION WITH THE JOINT GLOBAL COORDINATORS AND BOOK RUNNING LEAD MANAGERS AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE. NEITHER OUR COMPANY NOR THE JOINT GLOBAL COORDINATORS AND BOOK RUNNING LEAD MANAGERS ARE OBLIGED TO ASSIGN ANY REASON FOR ANY NON-ALLOCATION. CAN Based on the Application Forms received, our Company, in consultation with the Joint Global Coordinators and Book Running Lead Managers, in their sole and absolute discretion, shall decide the successful Bidder to whom the serially numbered CAN shall be sent, pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable for Allotment of such Equity Shares in their respective names shall be notified to such successful Bidder. Additionally, a CAN will include details of the relevant Escrow Cash Account into which such payments would need to be made, address where the application money needs to be sent, Pay-In Date as well as the probable designated date, being the date of credit of the Equity Shares to the respective successful Bidder’s account. The successful Bidders would also be sent a serially numbered Placement Document either in electronic form or by physical delivery along with the serially numbered CAN. The dispatch of the serially numbered Placement Document and the serially numbered CAN to the QIBs shall be deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by Company and the Joint Global Coordinators and Book Running Lead Managers and to pay the entire Issue Price for all the Equity Shares Allocated to such QIB. QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be Allotted to them pursuant to the Issue. Bank Account for Payment of Application Money Our Company has opened the “Ashok Leyland Limited – QIP Escrow Account” with Citibank N.A. in terms of the arrangement among our Company, the Joint Global Coordinators and Book Running Lead Managers and Citibank N.A. as escrow bank. The QIB will be required to deposit the entire amount payable for the Equity Shares Allocated to it by the Pay-In Date as mentioned in, and in accordance with, the respective CAN. Payments are to be made only through electronic fund transfer. Note: Payments through cheques are liable to be rejected. If the payment is not made favouring “Ashok Leyland Limited – QIP Escrow Account” within the time stipulated in the CAN, the Application Form and the CAN of the QIB are liable to be cancelled. Pending Allotment, our Company undertakes to utilise the amount deposited in “Ashok Leyland Limited – QIP Escrow Account” only for the purposes of (i) adjustment against Allotment of Equity Shares in the Issue; or (ii) repayment of application money if our Company is not able to Allot Equity Shares in the Issue.


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In case of cancellations or default by the QIBs, our Company, the Joint Global Coordinators and Book Running Lead Managers have the right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute discretion. Designated Date and Allotment of Equity Shares The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the “Ashok Leyland Limited – QIP Escrow Account” as stated above. The Equity Shares in the Issue will be issued and Allotment shall be made only in dematerialized form to the Allottees. Allottees will have the option to re-materialise the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act. Our Company, at its sole discretion, reserves the right to cancel the Issue at any time up to Allotment without assigning any reason whatsoever. Following the Allotment and credit of Equity Shares into the QIBs’ Depository Participant accounts, our Company will apply for final trading and listing approvals from the Stock Exchanges. In the case of QIBs who have been Allotted more than 5% of the Equity Shares in the Issue, our Company shall disclose the name and the number of the Equity Shares Allotted to such QIB to the Stock Exchanges and the Stock Exchanges will make the same available on their website. The Escrow Bank shall release the monies lying to the credit of the Escrow Cash Account to our Company after Allotment of Equity Shares to QIBs. In accordance with the Companies Act, 2013, in the event that our Company is unable to issue and Allot the Equity Shares offered in the Issue or there is a cancellation of the Issue within 60 days from the date of receipt of application money from a successful Bidder, our Company shall repay the application money within 15 days from expiry of 60 day period, failing which our Company shall repay that money to such successful Bidders with interest at the rate of 12 % per annum from expiry of the 60th day. Other Instructions Right to Reject Applications Our Company, in consultation with the Joint Global Coordinators and Book Running Lead Managers, may reject Bids, in part or in full, without assigning any reason whatsoever. The decision of our Company and the Joint Global Coordinators and Book Running Lead Managers in relation to the rejection of Bids shall be final and binding. Equity Shares in Dematerialized form with NSDL or CDSL The Allotment of the Equity Shares in the Issue shall be only in dematerialized form (i.e., not in physical certificates but be fungible and be represented by the statement issued through the electronic mode). A QIB applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary account with a Depository Participant of either NSDL or CDSL prior to making the Bid. Allotment to a successful QIB will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the QIB. Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and CDSL. The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialised form only for all QIBs in the demat segment of the respective Stock Exchanges. Our Company and the Joint Global Coordinators and Book Running Lead Managers will not be responsible or liable for the delay in the credit of Equity Shares to be issued pursuant to the Issue due to errors in the Application Form or otherwise on part of the QIBs.


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PLACEMENT Placement Agreement The Joint Global Coordinators and Book Running Lead Managers have entered into a placement agreement with us (the “Placement Agreement”), pursuant to which the Joint Global Coordinators and Book Running Lead Managers have agreed to procure, on a reasonable efforts basis, QIBs to subscribe for Equity Shares to be issued pursuant to the Issue, pursuant to Chapter VIII of the ICDR Regulations.

The Placement Agreement contains customary representations and warranties as well as indemnities from us and is subject to certain conditions and termination provisions contained therein.

Applications will be made to list the Equity Shares and admit them to trading on the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for the Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity Shares.

This Placement Document has not been, and will not be, registered as a prospectus with the Registrar of Companies in India and no Equity Shares will be offered in India or overseas to the public or any members of the public in India or to any class of investors other than QIBs.

In connection with the Issue, the Joint Global Coordinators and Book Running Lead Managers (or their affiliates) may, for their own accounts, enter into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares at the same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the Joint Global Coordinators and Book Running Lead Managers may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Joint Global Coordinators and Book Running Lead Managers may purchase Equity Shares and be allocated Equity Shares. See also the section “Notice to Investors — Off-shore Derivative Instruments (P-Notes)” beginning on page 2.

Lock-up

We have agreed that we will not, without the prior written consent of the Joint Global Coordinators and Book Running Lead Managers (which such consent shall not be unreasonably withheld), for the period commencing from the date of the Placement Agreement and ending 90 days from the Closing Date, directly or indirectly: (a) issue, offer, lend, sell, pledge, contract to sell or issue, sell any option or contract to purchase, purchase any option or contract to sell or issue, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing; (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares; or (c) publicly announce any intention to enter into any transaction whether any such transaction described in (a) or (b) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise.

Our Promoter has agreed that without the prior written consent of the Joint Global Coordinators and Book Running Lead Managers (which such consent shall not be unreasonably withheld), it will not, during the period commencing on the date of the Placement Agreement and ending 90 days after the date of allotment of the Issue Shares, directly or indirectly: (a) sell, lend, pledge, contract to sell, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing; (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares; or (c) publicly announce any intention to enter into any transaction whether any such transaction described in (a) or (b) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise; provided however that the foregoing restrictions will (i) not be applicable to any pledge or mortgage of the Equity Shares already existing on the date of the Placement Agreement or transfer of such existing pledge or mortgage; and (ii) not restrict the existing shareholders of the Company from acquiring or purchasing any Equity Shares in the Company, directly or indirectly, in accordance with and subject to applicable laws.


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DISTRIBUTION AND SOLICITATION RESTRICTIONS

The distribution of this Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Persons who come into possession of this Placement Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorized or permitted.

General

No action has been taken or will be taken that would permit a public offering of the Equity Shares to occur in India, the United States or any other jurisdiction, or the possession, circulation or distribution of this Placement Document or any other material relating to the Company or the Equity Shares in any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering materials or advertisements in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. The Issue will be made in compliance with the applicable ICDR Regulations. Each purchaser of the Equity Shares in this Issue will be deemed to have made acknowledgments and agreements as described under “Notice to Investors – Representation by Investors”, “Distribution and Solicitation Restrictions” and “Transfer Restrictions”.

Australia

This Placement Document is not a disclosure document under Chapter 6D of the Corporations Act 2001 (Cth) (the “Australian Corporations Act”), and has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under the Australian Corporations Act. (i) The offer of the Equity Shares under this Placement Document is only made to persons to whom it is lawful to offer the Equity Shares without disclosure to investors under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in Section 708 of the Australian Corporations Act; (ii) this Placement Document is made available in Australia to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia any Equity Share sold to the offeree within 12 months after their issue or transfer to the offeree under this Placement Document.

The Company is not licensed to provide financial product advice in Australia in relation to the Equity Shares. This Placement Document is intended to provide general information only and has been prepared without taking into account any particular person’s objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. No cooling off period applies in relation to this offer under the Australian Corporations Act.

Canada

The Equity Shares will not be qualified for sale under the securities laws of any province or territory of Canada. The Equity Shares may only be offered, sold or distributed, directly or indirectly, in or to or for the benefit of a resident of, the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New 186 Brunswick, Nova Scotia and Prince Edward Island (the “Placement Provinces”) pursuant to an exemption from the requirement to file a prospectus in such provinces and only through a dealer duly registered under the applicable securities laws of such provinces in circumstances where no exemption from the applicable registered dealer requirement is available. Each Joint Global Coordinator and Book Running Lead Manager has represented and agreed that it has not offered, sold or distributed and will not offer, sell or distribute any Equity Shares, directly or indirectly, in Canada or to or for the benefit of any resident of Canada, other than to a resident of the Placement Provinces in compliance with applicable securities laws.


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Cayman Islands

This Placement Document does not constitute an invitation or offer to the public in the Cayman Islands of the Equity Shares, whether by way of sale or subscription. Equity Shares have not been offered or sold, and will not be offered or sold, directly or indirectly, to the public in the Cayman Islands. However, Cayman Islands Exempted and Ordinary Non-Resident Companies and certain other legal entities formed under the laws of but not resident in the Cayman Islands and engaged in business outside of the Cayman Islands may be permitted to acquire Equity Shares.

Dubai International Financial Centre

This Placement Document relates to an exempt offer (an “Exempt Offer”) in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”). This Placement Document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with an Exempt Offer. The DFSA has not approved this Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it. The Equity Shares to which this Placement Document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Equity Shares offered should conduct their own due diligence on the Equity Shares. If you do not understand the contents of this Placement Document, you should consult an authorized financial adviser. For the avoidance of doubt, the Equity Shares are not interests in a “fund” or a “collective investment scheme” within the meaning of either the Collective Investment Law (DIFC Law No. 2 of 2010) or the Collective Investment Rules Module of the Dubai Financial Services Authority Rulebook.

European Economic Area

In relation to each member state of the European Economic Area (a “Member State”) which has implemented the Prospectus Directive (each, a “Relevant Member State”), each of the Joint Global Coordinator and Book Running Lead Managers severally and not jointly, or jointly and severally, represents and warrants that it has not made and will not make an offer to the public of any Equity Shares which are the subject of the Issue contemplated by this Placement Document may not be made in that Relevant Member State, except that the Equity Shares may be offered to the public in that Member State at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

1. to legal entities which are qualified investors, as defined in the Prospectus Directive, as implemented by the relevant Member State;

2. to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 Prospective Directive Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive (as defined below), subject to obtaining the prior consent of the relevant Book Running Lead Managers nominated by the Bank for any such offer; or

3. in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of the Equity Shares shall result in a requirement for the publication by the Bank or any Joint Global Coordinator and Book Running Lead Managers of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Equity Shares the public” in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 Prospectus Directive Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression “2010 Prospective Directive Amending Directive” means Directive 2010/73/EU and includes any relevant implementing measure in each Relevant Member State.


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Hong Kong No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong, by means of any document, other than to “professional investors”, as defined in the Securities and Futures Ordinance, Cap. 571 of the laws of Hong Kong (“Securities and Futures Ordinance”) and any rules made under that Ordinance; or to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent; or in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance, Cap. 32 of the laws of Hong Kong (“Companies Ordinance”) or which do not constitute an offer to the public within the meaning of the Companies Ordinance or an invitation to the public within the meaning of the Securities and Futures Ordinance. No document, invitation or advertisement relating to the Equity Shares has been issued or may be issued, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to Equity Shares which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance. This Placement Document and the Equity Shares have not been and will not be registered with the Securities and Futures Commission of Hong Kong and/or the Stock Exchange of Hong Kong. There are no public markets or platforms in Hong Kong for the purchase or disposal of the Equity Shares. If you are in doubt as to the contents of this Placement Document, you must immediately seek legal and investment advice from your solicitor, accountant and/or professional advisors.

Japan

The Equity Shares have not been and will not be registered under the Securities and Exchange Law of Japan (Law. No. 25 of 1948 as amended) (the “SEL”). The Equity Shares may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the SEL and any other applicable laws, regulations and ministerial guidelines of Japan. As used in this paragraph, a "resident of Japan" means any natural person residing in Japan and business offices located in Japan, including any corporation or other entity organized under the laws of Japan.

Korea

This Placement Document is not, and under no circumstances is to be considered as, a public offering of securities in Korea for the purposes of the Financial Investment Services and Capital Market Act of Korea (the “FSCMA”). Neither the Company nor any of the Joint Global Coordinators and Book Running Lead Managers may make any representation with respect to the eligibility of any recipients of this Placement Document to acquire the Equity Shares offered hereby under the laws of Korea, including but without limitation the Foreign Exchange Transaction Act of Korea and the regulations thereunder (the “FETA”). The Equity Shares offered hereby have not been registered under the FSCMA and the Equity Shares may not be offered, sold or delivered, directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea (as defined in the FETA), except otherwise permitted by applicable laws and regulations of Korea, including, without limitation, the FSCMA and the FETA.

Kuwait

The Issue has not been approved by the Kuwait Central Bank or the Kuwait Ministry of Commerce and Industry, nor has the Company received authorisation or licensing from the Kuwait Central Bank or the Kuwait Ministry of Commerce and Industry to market or sell the Equity Shares within Kuwait. Therefore, no services relating to the offering, including the receipt of applications and/or the allotment of Equity Shares, may be rendered within Kuwait by the Company or persons representing the Company unless a licence is obtained from the Kuwait Ministry of Commerce and Industry in accordance with Law 31 of 1990.

People’s Republic of China

Each of the Joint Global Coordinators and Book Running Lead Managers, severally, and not jointly, and the Company represents, warrants and agrees that:


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This Placement Document is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the People’s Republic of China (the “PRC”). The Equity Shares have not been and will not be filed with, or approved by, the China Securities Regulatory Commission or any other regulatory authority in the PRC.

This Placement Document has not been, may not be, issued, circulated or distributed in the PRC and the Equity Shares have not been and may not be offered, sold, pledged or transferred, directly or indirectly, within the territory of PRC, to any PRC person or entity unless such person or entity has obtained the requisite approval from, or has made the appropriate filings with, the relevant PRC authorities.

Qatar

This document does not, and is not intended to, constitute an invitation or an offer of securities in the State of Qatar (including the Qatar Financial Centre) and accordingly should not be construed as such. The Equity Shares have not been, and shall not be, offered, sold or delivered at any time, directly or indirectly, in the State of Qatar. Any offering of the Equity Shares shall not constitute a public offer of securities in the State of Qatar.

By receiving this document, the person or entity to whom it has been provided to understands, acknowledges and agrees that: (a) neither this Placement Document nor the Equity Shares have been registered, considered, authorized or approved by the Qatar Central Bank, the Qatar Financial Markets Authority, the Qatar Financial Centre Regulatory Authority or any other authority or agency in the State of Qatar; (b) neither the Company nor persons representing the Company are authorized or licensed by the Qatar Central Bank, the Qatar Financial Markets Authority, the Qatar Financial Centre Regulatory Authority, or any other authority or agency in the State of Qatar, to market or sell the Equity Shares within the State of Qatar; (c) this Placement Document may not be provided to any person other than the original recipient and is not for general circulation in the State of Qatar; and (d) no agreement relating to the sale of the Equity Shares shall be consummated within the State of Qatar.

No marketing of the Equity Shares has been or will be made from within the State of Qatar and no subscription to the Equity Shares may or will be consummated within the State of Qatar. Any applications to invest in the Equity Shares shall be received from outside of Qatar. This document shall not form the basis of, or be relied on in connection with, any contract in Qatar. Neither the Company nor persons representing the Company are, by distributing this document, advising individuals resident in the State of Qatar as to the appropriateness of investing in or purchasing or selling securities or other financial products. Nothing contained in this document is intended to constitute investment, legal, tax, accounting or other professional advice in, or in respect of, the State of Qatar.

Singapore This Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Placement Document and any other materials in connection with the offer or sale, solicitation or invitation for subscription or purchase of Equity Shares, or shares to be issued from time to time by the Company may not be circulated or distributed, nor may the Equity Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A of under Section 274 of the SFA Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(2) of the SFA, or any person pursuant to Section 275(1A) of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where Equity Shares are subscribed or purchased, they are subject to restrictions on transferability and resale and may not be transferred or resold in Singapore except as permitted under the SFA, in particular (but not limited to), where the shares are acquired under Section 276 of the SFA by a relevant person which is:

(a) a corporation which is not an accredited investor (as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (which the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within


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six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: (1) to an institutional investor (under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights or interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets and further for corporations, in accordance with the conditions specified in Section 275 (1A) of the SFA; (2) where no consideration is or will be given for the transfer; or (3) where the transfer is by operation of law or (4) as specified in Section 276(7) of the SFA.

Switzerland

Neither this Placement Document nor any documents related to the Equity Shares constitute a prospectus within the meaning of Articles 652a and 1156 of the Swiss Code of Obligations. The Equity Shares will not be listed on the SIX Swiss Exchange or any other regulated securities market in Switzerland, and consequently, the information presented in this Placement Document does not necessarily comply with the information standards set out in the listing rules in SIX Swiss Exchange. Accordingly, the Equity Shares have not been and may not be publicly offered or sold in Switzerland, as such term is defined or interpreted under the Swiss Code of Obligations. In addition, the Equity Shares do not constitute a participation in a collective investment scheme in the meaning of the Swiss Collective Investment Schemes Act (“CISA”) and they are neither subject to approval nor supervision by the Swiss Federal Banking Commission. Therefore, investors in the Equity Shares do not benefit from protection under CISA or supervision by the Swiss Federal Banking Commission or any other regulatory authority in Switzerland.

United Arab Emirates (excluding the Dubai International Financial Centre) The Equity Shares have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates (“U.A.E.”) other than in compliance with the laws of the U.A.E. Prospective investors in the Dubai International Financial Centre should have regard to the specific notice to prospective investors in the Dubai International Financial Centre set out above. The information contained in this Placement Document does not constitute a public offer of securities in the U.A.E. in accordance with the Commercial Companies Law (Federal Law No. 8 of 1984 of the U.A.E., as amended) or otherwise and is not intended to be a public offer. The Company and the Equity Shares have not been approved or licensed by or registered with the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or any other relevant licensing authorities or governmental agencies in the U.A.E. This Placement Document has not been approved by or filed with the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or the Dubai Financial Services Authority. This Placement Document is being issued to a limited number of selected institutional and sophisticated investors, is not for general circulation in the U.A.E. and may not be provided to any person other than the original recipient or reproduced or used for any other purpose. If you do not understand the contents of this Placement Document, you should consult an authorized financial adviser. This Placement Document is provided for the benefit of the recipient only, and should not be delivered to, or relied on by, any other person.

United Kingdom Each of the Joint Global Coordinators and Book Running Lead Managers has represented and agreed that:

(a) it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (“FSMA”) with respect to anything done by it in relation to the Equity Shares in, from or otherwise involving the UK; and

(b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated in the UK any invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) received by it in connection with the issue or sale of the Equity Shares in circumstances in which section 21(1) of FSMA does not apply to the Company.


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United States The Equity Shares have not been and will not be registered under the U.S. Securities Act and, subject to certain exceptions, may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. The Equity Shares are being offered (1) in the United States to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) pursuant to Section 4(a)(2) of the U.S. Securities Act and (2) outside the United States in reliance upon Regulation S. Each purchaser of the Equity Shares will be deemed to have made the representations, agreements and acknowledgements as described under “Transfer Restrictions”. Please see the section “Transfer Restrictions” beginning on page 175.


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TRANSFER RESTRICTIONS

Due to the following restrictions, investors are advised to consult legal counsel prior to purchasing Equity Shares or making any resale, pledge or transfer of the Equity Shares. Purchasers are not permitted to sell the Equity Shares Allotted pursuant to the Issue, for a period of one year from the date of Allotment, except on the Stock Exchanges. Allotments made to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements. Additional transfer restrictions applicable to the Equity Shares are listed below. U.S. TRANSFER RESTRICTIONS The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Each purchaser of the Equity Shares in the United States is deemed to have represented, agreed and acknowledged as follows: It is a “qualified institutional buyer” (as defined in Rule 144A).

It is aware that the sale of the Equity Shares to it is being made in reliance on an exemption under the U.S. Securities Act.

It is acquiring the Equity Shares for its own account or for the account of one or more eligible U.S. investors (i.e., “qualified institutional buyers”, as defined above), each of which is acquiring beneficial interests in the Equity Shares for its own account.

It understands that the Equity Shares are being offered in a transaction not involving any public offering in the United States within the meaning of the U.S. Securities Act, that the Equity Shares have not been and will not be registered under the U.S. Securities Act and that if in the future it decides to offer, resell, pledge or otherwise transfer any of the Equity Shares, such Equity Shares may be offered, resold, pledged or otherwise transferred in compliance with the U.S. Securities Act and other applicable securities laws only outside the United States in a transaction complying with the provisions of Rule 903 or Rule 904 of Regulation S or in a transaction otherwise exempt from the registration requirements of the U.S. Securities Act.

It will notify any transferee to whom it subsequently offers, sells, pledges or otherwise transfers and the executing broker and any other agent involved in any resale of the Equity Shares of the foregoing restrictions applicable to the Equity Shares and instruct such transferee, broker or agent to abide by such restrictions.

It acknowledges that if at any time its representations cease to be true, it agrees to resell the Equity Shares at the Company’s request.

It is a sophisticated investor and has such knowledge and experience in financial, business and investments as to be capable of evaluating the merits and risks of the investment in the Equity Shares. It is experienced in investing in private placement transactions of securities of companies in a similar industries and in similar jurisdictions.

It and any accounts for which it is subscribing to the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to the Company or any of the Joint Global Coordinator and Book Running Lead Managers for all or part of any such loss or losses that may be suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares, and (v) have no reason to anticipate any change in its or their circumstances, financial or otherwise, which may cause or require any sale or distribution by it or them of all or any part of the Equity Shares. It acknowledges that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. It is seeking to subscribe to the Equity Shares in this Issue for its own investment and not with a view to distribution.


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It has been provided access to the Preliminary Placement Document and this Placement Document which it has read in its entirety.

It agrees to indemnify and hold the Company and each of the Joint Global Coordinator and Book Running Lead Managers harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of these representations and warranties. It will not hold any of the Company or the Joint Global Coordinator and Book Running Lead Managers liable with respect to its investment in the Equity Shares. It agrees that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares. Where it is subscribing to the Equity Shares for one or more managed accounts, it represents and warrants that it is authorised in writing, by each such managed account to subscribe to the Equity Shares for each managed account and to make (and it hereby makes) the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “it” to include such accounts.

It acknowledges that the Company and the Joint Global Coordinator and Book Running Lead Managers and their respective affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations or agreements is no longer accurate, it will promptly notify the Company and the Joint Global Coordinator and Book Running Lead Managers. Each purchaser of the Equity Shares outside the United States is deemed to have represented, agreed and acknowledged as follows: It is authorised to consummate the purchase of the Equity Shares in compliance with all applicable laws and regulations.

It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer acknowledges) that the Equity Shares are being issued in reliance upon Regulation S and such Equity Shares have not been and will not be registered under the U.S. Securities Act.

It certifies that either (a) it is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares and is located outside the United States (within the meaning of Regulation S) or (b) it is a broker-dealer acting on behalf of its customer and its customer has confirmed to it that (i) such customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is not located outside the United States (within the meaning of Regulation S).

It is aware of the restrictions of the offer, sale and resale of the Equity Shares pursuant to Regulation S.

The Equity Shares have not been offered to it by means of any “directed selling efforts” as defined in Regulation S.

It understands that the Equity Shares are being offered in a transaction not involving any public offering in the United States within the meaning of the U.S. Securities Act, that the Equity Shares have not been and will not be registered under the U.S. Securities Act and that if in the future it decides to offer, resell, pledge or otherwise transfer any of the Equity Shares, such Equity Shares may be offered, resold, pledged or otherwise transferred in compliance with the U.S. Securities Act and other applicable securities laws only outside the United States in a transaction complying with the provisions of Rule 903 or Rule 904 of Regulation S or in a transaction otherwise exempt from the registration requirements of the U.S. Securities Act.

It is a sophisticated investor and has such knowledge and experience in financial, business and investments as to be capable of evaluating the merits and risks of the investment in the Equity Shares. It is experienced in investing in private placement transactions of securities of companies in a similar stage of development and in similar jurisdictions. It and any accounts for which it is subscribing to the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to the Company or any of the Joint Global Coordinator and Book Running Lead Managers for all or part of any such loss or losses that may be suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares, and (v) have no reason to anticipate any change in its or their circumstances, financial or otherwise, which may cause or require any sale or distribution by it or them


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of all or any part of the Equity Shares. It acknowledges that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. It is seeking to subscribe to the Equity Shares in this Issue for its own investment and not with a view to distribution. It has been provided access to the Preliminary Placement Document and this Placement Document which it has read in its entirety. It agrees to indemnify and hold the Company and each of the Joint Global Coordinator and Book Running Lead Managers harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of these representations and warranties.

It will not hold any of the Company or the Joint Global Coordinator and Book Running Lead Managers liable with respect to its investment in the Equity Shares. It agrees that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares.

Where it is subscribing to the Equity Shares for one or more managed accounts, it represents and warrants that it is authorised in writing, by each such managed account to subscribe to the Equity Shares for each managed account and to make (and it hereby makes) the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “it” to include such accounts. It acknowledges that the Company and the Joint Global Coordinator and Book Running Lead Managers and their respective affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations or agreements is no longer accurate, it will promptly notify the Company and the Joint Global Coordinator and Book Running Lead Managers.


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INDIAN SECURITIES MARKET The information in this section has been extracted from publicly available documents from various sources, including the SEBI, the Stock Exchanges , and has not been prepared or independently verified by us or the Joint Global Coordinators and Book Running Lead Managers, or any of their respective affiliates or advisors. The Indian Securities Market India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai. Stock Exchange Regulation Indian stock exchanges are regulated primarily by the SEBI, as well as by the Government acting through the Ministry of Finance, Capital Markets Division, under the Securities and Exchange Board of India Act, 1992, as amended (the “SEBI Act”), the Securities Contracts (Regulation) Act, 1956, as amended (the “SCRA”) and the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”). On June 20, 2012, the SEBI, in exercise of its powers under the SCRA and the SEBI Act, notified the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate, inter alia, the recognition, ownership and governance in stock exchanges and clearing corporations in India together with providing for minimum networth requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules along with various rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner, in which contracts are entered into, settled and enforced between members of the stock exchanges. The SEBI Act empowers the SEBI to regulate the Indian securities markets, including stock exchanges and intermediaries in the securities markets, promote and regulate self-regulatory organizations and prohibit fraudulent and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies, buy-backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional investors, foreign portfolio investors, credit rating agencies and other securities market participants have been notified by the SEBI. There are recognized stock exchanges in India. Most of the stock exchanges have their own governing board for self-regulation. The BSE and the NSE together hold a dominant position among the stock exchanges in terms of the number of listed companies, market capitalization and trading activity. With effect from April 1, 2003, the stock exchanges in India operate on a trading day plus two, or T+2, rolling settlement system. At the end of the T+2 period, obligations are settled with buyers of securities paying for and receiving securities, while sellers transfer and receive payment for securities. For example, trades executed on a Monday would typically be settled on a Wednesday. In order to contain the risk arising out of the transactions entered into by the members of various stock exchanges either on their own account or on behalf of their clients, the stock exchanges have designed risk management procedures, which include compulsory prescribed margins on the individual broker members, based on their outstanding exposure in the market, as well as stock-specific margins from the members. Listing The listing of securities on a recognized Indian stock exchange is regulated by the applicable Indian laws including the Companies Act, the SCRA, the SCRR, the SEBI Act, the various guidelines and regulations issued by the SEBI and the Listing Agreements of the respective stock exchanges. The SCRA empowers the governing body of each recognized stock exchange to suspend or withdraw admission to dealings in the securities of a company for a breach of, or non-compliance with, any of the conditions of admission to dealings or for any other reason, subject to the issuer receiving prior written notice of such intent of the exchange and a reasonable opportunity to show cause against the proposed action. The SEBI also has the power to make or amend the byelaws of the recognized stock exchanges in India, to supersede a recognized stock exchange’s governing body and withdraw recognition of a recognized stock exchange. Pursuant to an amendment dated June 4, 2010 to the SCRR, all listed companies (except public sector companies) are required to maintain a minimum public shareholding of at least 25 %. Any listed company which had public shareholding of less than 25 % at the time of commencement of the amendment dated June 4, 2010 to the SCRR was required to increase its


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public shareholding to at least 25 % within a period of three years from the date of such commencement. The SCRR also provides that if the public shareholding in a listed company falls below 25 % at any time, such company is required to bring the public shareholding to 25 % within a maximum period of 12 months from the date of such fall in the manner prescribed by the SEBI. Consequently, a listed company may be delisted from the stock exchanges for not complying with the minimum public shareholding requirement. Our Company is in compliance with this minimum public shareholding requirement. Disclosures under the Companies Act, 2013 and Listing Agreements Public limited companies are required under the Companies Act, 2013 and the Listing Agreements to prepare, file with the registrar of companies and circulate to their shareholders audited annual accounts which comply with the disclosure requirements and regulations governing their manner of presentation and which include sections relating to corporate governance under the Companies Act, 2013, related party transactions and management’s discussion and analysis as required under the Listing Agreement. In addition, a listed company is subject to continuing disclosure requirements pursuant to the terms of its Listing Agreement with the relevant stock exchange. Index-Based Market-Wide Circuit Breaker System In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed stock exchanges to apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The index based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index movement, at 10 %, 15 % and 20 %. These circuit breakers, when triggered, bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached earlier. With effect from October 1, 2013, the Stock Exchanges, shall on a daily basis translate the 10 %, 15 % and 20 % circuit breaker limits of market wide index variation based on the previous days’ closing level of the index. In addition to the market-wide index-based circuit filters, there are currently in place individual scrip-wise price bands of 20 % movements either up or down for all scrips in the compulsory rolling settlement. However, no price bands are applicable on scrips on which derivative products are available or scrips included in indices on which derivative products are available. The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility. Margin requirements are imposed by stock exchanges that are required to be maintained by the stockbrokers. The BSE The BSE was established in 1875 and is the oldest stock exchange in India. In 1956, it became the first stock exchange in India to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its present status as one of the premier stock exchanges of India. Pursuant to the BSE (Corporatisation and Demutualisation) Scheme 2005 of the SEBI, with effect from August 19, 2005, the BSE was incorporated and is now a company under the Companies Act. As at May 31, 2014, the one month average daily equity turnover was Rs. 438,680 lakhs and there were there were 3,145 scrips traded on the BSE. (Source: www.bseindia.com) The NSE The NSE was established by financial institutions and banks to serve as a national exchange and to provide nationwide on-line satellite-linked screen-based trading facilities with market makers and electronic clearing and settlement for securities including Government securities, debentures, public sector bonds and units. It has evolved over the years into its present status as one of the premier stock exchanges of India. The NSE was recognized as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. As at May 31, 2014, the one month average daily traded value of the capital market segment was Rs. 207,6300 lakhs. As at April 30, 2014, there were 1,690 listed companies trading on the NSE. (Source: www.nseindia.com)


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The MSE The Madras Stock Exchange Ltd (MSE) was established in 1937 and has obtained permanent recognition from the Government under the SCRA. It is one of the oldest stock exchanges in India and the first stock exchange in southern India. The MSE is a demutualised corporate entity pursuant to the MSE (Corporatisation and Demutualisation) Scheme, 2005 approved by the SEBI. The MSE has a strategic arrangement with the NSE which provides for the facility of trading by the members of MSE on the NSE platform and also for trading of MSE listed companies on the NSE. The MSE launched the MSE Share Price Index on November 23, 1987. The MSE has established an exclusive investment education centre named as the “MSE Institute of Capital Markets” to cater to the educational needs of the market participants. Trading Hours Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST (excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m. that has been introduced recently). The BSE and the NSE are closed on public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.; and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the trading hours. Stock Market Indices There are several indices of stock prices on NSE, which include the S&P CNX Nifty, CNX Nifty Junior, S&P CNX Defty, S&P CNX 500, CNX Midcap and CNX100. S&P CNX Nifty is a diversified 50 stock index accounting for various sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. S&P CNX Nifty is owned and managed by India Index Services and Products Limited (IISL), which is a joint venture between the NSE and CRISIL. The two indices which are generally used in tracking the aggregate price movements on BSE are the Sensex and the BSE 100 Index. The BSE Sensitive Index, or the Sensex, consists of listed shares of 30 large market capitalization companies. The companies are selected on the basis of market capitalization, liquidity and industry representation. The Sensex was first compiled in 1986 with the fiscal year ended March 31, 1979. The BSE 100 Index (formerly the BSE National Index) contains listed shares of 100 companies, including the 30 in the Sensex, with 1983-1984 as the base year. Internet-Based Securities Trading and Services The SEBI approved Internet trading in January 2000. Internet trading takes place through order routing systems, which route customer orders to exchange trading systems for execution. This permits customers to trade using brokers’ Internet trading systems. Stock brokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated under applicable law. The NSE became the first exchange to grant approval to its members for providing Internet-based trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments of the NSE. Trading Procedure In order to facilitate smooth transactions, the BSE replaced its open outcry system with the BSE Online Trading (BOLT) facility in 1995. This totally automated screen based trading in securities was put into practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and improving efficiency in back-office work. NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or “NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads. Takeover Code Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (the “Takeover


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Code”), which provides specific regulations in relation to substantial acquisition of shares and takeover. Once the equity shares of a company are listed on a stock exchange in India, the provisions of the Takeover Code will apply to any acquisition of the company’s shares/voting rights/control. The Takeover Code prescribes certain thresholds or trigger points in the shareholding a person or entity has in the listed Indian company, which give rise to certain obligations on part of the acquirer. Acquisitions up to a certain threshold prescribed under the Takeover Code mandate specific disclosure requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an open offer of the shares of the target company. The Takeover Code also provides for the possibility of indirect acquisitions, imposing specific obligations on the acquirer in case of such indirect acquisition. Delisting of Securities SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in relation to the voluntary and compulsory delisting of equity shares from the stock exchanges. Prohibition of Insider Trading Regulations The Insider Trading Regulations have been notified by SEBI to prohibit and penalize insider trading in India. An insider is, among other things, prohibited from dealing either on his own behalf or on behalf of any other person in the securities of a listed company when in possession of unpublished price sensitive information. The SEBI Insider Trading Regulations also provide disclosure obligations for shareholders holding more than a pre-defined percentage, persons who are promoters or part of the promoter group and directors and officers, with respect to their shareholding in the company, and the changes therein. The definition of “insider” includes any person who has received or has had access to unpublished price sensitive information in relation to securities of a company or any person reasonably expected to have access to unpublished price sensitive information in relation to securities of a company and who is or was connected with the company or is deemed to have been connected with the company. Depositories In August 1996, the Indian Parliament enacted the Depositories Act 1996 (the “Depositories Act”) which provides a legal framework for the establishment of depositories to record ownership details and effect transfers in electronic book-entry form. The SEBI framed regulations in relation to the formation and registration of such depositories, the registration of participants and the rights and obligations of the depositories, participants, companies and beneficial owners. The depository system has significantly improved the operation of the Indian securities markets. Derivatives (Futures and Options) Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock exchange functions as a self-regulatory organisation under the supervision of the SEBI.


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DESCRIPTION OF THE EQUITY SHARES

Set forth below is certain information relating to our share capital, including a brief summary of some of the provisions of the Memorandum and Articles of Association, the Companies Act and certain related laws of India. General As of March 31, 2014 our authorized capital is Rs. 259,210 lakhs divided into (a) 2,535,60 lakhs Equity Shares of Re. 1 each; (b) 365 Lakh Redeemable Non-cumulative Non-convertible Preference Shares of Rs. 10 each; and (c) 20 lakhs Non-convertible Redeemable Preference Shares of Rs. 100 each. As of the date of this Placement Document, 2,66,06,76,634 Equity Shares of Re. 1 each were paid up and outstanding. Dividend Under the Companies Act, 2013, unless the board recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. Subject to certain conditions specified in the Companies Act, 2013, no dividend can be declared or paid by a company for any financial year except out of the profits of the company for that year determined in accordance with the provisions of the Companies Act, 2013 or out of the undistributed profits of previous Fiscal Years or out of both, arrived at in accordance with the provisions of the Companies Act, 2013, or out of money provided by the Central Government or a state Government for payment of dividend by the Company in pursuance of a guarantee given by that government. Pursuant to the Listing Agreements, listed companies are required to declare and disclose their dividends on per share basis only. The dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid-up value of their equity shares as at the record date for which such dividend is payable. In addition, the board may declare and pay interim dividends. Under the Companies Act, 2013, dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is specified as the “record date” or “book closure date”. No shareholder is entitled to a dividend while unpaid calls on any of his equity shares are outstanding. Dividends must be paid within 30 days from the date of the declaration and any dividend that remains unpaid or unclaimed after that period must be transferred within seven days to a special unpaid dividend account held at a scheduled bank. Any money that remains unpaid or unclaimed for seven years from the date of such transfer must be transferred by the Company to the Investor Education and Protection Fund established by the Government and thereafter any claim with respect thereto will lapse. The Company may, before the declaration of any dividend in any financial year, transfer such percentage of its profits for that financial year as it may consider appropriate to the reserves of the Company. The Companies Act, 2013 and the Companies (Declaration of Dividend) Rules, 2014, provide that if the profit for a year is insufficient, the dividend for that year may be declared out of free reserves, subject to certain conditions prescribed under those legislations. Capitalization of Reserves As provided in the Articles of Association of the Company, the Company in a general meeting (on recommendation of the Board) may resolve that it is desirable to capitalize any part of the amount for the time being standing to the credit of the Company's reserve accounts or to the credit of the profit and loss accounts or otherwise available for distribution; and that such sum be accordingly set free for distribution in the specified manner amongst the shareholders who would have been entitled thereto and distributed by way as such dividend and in the same proportion. Any issue of bonus shares by a listed company would be subject to the guidelines issued by the SEBI. The relevant SEBI guidelines prescribe that no company shall, pending conversion of compulsorily convertible securities, issue any shares by way of bonus unless a similar benefit is extended to the holders of such compulsorily convertible securities, through a proportionate reservation of shares. Further, in order to issue bonus shares, a company should not have defaulted in the payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption thereof and should have sufficient reason to believe that it has not defaulted in respect of any statutory dues of the employees. The declaration of bonus shares in lieu of a dividend cannot be made. A bonus issue may be made out of free reserves built out of genuine profits or share premium collected in cash and not from reserves created by revaluation of fixed assets.


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The issue of bonus shares must take place within fifteen days from the date of approval by the board, if the articles of association of a company do not require such company to seek shareholders’ approval for capitalization of profits or reserves for making bonus issues. If a company is required to seek shareholders’ approval for capitalization of profits or reserves for making bonus issues, then the bonus issue should be implemented within two months from the date of the board meeting wherein the decision to issue bonus shares was taken subject to shareholders’ approval. Pre-emptive Rights and Alteration of Share Capital Subject to the provisions of the Companies Act, 2013, the Company can increase its share capital by issuing new equity shares. Such new equity shares must be offered to existing shareholders registered on the record date in proportion to the amount paid-up on those equity shares at that date. The offer shall be made by notice specifying the number of equity shares offered and the date (being not less than fifteen days and not exceeding thirty days from the date of the offer) after which the offer, if not accepted, will be deemed to have been declined. After such date the Board may dispose of the equity shares offered in respect of which no acceptance has been received, in such manner as they think is not disadvantageous to the shareholders and the Company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares in favor of any other person provided that the person in whose favor such shares have been renounced is approved by the Board in their absolute discretion. However, under the provisions of the Companies Act, 2013 and the Companies (Share Capital and Debentures) Rules, 2014, new shares may be offered to any persons, whether or not those persons include existing shareholders or employees to whom shares are allotted under a scheme of employees stock options, either for cash or for consideration other than cash, if a special resolution to that effect is passed by the shareholders of the Company in a general meeting. The issue of the Equity Shares pursuant to the Issue has been approved by a special resolution of the Company’s shareholders and such shareholders have waived their pre-emptive rights with respect to such Equity Shares. The Company’s issued share capital may, among other things, be increased by the exercise of warrants attached to any of the Company’s securities entitling the holder to subscribe for shares. The Articles of Association provide that the Company may consolidate or sub-divide the Company’s share capital or cancel equity shares which have not been taken up by any person. The Company can also alter its share capital by way of a reduction of capital, in accordance with the Companies Act, 2013. Preference Shares Preference share capital is that part of the paid-up capital of the company which fulfils both the requirements below: with respect to dividends, it carries or will carry a preferential right to be paid a fixed amount or an amount calculated at

a fixed rate; and

with respect to capital, it carries or will carry on a winding-up of the company or repayment of capital, a preferential right to be repaid the amount of the capital paid-up or deemed to have been paid-up, subject to the provisions of the Companies Act, 2013.

Preference shares must be redeemed within 30 years of issue, subject to the redemption of a minimum 10% of such preference shares per year from the 21st year onwards or earlier, on proportionate basis, at the option of the preference shareholders. Under the Companies Act, 2013, the Company may issue redeemable preference shares but: no such shares may be redeemed except out of profits otherwise available for dividends or out of the proceeds of a fresh

issue of shares made for the purposes of the redemption;

no such shares may be redeemed unless they are fully paid;

the premium, if any, payable on redemption shall have been provided for out of the Company’s profits or security premium account, before the shares are redeemed;


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where any such shares are redeemed out of the profits of the Company, there shall, out of profits which would otherwise have been available for dividends, be transferred to a reserve fund, to be called the Capital Redemption Reserve Account, a sum equal to the nominal amount of the shares redeemed; and

the provisions of the Companies Act, 2013 relating to the reduction of the share capital of the Company shall, except as provided under Section 55 of the Companies Act, 2013, apply as if such reserve account were paid-up share capital of the Company.

General Meetings of Shareholders The Company must hold its annual general meeting each year within 15 months of the previous annual general meeting and within six months after the end of each accounting year. The RoC may extend this period in special circumstances at the Company’s request. The Board may convene an extraordinary general meeting of shareholders when necessary and shall convene such a meeting at the request of a shareholder or shareholders holding in the aggregate not less than 10% of the Company’s issued paid-up capital. Written notices convening a meeting setting out the date and place of the meeting and its agenda must be given to members at least 21 days prior to the date of the proposed meeting and where any special business is to be transacted at the meeting an explanatory statement shall be annexed to the notice as required under the Companies Act, 2013. A general meeting may be called after giving shorter notice if consent is received, in writing or by electronic mode, from shareholders holding not less than 95% of the Company’s paid-up capital. The Company’s general meetings are held in Chennai. A listed company intending to pass a resolution relating to matters such as, but not limited to, an amendment in the objects clause of the memorandum of association, a buy-back of shares under the Companies Act, 2013, the giving of loans or extending a guarantee in excess of limits prescribed under the Companies Act, 2013 is required to pass the resolution by means of a postal ballot instead of transacting the business in the general meeting of the company. A notice to all the shareholders must be sent along with a draft resolution explaining the reasons thereof and requesting them to send their assent or dissent in writing on a postal ballot within a period of thirty days from the date of such notice. Shareholders may exercise their right to vote at general meetings or through postal ballot by voting through e-voting facilities in accordance with the circular dated April 17, 2014 issued by the SEBI and the Companies Act, 2013. Under the Companies Act, 2013, unless, the Articles of Association provide for a larger number: (i) five shareholders present in person, if the number of shareholders as on the date of meeting is not more than 1,000; (ii) 15 shareholders present in person, if the number of shareholders as on the date of the meeting is more than 1,000 but up to 5,000; and (iii) 30 shareholders present in person, if the number of shareholders as on the date of meeting exceeds 5,000, shall constitute a quorum for a general meeting of the Company. The quorum requirements applicable to shareholder meetings under the Companies Act, 2013 have to be physically complied with. Voting Rights At a general meeting upon a show of hands, every member holding shares and entitled to vote and present in person has one vote. Upon a poll, the voting rights of each Shareholder entitled to vote and present in person or by proxy is in the same proportion to such Shareholder’s share of the paid-up equity capital of the Company. Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require that the votes cast in favor of the resolution must be at least three times the votes cast against the resolution. The Companies Act, 2013 provides that to amend the articles of association of a company, a special resolution is required to be passed in a general meeting. A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles of Association. The instrument appointing a proxy is required to be lodged with us at least 48 hours before the time of the meeting, or in case of a poll, not less than 24 hours before the time appointed for taking the poll. A shareholder may, by a single power of attorney, grant a general power of representation regarding several general meetings of shareholders. Any shareholder may appoint a proxy. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings. A proxy may not vote except on a poll and does not have a right to speak at meetings. A shareholder which is a legal entity may appoint an authorized representative who can vote in all respects as if a member both on a show of hands and a poll.


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The Companies Act, 2013 allows the Company to issue shares with differential rights as to dividend, voting or otherwise, subject to certain conditions. In this regard, the law requires that for a company to issue shares with differential voting rights, the company must have, inter alia, had distributable profits in terms of the Companies Act, 2013 for the last three financial years and the company must not have defaulted in filing annual accounts and annual returns for the immediately preceding three financial years. Register of Shareholders and Record Dates The Company is obliged to maintain a register of shareholders at its RoC , unless a special resolution is passed in a general meeting authorizing the keeping of the register at any other place within the city, town or village in which the Registered Office is situated or any other place in India in which more than one-tenth of the total shareholders entered in the register of members reside. The Company recognizes as shareholders only those persons whose names appear on the register of shareholders and cannot recognize any person holding any share or part of it upon any express, implied or constructive trust, except as permitted by law. In the case of shares held in physical form, transfers of shares are registered on the register of shareholders upon lodgment of the share transfer form duly complete in all respects accompanied by a share certificate or, if there is no certificate, the letter of allotment in respect of shares transferred together with duly stamped transfer forms. In respect of electronic transfers, the depository transfers shares by entering the name of the purchaser in its books as the beneficial owner of the shares. In turn, the name of the depository is entered into the Company’s records as the registered owner of the shares. The beneficial owner is entitled to all the rights and benefits as well as the liabilities with respect to the shares held by a depository. For the purpose of determining the shareholders, the register may be closed for periods not exceeding 45 days in any one year or 30 days at any one time at such times, as the Board may deem expedient in accordance with the provisions of the Companies Act, 2013. Under the Listing Agreements of the Stock Exchanges on which the Company’s outstanding shares are listed, the Company may, upon at least seven working days’ advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders. The trading of shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed. Under the Companies Act, 2013, the Company is also required to maintain a register of debenture holders and a register of any other security holders. Annual Report and Financial Results The annual report must be presented at the annual general meeting. The report includes financial information, a corporate governance section and management’s discussion and analysis and is sent to the company’s shareholders. Under the Companies Act, 2013, the Company must file its balance sheet and profit and loss account with the Registrar of Companies within thirty days from the date of the annual general meeting. The Companies Act, 2013 also requires listed companies to place their financial statements, including consolidated financial statements, if any, and all other documents required to be attached thereto, on their website. As required under the Listing Agreements, copies are required to be simultaneously sent to the Stock Exchanges on which the shares are listed. The Company must also publish its financial results in at least one English language daily newspaper circulating in the whole or substantially the whole of India and also in a daily newspaper published in the language of the region of the Registered Office (i.e., Tamil). Transfer of Equity Shares Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with applicable SEBI regulations. These regulations provide the regime for the functioning of the depositories and their participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownerships of shares held through a depository are exempt from stamp duty. The SEBI requires that for trading and settlement purposes shares should be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange.


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The securities of the Company are freely transferable, subject to the provisions of the Companies Act, 2013. If a public company without sufficient cause refuses to register a transfer of shares within thirty days from the date on which the instrument of transfer or intimation of transmission, as the case may be, is delivered to the company, the transferee may appeal to the Company Law Board seeking to register the transfer. The Company Law Board is proposed to be replaced with the National Company Law Tribunal with effect from a date that is yet to be notified. Pursuant to the Listing Agreements, in the event that a transfer of shares is not effected within 15 days or where the Company has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of 15 days, the Company is required to compensate the aggrieved party for the opportunity loss caused by the delay. A transfer may also be by transmission. Subject to the provisions of the Articles, any person becoming entitled to shares in consequence of the death or insolvency of any member may, upon producing such evidence as may from time to time properly be required by the Board, be registered as a member in respect of such shares, or may, subject to the regulations as to transfer contained in the Articles, transfer such shares. The Articles of Association provide that the Company shall charge no fee for registration of transfer, transmission, probate, succession certificate and letters of administration, certificate of death or marriage, power of attorney or other similar document. Acquisition by us of our own Equity Shares A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by an approval of at least 75% of its shareholders, voting on it in accordance with the Companies Act, 2013 and sanctioned by the High Court of competent jurisdiction (or the National Company Law Tribunal once it is notified). Subject to certain conditions, a company is prohibited from giving, whether directly or indirectly and whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person for any shares in the company or its holding company. However, pursuant to the Companies Act, 2013, a company has been empowered to purchase its own shares or other specified securities out of its free reserves, the securities premium account or the proceeds of any fresh issue of shares or other specified securities (other than the kind of shares or other specified securities proposed to be bought back) subject to certain conditions, including:

the buy-back should be authorized by the Articles of Association of the company;

a special resolution has been passed in a general meeting authorizing the buy-back (in the case of listed companies, by

means of a postal ballot);

the buy-back is limited to 25% of the total paid-up capital and free reserves;

the debt owed by the company is not more than twice the capital and free reserves after such buy-back; and

the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of Securities) Regulations 1998, as amended.

A board resolution will constitute sufficient corporate authorization for a buy-back that is for less than 10% of the total paid-up equity capital and free reserves of the company. A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buy-back. Further, a company buying back its securities is not permitted to buy back any securities for a period of one year from the buy-back or to issue the same kind of shares or specified securities for six months subject to certain limited exceptions. A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company including its own subsidiary companies or through any investment company. Further, a company is prohibited from purchasing its own shares or specified securities, if the company is in default in the repayment of deposit or interest, in the redemption of debentures or preference shares, in payment of dividend to a shareholder, in repayment of any term loan or interest payable thereon to any financial institution or bank or in the event of non-compliance with certain other provisions of the Companies Act, 2013.


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Liquidation Rights Subject to the rights of creditors, of employees and of the holders of any other shares entitled by their terms of issue to preferential repayment over the shares, in the event of winding up of the Company, the holders of the Equity Shares are entitled to be repaid the amounts of capital paid-up or credited as paid-up on such shares. All surplus assets after payments due to employees, the holders of any preference shares and other creditors belong to the holders of the Equity Shares in proportion to the amount paid-up or credited as paid-up on such shares respectively at the commencement of the winding-up.


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TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of equity shares under the current tax laws presently in force in India. Several of these benefits are dependent on us or our shareholders fulfilling conditions prescribed under relevant tax laws. We may not choose to fulfill such conditions. This information is not exhaustive or comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their own tax consultant with respect to the tax implications of an investment in the Equity Shares. Investors should note that a draft of the Direct Tax Code Bill has been placed before the Indian Parliament. If that law comes into effect, there could be an impact on the tax provisions mentioned below.

STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY’S SHAREHOLDERS UNDER THE INCOME TAX ACT, 1961 (“IT ACT”) AND OTHER DIRECT TAX LAWS PRESENTLY IN FORCE IN INDIA

The following key tax benefits are available to the Company and the prospective shareholders under the current direct tax laws in India for the year - 2014-15.

The tax benefits listed below are the possible benefits available under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperative it faces in the future, it may or may not choose to fulfil. This Statement is only intended to provide the tax benefits to the Company and its shareholders in a general and summary manner and does not purport to be a complete analysis or listing of all the provisions or possible tax consequences of the subscription, purchase, ownership or disposal etc. of Equity Shares. In view of the individual nature of tax consequence and the changing tax laws, each investor is advised to consult their own tax adviser with respect to specific tax implications arising out of their participation in the Issue.

The Indian Finance Minister released the Direct Taxes Code Bill, 2009 for public comments along with a discussion paper on July 12, 2009, seeking to replace the existing IT Act. Upon receipt of public comments, the Finance Minister released the Revised Discussion Paper addressing the major issues on the Direct Tax Code, on June 15, 2010, which was available for public comments for a brief period up to June 30, 2010. As an outcome of this consultation process, the Indian Finance Minister tabled The Direct Taxes Code, 2010 ("DTC") in the Indian Parliament, which was referred to a Standing committee. The Standing Committee submitted its report to the Parliament on March 9, 2012. After considering the Standing Committee’s suggestions, in April’2014, the Government released Direct Taxes Code,2013 (DTC 2013) for public discussion / comments.It is currently unclear when would this be legislated to indicate what effect it would have on the Company and its Investors.

The Government is proposing to reform the indirect tax system in India with a comprehensive national goods and services tax, or GST, covering the manufacture, sale and consumptions of goods and services, which is likely to be introduced in Fiscal Year 2015. The proposed GST regime will combine taxes and levies by the central and state governments into one unified rate structure. The Government has publicly expressed the view that following the implementation of the GST, indirect tax incidence on domestically manufactured goods is expected to decrease along with prices on such goods.

The Company has been availing excise duty exemptions for manufacturing facilities in the state of Uttarakhand and other incentives in certain states of India either through subsidy or loan from such states where we have manufacturing operations. While both the Government and other state governments of India have publicly announced that all committed incentives will be protected following the implementation of the GST, given the limited availability of information in the public domain concerning the GST, we are unable to provide any assurance as to the effect of this or any other aspect of the tax regime following implementation of the GST.


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Special Tax Benefits 1. Special Tax Benefits Available to the Company

As per Section 35(2AB), weighted deduction @200% is available on Research & Development expenditure (except on land and building) incurred by the Company on in house research and development facility as approved by the prescribed authority, upto March 31, 2017. In respect of expenditure on Research & Development building, deduction @100% is available.

In addition, the Company is also eligible for income tax deduction under Section 80IC in respect of profits earned from its operations in Pantnagar facility up to 100% for the first 5 years and at the rate of 30% for the another 5 years thereafter.

2. Special Tax Benefits Available to the Shareholders of the Company

There are no special tax benefits available to the shareholders of the Company.

General Tax Benefits

1. Key benefits / deductions available to the Company under the IT Act

A) Business income:

a) Depreciation:

The Company is entitled to claim depreciation on specified tangible and intangible assets owned by it and used for the purpose of its business under Section 32 of the IT Act. In case of new machinery or plant that is acquired by the Company (other than the specified exclusions), the Company is entitled to a further sum equal to 20% of the actual cost of such machinery or plant subject to conditions specified in Section 32 of the IT Act.

b) Investment in new Plant & Machinery:

Section 32AC of the IT Act provides that, subject to the conditions specified in that sections, for the assessment years 2014-15 and 2015-16, the company is entitled to a deduction on the actual cost of the new assets as follows:

- For the assessment year 2014-15: 15% of a sum equal to the plant & machinery acquired and installed after the 31st day of March,2013 but before the 1st day of April,2014, if the actual cost of such new assets exceeds one hundred crore rupees, and

- For the assessment year 2015-16: 15% of a sum equal to 15% acquired and installed after the 31st day of

March,2013 but before the 1st day of April,2015, as reduced by the amount of deduction allowed, if any for the assessment year 2014-15

c) Expenditure incurred on voluntary retirement scheme:

As per Section 35DDA of the IT Act, the Company is entitled to deduction in respect of expenditure incurred in connection with voluntary retirement of its employees, of an amount equal to 1/5th of such expenses every year for a period of 5 years subject to conditions specified in that section.

d) Contribution to certain Institutions / Projects:

As per Section 35 (1) (ii) contribution to an approved institution for usage in scientific research are eligible for weighted deduction at 175%.

e) Deductions under Chapter VI-A of the IT Act:

As per Section 80 IA of the IT Act, the Company is eligible for deduction of profits and gains from its undertakings engaged in power generation from Gross Total Income for a period of 10 years in a block of 15 years from the date of its establishment, subject to fulfilment of certain conditions specified.


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As per Section 80-IC of the IT Act, the Company is eligible for deduction of an amount equal to specified per cent. of the profits and gains derived by specified undertaking for 10 assessment years subject to the fulfilment of the conditions specified in that section as mentioned in Para (1) above

As per Section 80G of the IT Act, the Company is entitled to claim deduction of a specified amount in respect of eligible donations subject to the fulfilment of the conditions specified in that section.

f) MAT Credit:

As per Section 115JAA of the IT Act, the Company is eligible to claim credit for Minimum Alternate Tax (“MAT”) paid for any assessment year commencing on or after April 1, 2006 against normal income-tax payable in subsequent assessment years. MAT credit shall be allowed for any assessment year to the extent of difference between the tax payable as per the normal provisions of the IT Act and the tax paid under Section 115JB for that assessment year. Such MAT credit is available for set-off upto 10 years succeeding the assessment year in which the MAT credit arises.

B) Capital gains:

a) i) Long Term Capital Gain (LTCG)

LTCG means capital gain arising from the transfer of a capital asset being a share held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a Zero coupon bond held by an assessee for more than 12 months.

In respect of any other capital assets, LTCG means capital gain arising from the transfer of an asset, held by an assessee for more than 36 months.

ii) Short Term Capital Gain (STCG)

STCG means capital gain arising from the transfer of capital asset being a share held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of Section 10 or a Zero coupon bonds, held by an assessee for 12 months or less. In respect of any other capital assets, STCG means capital gain arising from the transfer of an asset, held by an assessee for 36 months or less.

b) LTCG arising on transfer of equity shares of a company or units of an equity oriented fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D)) are exempt from tax under Section 10(38) of the IT Act provided the transaction is chargeable to securities transaction tax (“STT”) and subject to conditions specified in that section.

Income by way of long term capital gain exempt under Section 10(38) is to be taken into account in computing the Book profit and income tax payable under Section 115JB of the IT Act.

c) As per Section 48 of the IT Act and subject to the conditions specified in that section, LTCG arising on transfer of capital assets (other than bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable assets), is to be computed by deducting the indexed cost of acquisition and indexed cost of improvement from the full value of consideration.

As per Section 112 of the IT Act, the LTCG that are not exempt under Section 10(38) of the IT Act, will be subject to tax at a rate of 20% with indexation benefit. No deduction from Chapter VIA shall be allowed from such income.

However, if such tax payable on transfer of listed securities or units or Zero coupon bonds exceed 10% of the LTCG, without indexation benefit, the excess tax shall be ignored for the purpose of computing the tax payable by the assessee.

d) As per Section 111A of the IT Act, STCG arising on sale of equity shares or units of equity oriented mutual fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D)), are subject to tax at the rate of 15%, provided the transaction is chargeable to STT. No deduction under Chapter VIA shall be allowed from


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such income.

e) STCG arising on sale of equity shares or units of equity oriented mutual fund (as defined which has been set up under a scheme of a mutual fund specified under Section 10(23D)), where such transaction is not chargeable to STT, shall be taxable at the rate of 30%

f) In addition to the aforesaid tax rates discussed in c, d and e above, in the case of domestic companies where the income exceeds Rs. 1,00,00,000 but less than Rs.10,00,00,000, a surcharge of 5% on such tax liability is also payable. A 2% education cess and 1% secondary and higher education cess on the total income tax is payable by all categories of taxpayers and where the income exceeds Rs. 10,00,00,000 a surcharge of 10% on such tax liability is also payable. A 2% education cess and 1% secondary and higher education cess on the total income tax is payable by all categories of taxpayers.

g) As per Section 71 read with Section 74 of the IT Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years.

h) As per Section 71 read with Section 74 of the IT Act, long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years.

i) As per Section 54EC of the IT Act, capital gains arising from the transfer of a long term capital asset shall be exempt from capital gains tax if such capital gains are invested within a period of 6 months after the date of such transfer in specified bonds issued by the following and subject to the conditions specified therein:

National Highway Authority of India constituted under Section 3 of National Highway Authority of India Act, 1988

Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956

If only part of the capital gains is reinvested, the exemption shall be proportionately available.

However, if the new bonds are transferred or converted into money within three years from the date of their acquisition, the amount so exempted shall be taxable as capital gains in the year of transfer/conversion.

As per this section, the investment in the Long Term Specified Asset cannot exceed 50 lakh rupees for a financial year.

C) Income from Other Sources

Dividend Income:

Dividend (both interim and final), if any, received by the Company on its investments in equity shares of another Domestic Company shall be exempt from tax under Section 10(34) read with Section 115-O of the IT Act. Income received in respect of units of a mutual fund specified under Section 10(23D) of the IT Act (other than income arising from transfer of such units) shall be exempt from tax under Section 10(35) of the IT Act. However Section 14A restricts claim for deduction of expenses in relation to exempt income.

2. Key benefits available to the Members/shareholders of the Company

2.1 Resident Members/shareholders

a) Dividend income:

Dividend (both interim and final), if any, received by the resident shareholders from a Domestic Company shall be exempt from tax under Section 10(34) read with Section 115O of the IT Act. However Section 14A restricts claim for deduction of expenses in relation to exempt income.


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b) Capital gains:

(i) Benefits outlined in Paragraph 1(B) above are also applicable to resident shareholders. In addition to the same, the following benefit is also available to a resident shareholder being an individual or a HUF.

(ii) As per Section 54F of the IT Act, LTCG arising from transfer of equity shares shall be exempt from tax if net consideration from such transfer is utilized within a period of one year before, or two years after the date of transfer, for purchase of a new residential house, or for construction of residential house within three years from the date of transfer and subject to conditions and to the extent specified therein mainly relating to retention of the acquired asset for a period of 3 years.

2.2 Non-Resident Members

a) Dividend Income:

Dividend (both interim and final), if any, received by the non-resident shareholders from a Domestic Company shall be exempt from tax under Section 10(34) read with Section 115O of the IT Act. However Section 14A restricts claim for deduction of expenses in relation to exempt income, if return of income is filed in India.

b) Capital gains:

Benefits outlined in paragraph 2.1(b) above are also available to a non-resident shareholder except that as per first proviso to Section 48 of the IT Act, the capital gains arising on transfer of equity shares of an Indian Company need to be computed by converting the cost of acquisition, expenditure incurred in connection with such transfer and full value of the consideration received or accruing as a result of the transfer, into the same foreign currency in which the equity shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be at the prescribed rates prevailing on dates stipulated. Further, the benefit of indexation as provided in second proviso to Section 48 is not available to non-resident shareholders.

c) Tax Treaty Benefits:

As per Section 90 of the IT Act, a non-resident shareholder can claim relief in respect of double taxation, if any, as per the provision of the applicable double taxation avoidance agreement entered into by the Government of India with the country of residence of the non-resident shareholder.

The assessee has the option to apply the rates in tax treaty or the Indian tax laws, whichever is beneficial.

The benefits under tax treaties are available only if ;

- The transaction is not covered by General Anti-avoidance Rules - Tax residency certificate is obtained from the Government of resident country - Submission of Form 10F by the non-resident to the payer

2.3 Special provisions in case of non-resident Indians in respect of income / LTCG from specified foreign

exchange assets under Chapter XII-A of the IT Act.

i) Non-Resident Indian (“NRI”) means a citizen of India or a person of Indian origin who is not a resident. Person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, were born in undivided India.

ii) Specified foreign exchange assets include equity shares of an Indian company which are acquired/purchased/subscribed by NRI in convertible foreign exchange.

iii) As per Section 115E of the IT Act, income (other than dividend which is exempt under Section 10(34)) from investments and LTCG (other than gain exempt under Section 10(38)) from assets (other than specified foreign exchange assets) shall be taxable @ 20% (plus applicable Surcharge and Education Cess and Secondary & Higher Education Cess). No deduction in respect of any expenditure or allowance or deductions under Chapter VI-A shall


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be allowed from such income.

iv) As per Section 115E of the IT Act, LTCG arising from transfer of specified foreign exchange assets shall be taxable @ 10% (plus applicable Surcharge and Education Cess and Secondary & Higher Education Cess).

v) As per Section 115F of the IT Act, LTCG arising on transfer of a foreign exchange asset shall be exempt in case net consideration from such transfer is invested in the specified assets or savings certificates within six months from the date of such transfer, subject to the extent and conditions specified in that section.

vi) As per Section 115G of the IT Act, in case total income of a NRI consists only of income/LTCG from such foreign exchange asset / specified asset and tax thereon has been deducted at source in accordance with the IT Act, then, it shall not be necessary for a NRI to file return of income under Section 139(1) of the IT Act.

vii) As per Section 115H of the IT Act, where a person who is a NRI in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year, he may furnish a declaration in writing to the assessing officer, along with his return of income under Section 139 of the Act for the assessment year in which he is first assessable as a resident, to the effect that the provisions of the Chapter XII-A shall continue to apply to him in relation to investment income derived from the specified assets for that year and subsequent years until such assets are transferred or converted into money.

viii) As per Section 115I of the IT Act, the NRI can opt not be governed by the provisions of Chapter XII-A for any assessment year by furnishing return of income for that assessment year under Section 139 of the IT Act, declaring therein that the provisions of this chapter shall not apply, in which case the other provisions of the income tax act shall apply.

2.4 Foreign Institutional Investors (FIIs)

a) Dividend Income:

Dividend (both interim and final), if any, received by the shareholder from a Domestic Company shall be exempt from tax under Section 10(34) read with Section 115O of the IT Act.

b) Capital Gains:

Subject to (i) and (iv) below, the applicable rates of taxes are:

i. As per Section 115AD of the IT Act, income (other than income by way of dividends referred to Section 115O) received in respect of securities (other than units referred to in Section 115AB) shall be taxable at the rate of 20% (plus applicable Surcharge and Education Cess and Secondary & Higher Education Cess). No deduction in respect of any expenditure/allowance shall be allowed from such income.

ii. As per Section 115AD of the IT Act, capital gains arising from transfer of securities shall be taxable as follows:

Nature of income Rate of tax (%)

Long term capital gains on sale of equity share not subjected to STT 10 10 Short term capital gains on sale of equity shares subjected to STT 15 Short term capital gains on sale of equity shares not chargeable to STT 30

iii. For corporate FIIs, the above tax rates will be increased by a surcharge of 2% on such tax liability in case income

exceeds Rs 1,00,00,000 but less than Rs. 10,00,00,000. A 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge) is payable by all categories of taxpayers. In case the income exceeds Rs 10,00,00,000, the surcharge will be @ 5%. A 2% education cess and 1% secondary and higher education cess on the total income tax (including surcharge) is payable by all categories of taxpayers. The benefits of indexation and foreign currency fluctuation protection as provided by Section 48 of the IT Act are not available to an FII.


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iv. Benefit of exemption under Section 54EC of the IT Act shall be available as outlined in Paragraph 1(B)(i) above.

c) Tax Treaty Benefits:

As per Section 90 of the IT Act, a non-resident shareholder can claim relief in respect of double taxation, if any, as per the provision of the applicable double taxation avoidance agreements entered into by the Government of India with the country of residence of the non-resident shareholder.

The assessee has the option to apply the rates in tax treaty or the Indian tax laws, whichever is beneficial.

The benefits under tax treaties are available only if

- The transaction is not covered by General Anti-avoidance Rules - Tax residency certificate is obtained from the Government of resident country - Submission of Form 10F by the non-resident to the payer

2.5 Mutual Funds

As per the provisions of Section 10(23D) of the IT Act, any income of mutual funds registered under the Securities and Exchange Board of India, Act, 1992 or Regulations made there under, mutual funds set up by public sector banks or public financial institutions and mutual funds authorised by the Reserve Bank of India, would be exempt from income-tax, subject to the prescribed conditions.

3. Wealth Tax Act, 1957

Equity Shares in a company, held by a shareholder are not treated as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957, hence, wealth tax is not applicable on equity shares held in a company.

4. Tax deduction at source:

No income tax is deductible on income by way of Capital Gains, in case of residents. As per Section 195 of the IT Act, any income (including capital gains other than long term capital gains exempt under Section 10 (38) of the IT Act) payable to non-resident, may fall within the ambit of with-holding provisions, subject to the provisions of the relevant tax treaty. Accordingly, income tax may have to be deducted at source in the case of a non-resident at the rate prescribed under the domestic tax laws or under the tax treaty, whichever is beneficial to the assessee unless a lower withholding certificate is obtained from the tax authorities.

Under Section 196D of the IT Act, no deduction of tax at source shall be made in respect of capital gains arising on sale proceeds to FIIs on transfer of equity shares.

Notes: a) All the above benefits are as per the current tax law and will be available only to the sole/first names holder in case

the equity shares are held by joint holders. b) Transactions between non-residents may be subject to Capital gains tax in India on indirect transfer of shares in India if it

falls within the ambit of Section 9(1)(i) and other applicable domestic Act sections and relevant DTAA provisions. Investor should take expert advice on this aspect.

c) Obtaining a Permanent Account Number (PAN) is now a requirement for almost all transactions. Investor is advised to

obtain it; otherwise, the tax deducted at source as per Section 206AA shall be calculated as the highest amongst the rate specified in the relevant provision of the IT Act, the rate in force and a flat rate of 20 per cent.

d) Ideally the Investor should file Return of Income in India, specifically so in cases where any Indian taxes are payable or

refunds are to be obtained.


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Certain U.S. Federal Income Tax Considerations The following is a discussion of certain U.S. federal income tax consequences of purchasing, owning and disposing of Equity Shares. It does not purport to be a comprehensive description of all of the U.S. tax considerations that may be relevant to a particular person's decision to acquire the Equity Shares. This section is based on the United States Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, final, temporary and proposed Treasury regulations issued under the Code, administrative pronouncements by the U.S. Internal Revenue Service (the “IRS”) and judicial decisions, all as in effect or in existence as of the date of this Placement Document and all of which at any time may be repealed, revoked or modified or subject to differing interpretations so as to result in U.S. federal income tax consequences different from those discussed below, possibly with retroactive effect. This discussion is not binding on the IRS or the courts. No ruling has been or will be sought from the IRS with respect to the positions and issues discussed herein, and there can be no assurance that the IRS will not take a different position concerning the U.S. federal income tax consequences of an investment in the Equity Shares or that any such position would not be sustained. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES IN YOUR PARTICULAR SITUATION. The following discussion applies to you only if you are a U.S. Holder (as defined below), you acquire the Equity Shares in this Issue, you hold the Equity Shares as capital assets for U.S. federal income tax purposes and you are not resident in India for purposes of the Indian Income Tax Act, 1961 or the U.S. - India income tax treaty. This section does not apply to you if you are a member of a special class of U.S. Holders subject to special tax rules, including: a dealer in securities or foreign currencies; a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings; a bank or other financial institution; a tax-exempt organization, retirement plan, individual retirement account or tax-deferred account; an insurance company; a holder liable for alternative minimum tax; a holder that directly, indirectly or constructively owns 10% or more of the total combined voting power of all classes

of the Company's stock entitled to vote; a holder that holds the Equity Shares as part of a straddle, hedging or conversion transaction; a holder who is a U.S. expatriate; or a holder whose functional currency is not the U.S. dollar. This discussion does not address any aspect of U.S. federal gift or estate tax, or state, local or non-U.S. tax laws. Additionally, the discussion does not consider the tax treatment of partnerships or other pass-through entities (including entities treated as partnerships for U.S. federal income tax purposes) or persons who hold the Equity Shares through such entities. You are a “U.S. Holder” if you are a beneficial owner of Equity Shares and you are for U.S. federal income tax purposes: a citizen of the United States; a permanent resident of the United States whose income is subject to U.S. federal income tax regardless of its source; a U.S. domestic corporation, or other entity treated as a domestic corporation for U.S. federal income tax purposes; an estate whose income is subject to U.S. federal income tax regardless of its source; or a trust if (i) a U.S. court can exercise primary supervision over the trust's administration and one or more U.S. persons

are authorized to control all substantial decisions of the trust or (ii) the trust has a valid election in effect under current Treasury regulations to be treated as a U.S. person.

Taxation of Dividends Subject to the PFIC rules referred to below, if you are a U.S. Holder, you must include in your gross income the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for U.S.


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federal income tax purposes) when you receive the dividend, actually or constructively. The dividend is ordinary income that you must include in income when you receive the dividend, actually or constructively. Dividends generally are subject to tax at ordinary income rates of up to 39.6%. However, if the Company is not treated as a PFIC, U.S. Holders who are individuals may be eligible for the reduced tax rate equal to the current U.S. federal capital gains tax rate of up to 20% if the Company qualifies for benefits under the U.S. - India income tax treaty. U.S. Holders should consult their own tax advisor regarding their eligibility for the reduced tax rate described above. Dividends received generally will be income from non-U.S. sources. Such non-U.S. source income generally will be “passive category income”, which is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you. You should consult your own tax advisor to determine the foreign tax credit implications of owning the Equity Shares. The amount of the dividend distribution that you must include in your income as a U.S. Holder will be the U.S. dollar value of the Indian rupee payments made, determined at the spot Indian rupee/U.S. dollar exchange rate on the date the dividend distribution, regardless of whether the payment is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your adjusted tax basis in the Equity Shares and thereafter as capital gain. However, the Company does not intend to maintain calculations of its earnings and profits in accordance with U.S. federal income tax principles, so each U.S. Holder should therefore assume that any distribution by the Company with respect to the Equity Shares will constitute ordinary dividend income. Taxation of Capital Gains If you are a U.S. Holder and you sell or otherwise dispose of any of your Equity Shares, subject to the PFIC rules referred to below, you will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your adjusted tax basis, determined in U.S. dollars, in those Equity Shares that are sold or otherwise disposed of. Your adjusted tax basis in your Equity Shares generally should be the acquisition cost for such shares. Capital gain or loss from the sale, exchange or other disposition of shares held for more than one year is long-term capital gain or loss, and long-term capital gain is eligible for a reduced rate of taxation for non-corporate taxpayers. Long-term capital gains recognized by certain non-corporate U.S. Holders may generally qualify for a reduced rate of taxation of up to 20%. U.S. Holders should consult their own tax advisor regarding their eligibility for the reduced tax rate described above. Your ability to deduct capital losses is subject to limitations. Under the U.S. - India income tax treaty, India may generally tax capital gains in accordance with the provisions of its domestic law. U.S. Holders should consult their Indian tax advisors concerning the Indian tax consequences of capital gains arising from the sale or other disposition of their Equity Shares. If Indian tax is imposed on a U.S. Holder’s capital gain on the sale or other disposition of Equity Shares, a foreign tax credit may be available for U.S. federal income tax purposes with respect to such Indian tax. U.S. Holders should consult their U.S. tax advisors concerning the U.S. tax treatment of any such Indian tax. U.S. Holders should consult their own tax advisors regarding the treatment of any foreign currency gain or loss (which generally will be treated as U.S. source ordinary income or loss) on any non-U.S. currency received in a sale or exchange of the Equity Shares that is converted into U.S. dollars (or otherwise disposed of) on a date subsequent to receipt. Passive Foreign Investment Company Rules If the Company were a PFIC for any year during a U.S. Holder’s holding period, then certain rules will affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition, ownership and disposition of Equity Shares. The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company for such tax year is passive income (the “income test”) or (b) 50% or more of the value of the average quarterly assets held by the Company either produce passive income or are held for the production of passive income, based on the fair market value of such assets (the “asset test”). “Gross income” generally means all sales revenues less the cost of goods sold, and “passive income”


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includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. In addition, for purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. For purposes of the PFIC income test and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a “related person” (as defined in the Code), to the extent such items are properly allocable to the income of such related person that is not passive income. The Company does not believe that it was a PFIC during the tax year ended March 31, 2014, and based on current business plans and financial expectations, the Company does not believe that it will be a PFIC for the current tax year. However, PFIC classification is fundamentally factual in nature and generally cannot be determined until the close of the tax year in question and is determined annually. Additionally, the analysis depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. Consequently, there can be no assurance that the Company has never been and will not become a PFIC for any tax year during which U.S. Holders hold Equity Shares. If the Company were a PFIC in any tax year and a U.S. Holder held Equity Shares, such U.S. Holder generally would be subject to special rules with respect to “excess distributions” made by the Company on the Equity Shares and with respect to any gain from the disposition of Equity Shares. An “excess distribution” generally is defined as the excess of distributions with respect to the Equity Shares received by a U.S Holder in any tax year over 125% of the average annual distributions such U.S. Holder has received from the Company during the shorter of the three preceding tax years, or such U.S. Holder’s holding period for the Equity Shares. Generally, a U.S. Holder would be required to allocate any excess distribution or gain from the disposition of the Equity Shares ratably over its holding period for the Equity Shares. Such amounts allocated to the year of the disposition or excess distribution would be taxed as ordinary income, and amounts allocated to prior tax years would be taxed as ordinary income at the highest tax rate in effect for each such year and an interest charge at a rate applicable to underpayments of tax would apply. If the Company was a PFIC and, at any time, had non-U.S. subsidiaries that were classified as PFICs, the U.S. Holder could incur liability for the deferred tax and interest charge described above if either (1) the Company received a distribution from, or disposed of all or part of the Company’s interest in, a lower-tier PFIC or (2) the U.S. Holder disposed of all or part of its Equity Shares. Additionally, if the Company is a PFIC for any taxable year during which a U.S. Holder holds the Company’s Equity Shares, the Company generally will continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding taxable years during which such U.S. Holder holds the Company’s Equity Shares. If the Company ceases to be a PFIC, a U.S. Holder may avoid some of the adverse effects of the PFIC regime by making a deemed sale election with respect to the Equity Shares. While there are U.S. federal income tax elections that sometimes can be made to mitigate these adverse tax consequences (including, without limitation, the “QEF Election” and the “Mark-to-Market Election”), such elections are available in limited circumstances and must be made in a timely manner. U.S. Holders should be aware that, for each tax year, if any, that the Company is a PFIC, the Company will not satisfy the record keeping requirements or make available to U.S. Holders the information such U.S. Holders require to make a QEF Election with respect of the Company. A Mark-to-Market Election will only be available if the Equity Shares qualify as “marketable stock” under the Code, but there can be no assurance that the Company’s Equity Shares will qualify as marketable stock during all or any portion of a U.S. Holder’s holding period for the Equity Shares. The application and interpretation of certain aspects of the PFIC rules require the issuance of regulations which in many instances have not been promulgated and which may have retroactive effect. There can be no assurance that any of these regulations will be enacted or promulgated, and if so, the form they will take or the effect that they may have on this discussion. The rules dealing with PFICs are affected by various factors in addition to those described above. If the Company was a PFIC for any taxable year during which a U.S. Holder held Equity Shares, the U.S. Holder must file IRS Form 8621 for each taxable year in which the U.S. Holder recognizes any gain on a direct or indirect sale or other


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disposition of Equity Shares, receives deemed or actual distributions from the Company, or makes certain elections with respect to the Equity Shares. U.S. Holders should consult their own tax advisors regarding the Company’s classification as a PFIC, the potential U.S. federal income tax consequences arising from the ownership and disposition of shares in a PFIC as well as the availability, advisability, timeliness and effectiveness of making a “mark-to-market” election. Medicare Contribution Tax A United States person that is an individual, estate or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) such person’s "net investment income" for the relevant taxable year and (2) the excess of such person’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individual will be between $125,000 and $250,000, depending on the individual's circumstances). A United States person’s net investment income will generally include its dividend income and its net gains from the disposition of Equity Shares, unless such dividend income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). Under final Treasury Regulations published December 2, 2013 and generally effective for taxable years after December 31, 2013, income inclusions as a result of a QEF Election would not be considered “net investment income” unless a United States person making a QEF Election: (1) holds Equity Shares in connection with a trade or business of trading in financial instruments or commodities; or (2) elects to treat the income inclusion as a result of the QEF Election as “net investment income.” Absent a situation under (1) or (2), such income inclusions under a QEF Election will not be subject to the surtax on net investment income until that investment income is actually distributed to the United States person. The election under (2) above (as well as the calculation of the amount of any tax) should be made on IRS Form 8960 (currently in draft form), which must accompany a taxpayer’s timely filed (including extensions) return. This election must be made no later than the first taxable year beginning after December 31, 2013, in which a taxpayer both has an inclusion as a result of a QEF Election and is subject to the surtax (or would be subject to this tax if the election were made with respect to the QEF). Such election can be made on an original or amended return, provided that the year of the election, and all years affected by the election, are not closed as a result of the relevant statute of limitations. United States persons are advised to consult their own tax advisors regarding the application of this tax and the final Treasury Regulations (including any elections thereunder) with respect to an investment in Equity Shares. Foreign Account Tax Compliance Act (“FATCA”) U.S. return disclosure obligations (and related penalties) apply to U.S. Holders that hold certain specified foreign financial assets in excess of $50,000 for tax years beginning after March 18, 2010. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity. U.S. Holders may be subject to these reporting requirements unless their Equity Shares are held in an account at a U.S. domestic financial institution. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult their own tax advisors regarding the potential application of the FATCA rules to their Equity Shares. Backup Withholding and Information Reporting In general, information reporting requirements will apply to dividends in respect of Equity Shares or the proceeds received on the sale, exchange or redemption of any of the Equity Shares paid within the United States to U.S. Holders other than certain exempt recipients, such as corporations, and backup withholding tax at 28% may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number and a duly executed IRS Form W-9 (or to otherwise establish, in the manner provided by law, an exemption from backup withholding) or to report dividends required to be shown on the U.S. Holder's U.S. federal income tax returns. Backup withholding is not an additional income tax, and the amount of any backup withholding from a payment to a U.S. Holder will be allowed as credit against the U.S. Holder's U.S. federal income tax liability provided that the appropriate returns are filed.


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The foregoing does not purport to be a complete analysis of the potential tax considerations relating to the Issue, and is not tax advice. Prospective investors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of the Equity Shares, including the applicability of the U.S. federal, state and local tax laws or non-tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.


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LEGAL PROCEEDINGS Except as described below, we are not involved in any legal proceedings, and we are not aware of any threatened legal legal proceedings, which if determined adversely, could result in a material adverse effect on our business, financial condition or results of operations. We believe that the number of proceedings in which we are involved is not unusual for a Company of our size in the context of doing business in India. Our Company has no outstanding defaults in relation to repayment of statutory dues payable, dues payable to holders of any debentures and interest thereon, and in respect of deposits and interest thereon, repayment of loans from any bank or financial institution and interest thereon. A summary of certain legal proceedings pending against us where the amount claimed exceeds Rs. 500 lakhs and certain other litigation we consider material is set forth below: Civil Litigation 1. Two Letters Patent Appeals (“Appeals”) have been filed by the State of Gujarat and the deputy collector, Ahmedabad

against the Company before the High Court of Gujarat at Ahmedabad. The deputy collector, Ahmedabad filed the said appeals against the common order dated February 23, 2010 passed by the Gujarat High Court.

The deputy collector, Ahmedabad had issued notices under section 39 (1) (b) of the Bombay Stamp Act, 1958 stating that there is total deficit stamp duty of Rs. 8,57,09,850 pertaining to the registration of two debenture trust deeds by the Company. The Company replied to these notices but the deputy collector did not agree with the submissions of the Company. In anticipation of an adverse order being passed, the Company filed special civil applications bearing number 12885 and 12888 against the said show cause notices before the High Court of Gujarat. The High Court of Gujarat vide a common order dated February 23, 2010 quashed the said show cause notices and hence the present Appeals have been filed by the Applicants. Presently the Appeals are pending before the High Court of Gujarat.

2. A complaint bearing number U.T.P.E. No. 81 of 2001 has been pending before the Competition Appellate Tribunal, New

Delhi by Tam Tam Pedda Guruva Reddy (“Complainant”) against the Company. The Complainant alleged that the Company had misrepresented to the Complainant and provided defective vehicles. The said complaint was originally filed before the MRTP Commission alleging that the Company has been indulging in unfair trade practices as defined under section 36 A of the M. R. T. P. Act, 1969. Further the Complainant filed an application for amendment of the petition to enhance the claim amount to Rs. 1,196.2 lakhs and simple interest at the rate of 24% per annum on all claims towards the unproductive 40 vehicles purchased. Presently the complaint is pending before the Competition Appellate Tribunal, New Delhi.

Indirect Tax Litigation 1. Sales tax authorities issued assessment orders for the assessment years 1986-87 to 2000-01, consecutively against the

Company, disallowing stock transfer of chassis sold to various state transport undertakings in other states and treated those transactions as sales under central sales tax, by re-opening the assessment and subjecting the turnover escaped assessment to tax. The assessments for the assessment years 1986-87 to 1988-89 were reopened in the year 1992. The Company contested the demand for the assessment year 1986-87 to 1988-89 and the re-opening of the assessment by filing a writ petition before the Madras High Court, which was dismissed by the Madras High Court vide its order dated July 13, 1996. Subsequently, the Company filed a special leave petition before the Supreme Court (“special leave petition of 1997”), which was also dismissed. The Supreme Court observed that that the assessing officer has the power of revision and directed the Company to appeal before the Sales Tax Appellate Tribunal directly, if the order of revision is unacceptable.

The Company filed appeals before the Tamil Nadu Sales Tax Appellate Tribunal (“STAT”) for the orders passed against the Company for the assessment years 1986-87 to 1988-89 by the assessing officer. The STAT upheld these orders but revoked the penalty demanded by the assessing officer. Consequently, the Company filed another special leave petition before the Supreme Court. In 2004, the Supreme Court held that the observation of the Court in its order in the special leave petition of 1997 to the effect that an order passed under Section 6A(2) of the Central Sales Tax Act can be re-opened by a proceeding under Section 16 of the Tamil Nadu General Sales Tax Act, 1956, was not valid. The Supreme Court further noted that an order can only be re-opened on a limited set of grounds such as fraud, collusion, misrepresentation etc. and not merely on the basis of an error of judgment. The matter was remanded to the Madras High


201

Court by the Supreme Court to adjudicate on the validity of correctness of orders passed by the STAT. In 2005, the High Court remanded the matter back to the assessing officer to consider the issue afresh in the light of limited grounds prescribed by the Supreme Court. Consequently, the assessing officer re-opened the assessments for the years 1986-87 to 1992-93 and passed revision assessment orders. Assessment orders for the years 1993-04 to 2000-01 were also completed on the same grounds.

Thereafter for the assessment years 1986-87 to 2000-01 the Company has filed the appeal before various appellate authorities against the demand raised for various assessment years. The Company has also filed stay application to stay the demand made by the assessing authorities for various assessment years.

The Joint Commissioner (CT) Appeals, Chennai I and the Deputy Commissioner of Appeals have upheld most of the demands made by the assessing officer in all the 15 appeals. Thereafter the Company filed appeals before the STAT for all the assessment years. STAT has upheld the demand for sales tax for the assessment years 1986-89 to 2000-01 to a considerable extent and has also waived off the entire penalty. Accordingly the aggregate amount involved for all the assessment years is approximately Rs. 1,107.3 lakhs. Subsequently, the Company has appealed against the STAT order before the Central Sales Tax Appellate Authority, New Delhi (“CSTAA”). All the appeals are pending before CSTAA.

2. The Company had supplied vehicles to projects undertaken by various project authorities like the National Highway

Authority of India (“NHAI”) and the World Bank. As per notification No.108/95 issued by the central excise authorities the goods are supplied for such projects are exempted from the payment of excise duty on production of certificate issued by the project implementing authority. However, the adjudicating authority has issued show cause notices for the period 2003 to 2009 in respect of all supplies made under notification No.108/95 on the ground that the goods were not supplied directly to the project authorities but only to contractors / sub-contractors to the said project and hence, the Company’s claim of exemption is not valid. The Company received separate show cause notices for its plants at Ennore, Hosur I, Hosur II, Alwar and Bhandara. Orders-in-original were passed by the adjudicating authority only for the Ennore plant and Bhandara plant. The Company filed its replies to show cause notices pertaining to both the plants, which were rejected by the adjudicating officer. In respect of the Ennore plant, the Joint Commissioner and the Commissioner of Central Excise, Chennai – I passed orders in the Company’s favour holding it eligible for exemption. The central excise authority has filed appeals before the Commissioner of Central Excise (Appeals) and the Customs, Excise and Services Tax Appellate Tribunal, South Zone Bench, Chennai (“CESTAT”) against these orders and these appeals are still pending before the appellate authorities. In respect of the Bhandara plant, the Deputy Commissioner of Excise passed an order in the favour of the Company. The central excise authority filed an appeal before the Commissioner of Central Excise (Appeals). The Commissioner of Central Excise (Appeals) dismissed the Company’s claim of exemption and passed an order against the Company. The Company has filed an appeal before the CESTAT against the order of Commissioner of Central Excise (Appeals). Currently, the appeals in respect of Ennore plant and Bhandara plant are pending before the Commissioner of Central Excise (Appeals) and the CESTAT. The total amount involved is approximately Rs. 3,953 lakhs.

3. Appeals before CESTAT have been filed by the Company against the orders-in original and order-in appeal passed by

the Commissioner of Central Excise, LTU, Chennai and Commissioner of Excise (Appeals) respectively. Some of the chassis manufactured by the Company turned out to be defective and were returned from regional sales office to our factories. Once at the factories the chassis were dismantled and new chassis were manufactured out of the dismantled components of the defective chassis. The Company claimed cenvat credit on the chassis and other components used to make the new chassis on grounds that this amounted to manufacturing a new product and did not amount to repair or restoration of defective components. However, the Company was not allowed cenvat credit on ground that this process involved only repair of the components and no new product was manufactured out of the defective components. The CESTAT has stayed the recovery of the demand and penalty for the period of December 2008 to December 2009 till the disposal of the appeals upon the deposit of an amount of Rs. 200 lakhs by the Company, which has already been paid by the Company. The Company has filed a petition praying that CESTAT grants a stay against the recovery of demand for the period January 2010 to December 2010, which is also pending. The total amount involved is approximately Rs.1,442 lakhs The appeals are pending before the CESTAT, Chennai.


202

4. For the assessment years 2008-09 to 2012-13 the Company has claimed exemption from entry tax under the Rajasthan Tax on Entry of Goods into Local Area Act, 1999 for the parts and tyres used as raw material for manufacturing of motor vehicles in the state of Rajasthan in relation to the said assessment years. Out of the said exemption the assessing officer has disallowed exemption sought on tyres used by the Company for manufacturing of motor vehicles and has levied tax aggregating to approximately Rs. 5,393.02 lakhs. Five appeals have been filed by the Company before the Joint Commissioner (Appeals), Rajasthan against the said orders passed by the Assistant Commissioner, Commercial Tax.

Direct tax Litigation 1. The Company had issued foreign currency convertible notes (“FCCN”) to investors in the overseas market and claimed

certain issue expenses as deduction for assessment year 2005-06, which has been disallowed. The total amount is approximately Rs. 1,107.13 lakhs. The Company has filed appeal before the CIT(A) in this regard.

2. The assessing officer has treated foreign exchange differences on deposits held in foreign currency out of FCCN

proceeds as taxable income for foreign exchange gains and disallowance for foreign exchange loss, for the assessment years 2005-06, 2007-08, 2008-09 and 2009-10 respectively. The total amount in dispute is approximately Rs. 11,850.97 lakhs. The Company has filed appeals before the CIT(A) in this regard.

3. The Company has claimed weighted deduction of 150% under the amended Section 35(2AB) w.e.f. April 01, 2004 of the

Income Tax Act, 1961 (“Income Tax Act”), in respect of capital and revenue expenditure incurred on in-house R&D in the assessment year 2005-06. The deduction for automobile industry was notified vide Notification no. 245/2004/SO/1021(E) dated September 21, 2004. The assessing officer disallowed the weighted deduction on expenditure incurred prior to the notification date i.e., for the period April 1, 2004 to September 20, 2004. Further, the assessing officer has disallowed certain R&D capital expenditure not verified by Department of Scientific & Industrial Research (“DSIR”) for the assessment years 2009-10 and 2010-11. The total amount in dispute is Rs. 1,1843.80 lakhs approximately. The Company has filed appeals before the CIT(A) in this regard.

4. The assessing officer has made additions to taxable income, ignoring the expenses offered by the Company, as relatable

to exempted income under Section 14A of the Income Tax Act, for the assessment years 1992-93, 1996-97, 1997-98 and 1999-2000 to 2010-11. The aggregate amount in dispute is Rs. 4,505.06 lakhs approximately. The appeals for various assessment years are pending before CIT LTU(A), High Court of Madras, CIT (A) and ITAT.

5. The assessing officer has made additions for variation in arm’s length price observed by the transfer pricing officer for

the assessment years from 2004-05 to 2010-11 disagreeing over issues like aggregation of transactions, adjustments for value of services and non charging of commission on financial guarantees provided to foreign associates. The total amount in dispute is Rs. 925.59 lakhs approximately. The appeals for various assessment years are pending before CIT (A) and ITAT.

6. Various issues on claims towards depreciation / additional depreciation for assessment years 2005-06 to 2010-11

amounting to Rs. 4,049.21 lakhs approximately are in dispute. The appeals are pending before CIT (A) and ITAT. 7. The assessing officer has passed orders against the Company erroneously taking the Cenvat credit, which has been

carried forward in books under Loans and advance, for utilization in subsequent years as remission, for the assessment year 2005-06. The total amount in dispute is Rs. 2,797.00 lakhs approximately. The Company has filed an appeal before the CIT (A) in this regard.

8. During the assessment years 2007-08, 2008-09 to 2010-11 the assessing officer disallowed certain expenses on the basis

that it is not incurred wholly and exclusively for the purpose of business. The total amount claimed is Rs. 10,324.74 lakhs approximately. The Company has filed appeals before the CIT (A) in this regard.

9. During the assessment years 2007-08 to 2010-11, the assessing officer has disallowed an amount of Rs. 18,711.64 lakhs

approximately for non-deduction of TDS on certain expenses / payments under Section 40(a)(ia) of the Act. The Company has filed appeals before the CIT (A) in this regard.

10. Amounts credited to share premium account on conversion of FCCN into shares has been considered as income to the

FCCN holders and consequently disallowed for non-deduction of Tax by the assessing officer for the assessment years


203

2006-07 and 2008-09. The total amount in dispute is Rs. 5,110.98 lakhs approximately. The Company has filed an appeal before the CIT (A) in this regard.

11. The assessing officer disallowed the reduction of notional loss from hedge reserve account by the Company for the

assessment year 2009-10 on the grounds that only such losses arising out of actual settlement of derivative transactions can be held to be non-speculative loss and that notional loss on derivatives (restatement of gains / losses), which is not incurred by actual settlement, cannot be allowed to be set off against profits of business. The company has filed an appeal before the CIT(A). The total amount in dispute is approximately Rs. 3,220.08 lakhs.

Material Criminal Cases 1. There is one material criminal proceeding pending against five of our employees. It is alleged that these employees were

engaged in criminal conspiracy along with representatives of Technical Directorate, Central Institute of Road Transport, Pune (“CIRT”) to fabricate the laboratory testing report of plywood used in manufacture of buses supplied to the Delhi Transport Corporation. A charge sheet has been filed against our employees before the Special Judge, Pune, for alleged offence under sections 120B, 420, 465, 467 471 and 511 of the Indian Penal Code, 1860) and sections 7,13(1)(d) and13(2) the Prevention of Corruption Act, 1988. As on date this matter is pending for commencement of trial before the Special Judge, Pune.

2. There is one proceeding pending before the Chief Judicial Magistrate, Thiruvallur against Mr. Vinod Dasari, in his capacity as the Occupier and Mr. K. Sridharan Balaji, in his capacity as the Manager of the factory of the Company, at Ennore in relation to charges under section 7A the Factories Act, 1948 (General duties of the Occupier), Section 41 the Factories Act, 1948 (Power of state government to make rules for securing the safety of persons employed in factories) Rule 61 F of the Tamil Nadu Factories Rules, 1950 (Method of work) read with Section 92 of the Factories Act, 1948 (General penalty for offences) with regard to the death of a contract employee working in the factory of the Company, at Ennore.

Litigation Involving our Promoters There are no litigations or legal actions pending or taken by any Ministry or Department of the Government or a statutory authority against the Promoter of our Company, Hinduja Automotive Limited during the last three years immediately preceding year 2014. Proceedings under the Companies Act On February 3, 2011, the MCA conducted an inspection in connection with corporate compliance by the Company. The MCA noted certain violations of Companies Act including delays in share allotments in certain of our Joint Ventures and delays in the filing of certain statutory forms and reporting certain events to the MCA. The MCA also noted that certain related party transactions were entered into without requisite government approval. The Company responded to this inspection report, pursuant to which the MCA vide its letter dated November 19, 2013, has taken a lenient view by not imposing any penalty and has directed us to ensure future compliance with provisions of the Companies Act in future . Except as stated above, there has been no inquiry, inspection or investigations initiated or conducted against the Company under the Companies Act, 2013 or any previous company law in the last three years immediately preceding the year of circulation of this Placement Document. Further, there have not been any prosecutions filed (whether pending or not), fines imposed, compounding of offences under the Companies Act, 2013 or any previous company law, in the last three years immediately preceding the year of circulation of this Placement Document with respect to the Company. Material Frauds against the Company There have been no material frauds committed against the Company in the last three years.


204

LITIGATION AGAINST THE SUBSIDIARIES AND THE SUBSIDIARIES HELD FOR SALE A summary of legal proceedings pending against our Subsidiaries and the Subsidiaries Held for Sale where the amount claimed exceeds Rs. 500 lakhs and certain other litigation we consider material is set forth below: Nil Proceedings under the Companies Act There has been no inquiry, inspection or investigations initiated or conducted against the Subsidiaries or the Subsidiaries Held for Sale under the Companies Act, 2013 or any previous company law in the last three years immediately preceding the year of circulation of this Placement Document. Further, there have not been any prosecutions filed (whether pending or not), fines imposed or compounding of offences under the Companies Act, 2013 or any previous company law, in the last three years immediately preceding the year of circulation of this Placement Document with respect to the subsidiaries or the Subsidiaries Held for Sale.


205

INDEPENDENT AUDITORS The Company’s financial statements as of and for each of the years ended March 31, 2014, 2013 and 2012, included in this Placement Document, have been audited by M/s. M. S. Krishnaswami & Rajan, Chartered Accountants and M/s. Deloitte Haskins & Sells LLP, Chartered Accountants. Please see the section, “Financial Statements” beginning on page F-1.


206

GENERAL INFORMATION

1. We were incorporated under the laws of the Republic of India on September 7, 1948. As of the date of this Placement

Document, our authorized capital is Rs. 259,210 lakhs divided into (a) 2,535,60 lakhs Equity Shares of Re. 1 each; (b) 365 Lakh Redeemable Non-cumulative Non-convertible Preference Shares of Rs. 10 each; and (c) 20 lakhs Non-convertible Redeemable Preference Shares of Rs. 100 each. As of the date of this Placement Document, 2,66,06,76,634 Equity Shares of Re. 1 each were paid up and outstanding.

2. Our Registered Office is located at 1, Sardar Patel Road, Guindy, Chennai – 600 032 India.

3. Under our Memorandum of Association, our principal objects are to carry out the business described in the section

“Business” beginning on page 115. The objects are set out in Clause III of our Memorandum of Association.

4. The Issue was authorized and approved by our Board of Directors by resolutions dated May 10, 2013 and approved by our shareholders by resolutions dated July 16, 2013. Our Board and shareholders approved the Issue comprising of issue of upto 1,852 Lakh Equity Shares of face value of Re. 1 each constituting 7% of the issued share capital of the Company.

5. We have received in-principle approvals from the Stock Exchanges under Clause 24(a) of the Listing Agreements with the Stock Exchanges for the issue of the Equity Shares. We will apply for in-principle and final approvals to list our Equity Shares to be issued in the Issue on the BSE, the NSE and the MSE.

6. Copies of our Memorandum and Articles of Association will be available for inspection during usual business hours on any weekday (except Saturdays and public holidays) during the offering period at our Registered Office.

7. Other than as set forth in this Placement Document, there has been no significant change in our financial results since March 31, 2014, the date of our last audited financial statements.

8. Except as disclosed in this Placement Document, we are not involved in any material legal proceedings and we are not aware of any threatened legal proceedings, which, if determined adversely, could result in a material adverse effect on our business, financial condition or results of operations.

9. The Company has obtained necessary consents, approvals and authorisations required in connection with the Issue.

10. M/s. M. S. Krishnaswami & Rajan, Chartered Accountants and M/s. Deloitte Haskins & Sells LLP, Chartered Accountants have audited our financial statements as of and for the years ended, March 31, 2014, March 31, 2013 and March 31, 2012 and have provided their consent for inclusion of their reports in relation thereto in this Placement Document.

11. We confirm that we are in compliance with minimum public shareholding requirements under the terms of our Listing Agreements with the Stock Exchanges.

12. The Floor Price for the Issue is Rs. 34.30 per Equity Share calculated in accordance with Regulation 85 of the ICDR Regulations.


207

FINANCIAL STATEMENTS

INDEX

Sr. No. Contents Page No. 1. Independent Auditor’s Report and Summary Standalone Financial Statements for the years ended

March 31, 2012, 2013 and 2014 F-1

2. Independent Auditor’s Report and Consolidated Financial Statements for the year ended March 31, 2014

F-78

F - 1

FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT ON SUMMARY STANDALONE FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF ASHOK LEYLAND LIMITED

1. The accompanying Summary Standalone Financial Statements which comprise the Summary Balance Sheets of Ashok

Leyland Limited (the “Company” or the “Issuer”) as at March 31, 2014, March 31, 2013 and March 31, 2012 and also

the Summary Standalone Statements of Profit and Loss and the Summary Standalone Cash Flow Statements for the years

ended on those dates; together with the Notes to the Summary Standalone Financial Statements, together referred to

herein as the “Summary Standalone Financial Statements”, have been derived by the Management of the Company from

the Audited Standalone Financial Statements for the years ended March 31, 2014, March 31, 2013 and March 31, 2012

(the “Audited Standalone Financial Statements”). The Audited Standalone Financial Statements for respective years were

adopted by the Board of Directors on May 22, 2014, May 10, 2013 and May 14, 2012 respectively.

2. We expressed unmodified audit opinions on the Audited Standalone Financial Statements of the Company for the years

ended March 31, 2014, March 31, 2013 and March 31, 2012 vide our reports dated May 22, 2014, May 10, 2013 and

May 14, 2012 respectively.

3. The figures included in the Summary Standalone Financial Statements do not reflect the events that occurred subsequent

to the date of our reports on the respective periods referred to in paragraph 2 above.

4. The Summary Standalone Financial Statements have been prepared by the Management of the Company for the purposes

of inclusion in the Preliminary Placement Document and the Placement document (together with any supplements or

amendments thereto, the “Placement Documents”), prepared by the Issuer in connection with the proposed Qualified

Institutional Placement of equity shares of Re.1 each (the “securities”) outside the United States of America (the

“Offering" or “Issue”). The Issue is made as part of a global offering that includes an offering of the Securities in the

United States of America pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended (the “Global

Offering”) and will involve the preparation by the Issuer, and for which the Issuer will be solely responsible, of the

Placement Documents for filing with the Madras Stock Exchange, Bombay Stock Exchange and National Stock

Exchange in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2009, as amended.

5. These Summary Standalone Financial Statements have been initialed by us for identification.

Management’s Responsibility for the Summary Financial Statements

6. The Company’s Management is responsible for the preparation of the Summary Standalone Financial Statements from

the Audited Standalone Financial Statements for the respective periods referred above on the basis described in Note B to

the Summary Standalone Financial Statements.

Auditors’ Responsibility

7. Our responsibility is to express an opinion on these Summary Standalone Financial Statements based on our procedures,

which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary

Financial Statements” issued by the Institute of Chartered Accountants of India.

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the Summary Standalone

Financial Statements, which have been derived by the Management of the Company from the Audited Standalone

F - 2

Financial Statements of the Company for the years ended March 31, 2014, March 31, 2013 and March 31, 2012, are a

fair summary of those Audited Standalone Financial Statements on the basis described in Note B to the Summary

Standalone Financial Statements.

9. This report is intended solely for your information and for inclusion in the placement documents prepared in connection

with the Offering and is not to be used, referred to or distributed for any other purpose, without prior written consent.

For M.S. Krishnaswami & Rajan

Chartered Accountants

Registration No. 01554S

M.S. Murali

Partner

Membership No. 26453

For Deloitte Haskins & Sells LLP


Firm’s Registration No. 117366W/W-100018

Abhijit A. Damle

Partner


June 26, 2014

Chennai

F - 3

SUMMARY STANDALONE BALANCE SHEETS

As at March 31,

2012

Rs. Lakhs

As at March 31,

2013

Rs. Lakhs

As at March 31,

2014

Rs. Lakhs

Particulars Note No.



Share capital 1.1 26,606.80 26,606.80 26,606.80

Reserves and surplus 1.2 394,625.82 418,903.66 418,181.63

421,232.62 445,510.46 444,788.43


Long-term borrowings 1.3 229,335.11 273,784.18 329,650.51

Deferred tax liabilities (Net) 1.4 49,036.69 52,736.69 40,676.69

Other long-term liabilities 1.5 - 177.85 237.12

Long-term provisions 1.6 7,656.30 7,851.26 6,786.62

286,028.10 334,549.98 377,350.94

Current liabilities

Short-term borrowings 1.7 10,175.00 76,698.25 58,740.81

Trade payables 1.8 257,096.72 248,536.85 221,415.37

Other current liabilities 1.9 175,004.83 173,506.34 169,691.35

Short-term provisions 1.10 42,037.44 30,868.33 8,812.67

484,313.99 529,609.77 458,660.20

TOTAL

1,191,574.71 1,309,670.21 1,280,799.57

ASSETS

Non-current assets

Fixed assets

Tangible assets 1.11 456,571.25 491,843.42 522,192.70

Intangible assets 1.12 34,778.16 36,344.86 43,794.02

Capital work-in-progress 1.11 43,519.06 56,261.83 15,513.03

Intangible assets under

development 1.12

11,303.03 12,630.91 2,639.69

546,171.50 597,081.02 584,139.44

Non-current investments 1.13 153,447.89 233,763.19 240,531.11

Long-term loans and advances 1.14 60,823.95 49,933.41 67,276.53

Other non-current assets 1.15 742.74 1,203.21 3,308.99

761,186.08 881,980.83 895,256.07

Current assets

Current investments 1.16 - - 38,437.48

Inventories 1.17 223,062.52 189,602.08 118,870.31

Trade receivables 1.18 123,076.42 141,941.13 129,901.05

Cash and bank balances 1.19 3,255.58 1,394.24 1,169.06

Short-term loans and advances 1.20 72,657.43 87,134.18 80,071.10

Other current assets 1.21 8,336.68 7,617.75 17,094.50

430,388.63 427,689.38 385,543.50

TOTAL 1,191,574.71 1,309,670.21 1,280,799.57

Statement on Significant Accounting Policies and Notes to the Financial Statements are an integral part of this Balance Sheet.

F - 4

For ASHOK LEYLAND LIMITED

GOPAL MAHADEVAN VINOD K DASARI

Chief Financial Officer Managing Director

June 26, 2014

Chennai

F - 5

SUMMARY STANDALONE STATEMENTS OF PROFIT AND LOSS

Year ended

March 31,

2012

Rs. Lakhs

Year ended

March 31, 2013

Rs. Lakhs

Year ended

March 31,

2014

Rs. Lakhs

Particulars Note No.

Income

Revenue from operations 2.1 1,372,080.50 1,329,855.89 1,056,084.53

Less: Excise Duty

81,647.85 81,735.89 61,741.86

Revenue from operations (Net)

1,290,432.65 1,248,120.00 994,342.67

Other income 2.2 4,035.03 6,235.15 6,652.07

Total Revenue

1,294,467.68 1,254,355.15 1,000,994.74

Expenses

Cost of materials consumed 2.3 912,148.33 753,941.64 590,969.47

Purchases of Stock-in-Trade - Traded goods 2.4 50,737.37 131,173.94 126,902.76

Changes in inventories of finished goods,

work-in-progress and Stock-in-Trade 2.5

(16,701.30) 27,197.69 42,387.10

946,184.40 912,313.27 760,259.33

Employee benefits expense 2.6 102,039.42 107,551.34 99,967.23

Finance costs 2.7 25,525.32 37,688.57 45,292.48

Depreciation and amortisation expense 2.8 35,281.32 38,078.35 37,703.60

Other expenses 2.9 116,599.34 140,608.56 117,459.88

Total Expenses

1,225,629.80 1,236,240.09 1,060,682.52

Profit / (Loss) before exceptional items and tax

68,837.88 18,115.06 (59,687.78)

Exceptional items 2.10 159.78 28,955.61 50,565.89

Profit / (Loss) before tax

68,997.66 47,070.67 (9,121.89)

Tax expense:

Current tax (Refer Note 3.13 to the Financial

Statements) 7,752.00 - -

Deferred tax

4,648.00 3,700.00 (12,060.00)

12,400.00 3,700.00 (12,060.00)

Profit for the year from continuing

operations 56,597.66 43,370.67 2,938.11

Earnings per share (Face value Re.1) – Basic

and Diluted (in Rs.) (Refer Note 3.3 to the

Financial Statements)

2.13 1.63 0.11

Statement on Significant Accounting Policies and Notes to the Financial Statements are an integral part of this Statement of Profit

and Loss.

F - 6




June 26, 2014

Chennai

F - 7

SUMMARY STANDALONE CASH FLOW STATEMENTS

Year ended

March 31,

2012

Rs. Lakhs

Year ended

March 31,

2013

Rs. Lakhs

Year ended

March 31, 2014

Rs. Lakhs


Profit / (Loss) before tax

68,997.66 47,070.67 (9,121.89)

Adjustments for :

Depreciation, amortisation and impairment - net of capitalisation 35,281.32 38,078.35 37,703.60

Other amortisations

(569.83) 571.31 189.04

Bad and doubtful debts / advances provided / written-off (net of

recovery) - - 524.85

Foreign exchange (gains) / losses

1,072.60 (1,277.41) 733.26

Loss / (Profit) on disposal of tangible assets

(348.03) (417.26) (20,266.16)

Loss / (Profit) on sale of long-term investments

(159.78) (32,971.92) (36,870.91)

Provision for diminution in value of long-term investments

26.55 4,016.31 957.32

Voluntary Retirement Scheme expense

- - 4,674.94

Finance costs - net of capitalisation

25,525.32 37,688.57 45,292.48

Interest income

(1,373.33) (3,324.34) (1,733.54)

Dividend income

(906.06) (756.27) (470.52)

Operating profit before working capital changes

127,546.42 88,678.01 21,612.47


Liabilities and provisions

42,441.92 (16,994.37) (33,756.72)

Trade receivables

(5,971.05) (19,089.74) 11,680.51

Inventories

(2,172.18) 33,460.44 70,731.77

Loans and Advances

(33,550.09) (3,110.52) (8,448.02)

Other non-current and current assets

1,434.97 882.69 1,472.01

Voluntary Retirement Compensation paid - Exceptional item

- - (4,674.94)

Cash generated from operations

129,729.99 83,826.51 58,617.08

Income tax paid

(14,998.63) (10,996.55) (2,974.07)

Net cash flow from operating activities [A] 114,731.36 72,829.96 55,643.01


Payments for acquisition of assets

(69,783.90) (64,916.21) (21,975.40)

Proceeds on sale of fixed assets

720.74 532.39 1,269.65

Proceeds on sale of immovable properties - Exceptional item

- - 9,733.47

Proceeds from sale of long-term investments - Exceptional item 25,114.30 41,464.58 50,965.55

Purchase of long-term investments

(55,429.27) (92,824.28) (53,792.90)

Inter Corporate Deposits – given

- - (5,000.00)

Inter Corporate Deposits - repaid

- - 2,000.00

F - 8




June 26, 2014

Chennai

Year ended

March 31,

2012

Rs. Lakhs

Year ended

March 31,

2013

Rs. Lakhs

Year ended

March 31, 2014

Rs. Lakhs

Interest received

775.98 1,880.76 1,436.40

Dividend received

906.06 756.27 470.52

Changes in Advances / Related Party Loans and

advances given / repaid (Net) (8,055.94) (3,325.54) 4,082.67

Taxes paid

- - (204.06)

Net cash flow (used in) investing activities [B] (105,752.03) (116,432.03) (11,014.10)


Proceeds from long-term borrowings

57,731.54 117,138.48 120,094.11

Repayments of long-term borrowings

(34,878.46) (73,470.92) (85,060.82)

Proceeds from short-term borrowings

117,832.98 1,026,932.92 1,367,178.54

Repayments of short-term borrowings

(108,291.85) (960,561.17) (1,383,939.80)

Debenture / Loan raising expenses paid

(896.44) (1,135.29) (880.38)

Interest paid

(24,686.96) (36,282.97) (43,578.14)

Dividend paid and tax thereon

(30,923.05) (30,923.05) (18,677.15)

Net cash flow (used in) / from financing activities[C] (24,112.24) 41,698.00 (44,863.64)

Net cash (outflow) [A+B+C] (15,132.91) (1,904.07) (234.73)

Opening cash and cash equivalents

17,537.27 2,746.31 781.09

Add: Pursuant to amalgamation [Refer Note 3.16 to

the Financial Statements] - - 28.04

Exchange fluctuation on foreign currency bank balances

341.95 (61.15) (68.50)

Closing cash and cash equivalents

[Refer Note 1.19 a. to the Financial Statements] 2,746.31 781.09 505.90

Note: FY 2014

Share Application money aggregating Rs. 3,192.17 lakhs has been converted into share capital during the period.

F - 9

Notes forming part of the summary standalone financial statements

A. Corporate Information

Ashok Leyland Limited (“Company”) is a public limited company incorporated under the provisions of the Companies Act,1956. Its

shares are listed in three stock exchanges in India. The company is engaged in the manufacturing and selling of Heavy, medium and

light commercial vehicles, engines for a variety of applications including in industries such as automotive, captive power gensets and

marine. The company caters to the domestic and international markets, predominantly in the SAARC, Middle East and Africa.

B. Basis of preparation of summary standalone financial statements

The Summary Standalone Financial Statements which comprise the Summary Balance Sheets of Ashok Leyland Limited (the

“Company” or the “Issuer”) as at March 31, 2014, March 31, 2013 and March 31, 2012 and also the Summary Standalone Statements

of Profit and Loss and the Summary Standalone Cash Flow Statements for the years ended on those dates; together with related

schedules and explanatory notes referred to herein as the “Summary Standalone Financial Statements”.

The Summary Standalone Financial Statements have been derived by the Management of the Company from the Audited Standalone

Financial Statements for the years ended March 31, 2014, March 31, 2013 and March 31, 2012 (the “Audited Standalone Financial

Statements”). The Audited Standalone Financial Statements for respective years were approved by the Board of Directors on May 22,

2014, May 10, 2013 and May 14, 2012 respectively.

The figures included in the Summary Standalone Financial Statements do not consider the facts or circumstances which arose

subsequent to the date of approval of the Audited Standalone Financial Statements for respective years as stated above.

The figures for the years ended March 31, 2013 and 2012 included in the Summary Standalone Financial Statements have been

reclassified to correspond with the classification criteria followed for the year ended March 31, 2014.

The significant accounting policies used in the preparation of the Audited Standalone Financial Statements of the Company are given

below.

C. Significant Accounting Policies

Statement on Significant Accounting Policies forming part of the Financial Statements for the year ended March 31, 2012 to

March 31, 2014

1. Accounting convention

1.1 Financial statements are prepared in accordance with the Generally Accepted Accounting Principles in India to comply

with the Accounting Standards notified under Section 211 (3C) of the Companies Act 1956 (“the 1956 Act”) [which

continues to be applicable in respect of section 133 of the Companies Act 2013 (“the 2013 Act”) in terms of general

circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs] and the relevant provision of the 1956 Act

/ 2013 Act as applicable. The financial statements have been prepared on accrual basis under historical cost convention

except for certain categories of fixed assets that are carried at re-valued amounts.

1.2 All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and

other criteria set out in the revised schedule VI to the Companies Act, 1956. Based on the nature of products and the time

between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has

determined its operating cycle as twelve months for the purpose of current - non current classification of assets and

liabilities.

1.3 Use of estimates

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires

management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities on the

date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the

year. Estimates are based on historical experience, where applicable and other assumptions that management believes are

reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with

in the period in which the results are known/ materialize.

F - 10

2. Tangible and Intangible Fixed assets and depreciation / amortisation

2.1 Cost of all civil works (including electrification and fittings) is capitalised with the exception of alterations and

modifications of a capital nature to existing structures where the cost of such alteration or modification is Rs 100,000 and

below. Other fixed assets, including intangible assets and assets given on lease, where the cost exceeds Rs. 10,000 and the

estimated useful life is two years or more, is capitalised. Cost of initial spares and tools is capitalised along with the

respective assets. Cost of fixed assets is net of eligible credits under CENVAT / VAT Scheme. Expenditure directly

related and incidental to construction / development and borrowing costs in para 3 below are capitalised upto the date the

assets are ready for their intended use. Exchange differences are capitalised to the extent dealt with in para 6.2 below.

FY’14: Certain categories of fixed assets were revalued and are carried at the revalued amounts less accumulated

depreciation and impairment loss, if any. Increase in the net book value on such revaluation is credited to “Revaluation

Reserve Account”. Upon the sale, disposal, extinguishment of the revalued assets the amount of revaluation reserve

against such assets is adjusted against their carrying values and the difference between the sale proceeds of such assets and

the adjusted carrying value are recognised in the Statement of profit and loss.

2.2 Tangible fixed assets and Intangible assets, that are not yet ready for their intended use, are carried at costs, comprising

direct cost, and other incidental / attributable expenses and reflected under Capital work in progress / Intangible assets

under development, respectively.

2.2 Assets are depreciated / amortised, as below, on straight line basis:

a) Leasehold land over the period of lease;

b) Leasehold land and buildings, as revalued, is calculated on the respective revalued amounts, over the balance useful

life as determined by the valuers in the case of buildings and as per (a) above in the case of land;

c) Buildings, plant and machinery (except assets subject to impairment) and other assets, including assets given on lease

and assets in leased premises / customer premises, over their estimated useful lives or lives derived from the rates

prescribed in Schedule XIV to the Companies Act, 1956, whichever is lower;

d) Assets subject to impairment, on the asset's revised carrying amount, over its remaining useful life.

e) Intangible assets are amortized over their estimated useful life.

2.3 Depreciation / amortisation is provided on a pro-rata basis from the month the assets are put to use during the financial

year. In respect of assets sold or disposed off during the year, depreciation / amortisation is provided upto the month of sale

or disposal of the assets.

2.4 The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment. If any

indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the

carrying amount exceeds the recoverable amount.

3. Borrowing costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets, are added to the cost of

those assets, upto the date when the assets are ready for their intended use. Expenditure incurred on issue of debentures is

adjusted against Securities Premium Account. Expenditure incurred on raising loans is amortised over the period of such

borrowings. Premium paid on prepayment of borrowing is amortised over the unexpired period thereof or six months,

whichever is less. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they

are incurred.

4. Investments

Long term investments are carried individually at cost. However, provision for diminution is made to recognise a decline,

if any, other than temporary, in the carrying value of the investment. Current investments are carried individually at lower

of cost and fair value.

F - 11

5. Inventories

5.1 Inventories are valued at lower of cost and net realisable value; cost being ascertained on the following basis:

- Stores, raw materials and components and work-in-progress: On monthly moving weighted average basis.

- FY’14: spares, consumable tools : weighted average basis

FY’13 and FY’12: spares and consumable tools: monthly moving weighted average basis

In respect of works-made components, cost includes applicable production overheads.

- Finished / trading goods: under absorption costing method.

5.2 Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes.

5.3 FY’14 and FY’13: Cost of patterns and dies is amortised over a period of five years.

FY’12: Cost of patterns and dies is amortised equally over five years

5.4 Surplus / obsolete / slow moving inventories are adequately provided for.

6. Foreign currency transactions and derivatives

6.1 Foreign currency transactions are recorded at the rates prevailing on the date of the transaction. Monetary assets and

liabilities in foreign currency are translated at closing rate. Exchange differences arising on settlement or translation of

monetary items other than those mentioned in para 6.2 below are recognised as income or expense in the Statement of

Profit and Loss in the period it arises.

6.2 Exchange differences on translation or settlement of long term foreign currency monetary items (i.e. whose term of

settlement exceeds twelve months from date of its origination) at rates different from those at which they were initially

recorded or reported in the previous financial statements, insofar as it relates to acquisition of depreciable assets are

adjusted to the cost of the assets and depreciated over remaining useful life of such assets.In other cases, these are

accumulated in “Foreign currency monetary item translation difference account” and amortised by recognition as income

or expense in each period over the balance term of such items till settlement occurs but not beyond March 31, 2020.

6.3 The company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations

relating to firm commitments and highly probable forecast transactions. The company designates such forward contracts in

a cash flow hedging relationship by applying the hedge accounting principles set out in Accounting Standard- 30

“Financial Instruments-Recognition and measurement” issued by ICAI. Gains and losses on these forward contracts

designated as “effective Cash flow hedges” are recognised in the “Hedge Reserve Account” till the underlying forecasted

transaction occurs. Any ineffective portion however, is recognised immediately in the Statement of profit and loss.

6.4 Gains and losses on all other derivatives (including forward contracts not designated as Cash flow hedge) are recognised in

the Statement of Profit and Loss in the period it arises. Premium or discount on forward contracts is amortized over the life

of the contract.

6.5 Investments in equity capital of companies registered outside India are carried in the Balance Sheet at the rates prevailing

on the date of the transaction.

6.6 Income / expenditure of overseas branches are recognised at the average rate prevailing during the month in which

transaction occurred.

7. Segment Reporting

The company’s primary segment is identified as business segment based on nature of product, risks, returns and the

internal business reporting system and secondary segment is identified based on geographical location of the customers as

per Accounting Standard – 17.The company is principally engaged in a single business segment viz. Commercial vehicles

and related components.

F - 12

8. Revenue recognition

a) Sale of goods

Revenue from sale of products net of returns, is recognised on despatch or appropriation of goods in accordance with

the terms of sale and is inclusive of excise duty. Price escalation claims are recognised to the extent there is reasonable

certainty of its realisation.

b) Sale of Services

Revenue from services is recognised in accordance with the specific terms of contract on performance.

c) Other operating revenues

Other operating revenues comprise of income from ancillary activities incidental to the operations of the Company and

is recognised when the right to receive the income is established as per the terms of the contract.

d) Other Income

Interest income is accounted on accrual basis. Dividend income is accounted as and when the right to receive the

dividend is established.

9. Leases

Where the company is a lessor

a) Leases in which the company transfers substantially all the risks and rewards of ownership of the asset are

classified as finance leases. Assets given under finance lease are recognised as a receivable at an amount equal to

the net investment in the lease. After the initial recognition, the company apportions lease rentals between

principal repayment and interest income so as to achieve a constant periodic rate of return on the net investment

outstanding in respect of the finance lease. The interest income is recognised in the Statement of Profit and Loss.

Initial direct costs such as legal costs, brokerage costs, etc., are recognised immediately in the Statement of Profit

and Loss.

b) Leases in which the company does not transfer substantially all the risks and rewards of ownership of the asset are

classified as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an

operating lease is recognised in the Statement of Profit and Loss on a straight line basis over the lease terms.

Costs, including depreciation, are recognised as an expense in the Statement of Profit and Loss. Initial direct costs

such as legal costs, brokerage costs etc. are charged to the Statement of Profit and Loss in the period of

incurrence.

10. Government grants

Grants in the form of capital/investment subsidy are treated as Capital reserve. Export incentives and incentives in the

nature of subsidies given by the Government are reckoned in revenue in the year of eligibility.

11. Research and Development Costs

Expenditure on the design and production of prototypes is charged to the Statement of Profit and Loss as and when

incurred. Product development costs, including knowhow developed / acquired, incurred on new vehicle/ engine

platforms, variants on existing platforms and aggregates are recognised as Intangible assets only when product’s technical

feasibility is established and amortised over their estimated useful life.

12. Employee benefits

12.1 Employee benefit expenses include salary, wages, performance incentives, compensated absences, medical benefits, and

other perquisites. It also includes post-employment benefits such as provident fund, superannuation fund, gratuity,

pensionary benefits etc.

12.2 Short term employee benefit obligations are estimated and provided for.

F - 13

12.3 Post-employment benefits and other long term employee benefits

- Defined contribution plans:

Company’s contribution to provident fund, superannuation fund, employee state insurance and other funds are

determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period

of incurrence when the services are rendered by the employees.

In respect of provident fund contributions made to a trust administered by the Company, the interest rate payable to

the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government

under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be

contributed by the Company and charged to the Statement of Profit and Loss.

- Defined benefit plans and compensated absences:

Company’s liability towards gratuity, other retirement benefits and compensated absences are actuarially determined

at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in the

Statement of Profit and Loss in the period of occurrence.

12.4 Termination benefits

Expenditure on termination benefits (including expenditure on Voluntary Retirement scheme) is recognised in the

Statement of Profit and Loss in the period of incurrence.

13. Provisions and Contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an

outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions

are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are

disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

Provision for product warranties is made for contractual obligations in accordance with the policy in force and is estimated

for the unexpired period.

14. Income taxes

14.1 Income tax expenses comprise current and deferred taxes. Current tax is determined on income for the year chargeable to

tax in accordance with the Income Tax Act, 1961 and after considering credit for Minimum Alternate Tax (MAT) available

under the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of

adjustments to future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit

associated with it will flow to the company resulting in payment of normal income tax.

14.2 Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that

originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax assets are recognised

for timing differences other than unabsorbed depreciation and carry forward losses only to the extent that there is a

reasonable certainty that there will be sufficient future taxable income to realise the assets. Deferred tax asset pertaining to

unabsorbed depreciation and carry forward of losses are recognised only to the extent there is a virtual certainty of its

realisation.

15. Cash Flow statement

Cash flow statements are reported using the indirect method, whereby profit/(loss) before extra-ordinary items/exceptional

items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future

cash receipt or payments. The cash flows from operating, investing and financing activities of the company are segregated

based on available information including taxes paid relating to these activities.

F - 14

D. Other Notes annexed to and forming part of the Summary Standalone Financial Statements

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014

Rs. Lakhs Rs. Lakhs Rs. Lakhs

1.1 CAPITAL

Authorised

a) 2535,60,00,000(2013: 400,00,00,000)

(2012: 300,00,00,000) Equity shares of Re.1

(2013: Re.1) (2012: Re:1)each 30,000.00 40,000.00 253,560.00

b) 3,65,00,000 (2013: Nil) (2012: Nil)

Redeemable Non-Cumulative Non-

Convertible Preference Shares of Rs.10 (2013:

Nil) (2012: Nil) each - - 3,650.00

c) 20,00,000 (2013: Nil) (2012: Nil) Non-

Convertible Redeemable Preference Shares of

Rs.100 (2013: Nil) (2012: Nil) each - - 2,000.00

30,000.00 40,000.00 259,210.00

Issued

a) 201,45,66,829 (2013: 201,45,66,829)


(2013: Re.1) (2012: Re.1) each 20,145.67 20,145.67 20,145.67

b) 64,63,14,480 (2013: 64,63,14,480)


(2013: Re.1) (2012: Re.1) each issued through

Global Depository Receipts 6,463.14 6,463.14 6,463.14

26,608.81 26,608.81 26,608.81

Subscribed and fully paid up

a) 201,43,62,154 (2013: 201,43,62,154)


(2013: Re.1) (2012: Re.1) each 20,143.62 20,143.62 20,143.62

b) 64,63,14,480 (2013: 64,63,14,480)


(2013: Re.1) (2012: Re.1) each issued through

Global Depository Receipts 6,463.14 6,463.14 6,463.14

26,606.76 26,606.76 26,606.76

Add: Forfeited shares (amount originally paid

up in respect of 760 shares) 0.04 0.04 0.04

26,606.80 26,606.80 26,606.80

Notes:

1. During FY 2014, the Authorised Capital of the Company was increased by Rs. 2,19,210 Lakhs pursuant to the

amalgamation of Ashley Services Limited with the Company. [Refer Note 3.16 b. to the Financial Statements]

During FY 2013, the Authorised Capital of the Company was enhanced by Rs. 10,000 Lakhs pursuant to the approval by

the shareholders at the Annual General meeting held on July 24, 2012.

F - 15

2. Reconciliation of number of Equity

shares subscribed 2012

2013 2014

Balance as at the beginning of the year 133,03,38,317 266,06,76,634 266,06,76,634

Add: Shares issued and allotted as

bonus shares in the ratio of 1:1 (Refer Note

1.2(b) to the Financial Statement) 133,03,38,317 - -

Balance as at the end of the year 266,06,76,634 266,06,76,634 266,06,76,634

3. Shares issued in preceding 5 years

The Company had issued and allotted during the year 2011-12, 133,03,38,317 equity shares as fully paid-up bonus shares

by utilisation of securities premium reserve in the ratio of 1:1.

4. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 (2013: 102,72,37,424) (2012: 102,72,37,424)

Equity shares and 54,86,669 (2013: 54,86,669) (2012: 54,86,669) Global Depository Receipts (GDRs) equivalent to

32,92,00,140 (2013: 32,92,00,140) (2012: 32,92,00,140) Equity shares of Re.1 (2013: Re.1) (2012:Re. 1) each aggregating

to 53.89% (2013: 50.98%) (2012:50.98%)of the total share capital.

5. Shareholders other than the Holding Company holding more than 5% of the total share capital

Life Insurance Corporation of India holds 24,05,15,574 (2013: 25,00,56,674) (2012: 25,93,11,056) Equity shares of Re.1

(2013: Re.1) (2012: Re.1) each aggregating to 9.04% (2013: 9.40%) (2012: 9.75%).

6. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to

holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions

of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the

provisions of the Companies Act, 1956. Each GDR holder is entitled to receive 60 equity shares [2013: 60 equity

shares ] [2012: 60 equity shares] of Re. 1 each, per GDR, and their voting rights can be exercised through the

Depository.

F - 16

As at March 31,

2012

As at March 31,

2013 As at March 31, 2014


1.2 RESERVES AND SURPLUS

a)Capital Reserve

Balance as at the beginning of the year 89.50 89.50 89.50

Add: Pursuant to amalgamation [Refer Note

3.16 c. to the Financial

Statements]

- - 8,793.10

Balance as at the end of the year 89.50 89.50 8,882.60

b)Securities Premium Account

Balance as at the beginning of the year 89,033.66 75,604.54 75,476.83

Less: Utilisation towards issue of fully paid

bonus shares 13,303.38 - -

Less: Expenses incurred on issue of Debentures 125.74 127.71 117.33

Balance as at the end of the year 75,604.54 75,476.83 75,359.50

c)Debenture Redemption Reserve


Add: Transferred from Surplus in Statement of

Profit and Loss 3,750.00 - -

Less: Transferred to Surplus in Statement of

Profit and Loss 3,750.00 - 1,750.00


d)Revaluation Reserve


Less: Transferred to Statement of Profit and Loss

[Refer Note 3.2.9 (b) to the Financial Statements] 1,577.46 1,571.27 1,515.89

Transferred to General reserve on sale of assets 88.15 - -

Adjustment on sale of revalued assets

[Refer Note 3.2.9 (c) to the Financial Statements] 131.38 99.31 10,756.56

Add: Transferred from Depreciation / Amortisation

Reserve 2,505.09 - -


e)General Reserve


Add: Transferred from Surplus in Statement of Profit

and Loss 10,000.00 5,000.00 -

Transferred from Revaluation reserve on sale of

assets 88.15 - -


f)Hedge Reserve

[ Refer Note 3.9.2 to the Financial Statements ]

Balance as at the beginning of the year (129.82) (1,953.80) (59.57)

Add: Unrealised gains / (losses) on cash flow hedges

outstanding (net) (1,953.80) (59.57) 378.28

Less: Gain / (losses) on cash flow hedges recognised

in the Statement of

Profit and Loss upon settlement (129.82) (1,953.80) (59.57)

Balance as at the end of the year (1,953.80) (59.57) 378.28

F - 17

As at March 31,

2012

As at March 31,

2013 As at March 31, 2014


g)Foreign currency monetary item

translation difference

[ Refer Note 3.9.1 to the Financial Statements ]

Balance as at the beginning of the year - 415.27 (96.35)

Add: Exchange difference on translation of

outstanding loan balances 1,470.68 (393.99) (441.78)

Less: Exchange difference amortised in the Statement

of Profit and Loss 1,055.41 117.63 54.76

Balance as at the end of the year 415.27 (96.35) (592.89)

h)Surplus in Statement of Profit and Loss


Add: Current year profit 56,597.66 43,370.67 2,938.11

Transferred from Debenture Redemption

Reserve 3,750.00 - 1,750.00

Pursuant to amalgamation [ Refer Note 3.16 c.

to the Financial

Statements ] - - (4.77)

Less: Transferred to General Reserve 10,000.00 5,000.00 -

Transferred to Debenture Redemption Reserve 3,750.00 - -

Proposed Dividend [Re. Nil per share (2013: Re.0.60

per share) (2012: Re. 1.00 per share) ] 26,606.77 15,964.06 -

Corporate dividend tax thereon 4,316.28 2,713.09 -


394,625.82 418,903.66 418,181.63

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.3 LONG TERM BORROWINGS

a) Secured Borrowings

i.Debentures 36,000.00 89,000.00 107,500.00

ii. Term Loan from banks 60,000.00 33,333.33 58,333.33

b) Unsecured Borrowings

i. Long-term monetary item in foreign currency

External Commercial Borrowings from banks 125,491.67 144,760.00 155,779.00

ii. Other loans and advances

Interest free sales tax loans 6,692.17 5,714.76 7,931.22

Loans from others 1,151.27 976.09 106.96

229,335.11 273,784.18 329,650.51

Notes:

1. Refer Note 1.9 to the Financial Statements for Current Maturities of Long term borrowings

2. Security and terms of repayment in respect of the above borrowings are detailed in Note 3.14 to the Financial

Statements.

F - 18

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.4 DEFERRED TAX LIABILITIES (NET)

a) Deferred tax liability due to

i.Depreciation / Research and development

expenditure 51,033.03 57,540.05 60,718.53

ii. Other timing differences 593.58 1,233.50 1,697.86

b) Deferred tax asset arising out of

i.Voluntary retirement scheme compensation (31.36) (16.03) (1,281.84)

ii. Carry forward of Losses - Unabsorbed

depreciation - (2,870.24) (16,789.65)

iii. Provision for Compensated absenses (2,064.64) (2,162.96) (1,971.87)

iv. Other timing differences (493.92) (987.63) (1,696.34)

49,036.69 52,736.69 40,676.69

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.6 LONG-TERM PROVISIONS

a) Provision for Employee Benefits

i. Compensated absences 5,165.73 5,574.64 4,927.32

ii. Post retirement benefits 377.30 393.44 425.53

iii.Post retirement medical benefits 150.19 123.66 98.83

b) Provision for product warranties 1,963.08 1,759.52 1,334.94

7,656.30 7,851.26 6,786.62

Movement in respect of provision :

Rs. Lakhs

Particulars Year Opening

balance

Net additions /

(utilisations) Closing balance

Provision for product

warranties

2014 1,759.52 (424.58) 1,334.94

2013 1,963.08 (203.56) 1,759.52

2012 2,300.38 (337.30) 1,963.08

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.5 OTHER LONG TERM LIABILITIES

a) Income received in advance - 177.85 13.00

b) Capital creditors - - 224.12

- 177.85 237.12

F - 19

As at March 31,

2012 As at March 31, 2013

As at March 31,

2014


1.8 TRADE PAYABLES

Trade payables - including acceptances

i. Micro, Small and Medium enterprises [Refer

note 3.11 to the Financial Statements ] 8,829.50 291.84 2,190.11

ii. Other Trade Payables 248,267.22 248,245.01 219,225.26

257,096.72 248,536.85 221,415.37

As at March 31,

2012 As at March 31, 2013

As at March 31,

2014


1.7 SHORT TERM BORROWINGS

Secured Borrowings

Loans from Banks - 68,012.65 27,896.99

(Includes Cash Credit, Working capital demand

loan, Packing credit, etc)

Unsecured Borrowings

Short term loans (STL) from Banks 10,175.00 8,685.60 30,843.82

10,175.00 76,698.25 58,740.81

Notes:

1. Maximum balance outstanding during the year for Commercial Paper is Rs. 60,000.00 lakhs (2013) Rs. 56,500.00

lakhs.

2. Terms of repayment in respect of the above borrowings are detailed in Note 3.15 to the Financial Statements

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.9 OTHER CURRENT LIABILITIES

a) Current maturities of Long-term debts 70,279.22 85,060.82 80,640.76

b) Interest accrued but not due on borrowings 4,422.17 7,066.00 8,957.45

c) Income received in advance 34.01 173.50 191.32

d) Unclaimed dividends 509.27 613.15 659.59

e) Advance from Customers 17,163.01 5,138.66 14,162.95

f) Statutory Liabilities 21,061.57 18,287.69 15,984.09

g) Other payables 61,535.58 57,166.52 49,095.19

175,004.83 173,506.34 169,691.35

F - 20

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.10 SHORT-TERM PROVISIONS

a) Provision for employee benefits

i. Compensated absences 1,197.79 1,318.47 874.00

ii. Post retirement benefits 86.52 86.37 132.81

iii.Post retirement medical benefits 51.35 41.22 37.73

b) Others

i. Proposed dividend 26,606.77 15,964.06 -

ii. Corporate dividend tax on proposed

dividend 4,316.28 2,713.09 -

iii. Product warranties 9,778.73 10,745.12 7,768.13

42,037.44 30,868.33 8,812.67

Movement in respect of provision :

Rs. lakhs

Particulars Year Opening balance Net additions /

(utilisations) Closing balance

Provision for product

warranties

2014 10,745.12 (2,976.99) 7,768.13

2013 9,778.73 966.39 10,745.12

2012 9,667.30 111.43 9,778.73

Notes:

1. Details of security and terms of repayment in respect of the current maturities of long term debts are detailed in Note

3.14 to the Financial Statements.

2. Other payables include:

- Contribution payable to Gratuity Fund

2,002.48 2,024.50 1,749.54

- Foreign exchange (gain) / loss on Forward

contracts – net

2,948.75 31.22 2,084.80

- Employee benefits 14,297.59 12,589.72 9,387.20

- Capital creditors 12,409.52 16,902.75 14,678.86

F - 21

1.11TANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS (FY 2013-14)

Rs. Lakhs

DESCRIPTION GROSS BLOCK (COST / VALUATION) DEPRECIATION / AMORTISATION / IMPAIRMENT NET

BLOCK

TANGIBLE ASSETS 01.04.2013 Additions /

Adjustments Disposals 31.03.2014

Upto Charge during the

year

Disposals

/Adjustments

Upto

31.03.2013 31.03.2014 31.03.2014

Land

- Freehold land 76,806.58 8.96 10,771.57 66,043.97 - - - - 66,043.97

- Leasehold land 42,115.59 255.19 - 42,370.78 2,358.06 522.03 (0.85) 2,880.94 39,489.84

- Leasehold land given on

lease 126.41 - - 126.41 18.88 1.28 0.85 19.31 107.10

Buildings 143,370.04 12,518.21 1,197.82 154,690.43 26,114.21 5,166.74 278.54 31,002.41 123,688.02

Building given on lease 1,140.15 4.34 - 1,144.49 111.09 21.34 13.95 118.48 1,026.01

Plant and equipment 427,686.76 60,701.61 8,163.81 480,224.56 187,799.86 22,493.85 7,750.42 202,543.29 277,681.27

Plant and equipment given

on lease 6.00 - - 6.00 2.29 0.28 0.30 2.27 3.73

Furniture and fittings 8,163.76 853.70 231.66 8,785.80 4,498.14 1,117.90 210.95 5,405.09 3,380.71

Furniture and fittings given

on lease 88.87 - - 88.87 52.42 11.11 7.41 56.12 32.75

Vehicles and aircraft 15,005.54 84.78 180.46 14,909.86 6,854.24 1,038.74 177.78 7,715.20 7,194.66

Vehicles given on lease 0.24 - - 0.24 0.24 - - 0.24 -

Office Equipment 20,638.03 597.94 678.79 20,557.18 15,495.34 2,183.62 663.80 17,015.16 3,542.02

Office Equipment given on

lease 43.97 - - 43.97 43.75 2.00 4.40 41.35 2.62

TOTAL 735,191.94 75,024.73 21,224.11 788,992.56 243,348.52 32,558.89 9,107.55 266,799.86 522,192.70

Less:

Transfer from Revaluation Reserve pertaining to Building 1,181.62

Amount considered as Rent [Refer Note 2.9 to the Financial Statements] 523.31

TOTAL 30,853.96

Capital Work in Progress

15,513.03

F - 22

1.12 INTANGIBLE ASSETS AND INTANGIBLE ASSETS UNDER DEVELOPMENT (FY 2013-14)

Rs. Lakhs

DESCRIPTION GROSS BLOCK (COST / VALUATION) DEPRECIATION / AMORTISATION / IMPAIRMENT NET

BLOCK

INTANGIBLE ASSETS 01.04.2013 Additions /


Upto Charge

during the

year

Disposals

/Adjustments

Upto 31.03.2014

31.03.2013 31.03.2014

Computer software

- Developed 15,162.42 367.16 - 15,529.58 3,380.40 1,328.99 - 4,709.39 10,820.19

- Acquired 11,247.69 471.00 - 11,718.69 7,569.30 1,655.33 - 9,224.63 2,494.06

Others

Technical knowhow

- Developed 24,355.44 58.35 - 24,413.79 8,088.74 2,037.76 - 10,126.50 14,287.29

- Acquired 13,175.40 13,402.29 - 26,577.69 8,557.65 1,827.56 - 10,385.21 16,192.48

TOTAL 63,940.95 14,298.80 - 78,239.75 27,596.09 6,849.64 - 34,445.73 43,794.02


development

2,639.69

F - 23

1.11 TANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS (FY 2012-13)

Rs. Lakhs

DESCRIPTION GROSS BLOCK (COST / VALUATION) DEPRECIATION / AMORTISATION / IMPAIRMENT NET BLOCK

01.04.2012

Additions /


Upto Charge during

the year

Disposals

/Adjustments

Upto

31.03.2012 31.03.2013 31.03.2013

Land

- Freehold land 76,821.70 3.70 18.82 76,806.58 - - - - 76,806.58

- Leasehold land 41,529.78 585.81 - 42,115.59 1,837.62 520.97 0.53 2,358.06 39,757.53

- Leasehold land given on lease 126.41 - - 126.41 17.60 1.28 - 18.88 107.53

Buildings 134,043.75 9,506.79 180.50 143,370.04 21,618.14 4,592.68 96.61 26,114.21 117,255.83

Building given on lease 1,140.15 - - 1,140.15 90.18 20.91 - 111.09 1,029.06


Plant and equipment given on lease 6.00 - - 6.00 1.90 0.39 - 2.29 3.71

Furniture and fittings 6,950.74 1,221.37 8.35 8,163.76 3,504.15 996.86 2.87 4,498.14 3,665.62

Furniture and fittings given on

lease 88.87 - - 88.87 41.31 11.11 - 52.42 36.45



Office Equipment 18,730.04 2,138.40 230.41 20,638.03 13,573.15 2,155.49 233.30 15,495.34 5,142.69

Office Equipment given on lease 43.97 - - 43.97 37.84 5.91 - 43.75 0.22

TOTAL 671,348.43 67,243.86 3,400.35 735,191.94 214,777.18 31,756.95 3,185.61 243,348.52 491,843.42

Less:



TOTAL 29,997.70


56,261.83

F - 24


Rs. Lakhs


01.04.2012

Additions /


Upto Charge during

the year

Disposals

/Adjustments

Upto 31.03.2013

31.03.2012 31.03.2013

Computer software

- Developed 8,625.32 6,537.10 - 15,162.42 2,553.05 827.35 - 3,380.40 11,782.02

- Acquired 9,285.58 1,962.11 - 11,247.69 5,904.35 1,665.26 0.31 7,569.30 3,678.39

Others

Technical knowhow

- Developed 24,249.44 106.00 - 24,355.44 4,028.69 4,060.05 - 8,088.74 16,266.70

- Acquired 12,133.57 1,041.83 - 13,175.40 7,029.66 1,527.99 - 8,557.65 4,617.75

TOTAL 54,293.91 9,647.04 - 63,940.95 19,515.75 8,080.65 0.31 27,596.09 36,344.86


development

12,630.91

F - 25

1.11 TANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS (FY 2011-12)

Rs. Lakhs


01.04.2011

Additions /


Upto Charge

during the

year

Disposals

/Adjustments

Upto

31.03.2011 31.03.2012 31.03.2012

Land

- Freehold land 76,757.82 63.88 - 76,821.70 - - - - 76,821.70

- Leasehold land 40,052.72 1,477.06 - 41,529.78 4,748.21 510.26 3,420.00 1,838.47 39,691.31

- Leasehold land given on

lease 126.41 - - 126.41 41.08 8.26 32.59 16.75 109.66

Buildings 122,382.21 12,002.72 328.97 134,055.96 17,567.44 4,118.59 53.94 21,632.09 112,423.87

Building given on lease 805.60 322.34 - 1,127.94 57.39 18.84 - 76.23 1,051.71


Plant and equipment given on

lease - - - - - - - - -

Furniture and fittings 5,512.88 1,469.91 38.04 6,944.75 2,709.29 837.02 36.35 3,509.96 3,434.79

Furniture and fittings given

on lease 58.58 36.29 - 94.87 25.86 9.65 - 35.51 59.36

Vehicles and aircraft 14,297.72 765.90 229.57 14,834.05 5,155.05 963.65 188.86 5,929.84 8,904.21

Vehicles given on lease - - - - - - - - -

Office Equipment 15,436.61 3,664.21 371.01 18,729.81 12,051.64 1,896.15 370.48 13,577.31 5,152.50

Office Equipment given on

lease 44.20 - - 44.20 25.65 8.02 - 33.67 10.53

TOTAL 627,267.46 49,715.55 5,634.58 671,348.43 192,829.42 30,507.55 8,559.79 214,777.18 456,571.25

Less:



TOTAL 28,745.85


43,519.06

F - 26

Notes for FY 2013-14, FY 2012-13 and FY 2011-12:

1. Buildings include service installations of gross value Rs. 16,123.14 lakhs (2013: Rs. 14,772.56 lakhs) (2012: Rs. 12,171.40 lakhs).

2. Land and Buildings (other than those given on lease and installations) have been revalued as at March 31, 2009 after considering depreciation / amortisation upto

that date as per external valuer's report, on the governing principles of current cost. The amount of increase on the revaluation done on March 31, 2009 was Rs.

1,36,486.44 lakhs and the revalued amount substituted for historical cost of the fixed assets as at that date was Rs. 2,03,737.92 lakhs.

3. A portion of the Buildings in Bhandara revalued at Rs. 950 lakhs is on a land, the title for which is yet to be transferred to the Company.

4. Sale deeds in respect of certain immovable properties (aggregating Rs.7,685.52 Lakhs in value) transferred during the FY 2014 is pending execution / registration.

5. Cost of Buildings as at March 31, 2014 includes:

a) Rs.3.42 lakhs (2013: Rs.3.42 lakhs) (2012: Rs. 3.42 lakhs) being cost of shares in Housing Co-operative Society representing ownership rights in residential

flats and furniture and fittings thereat.

b) Rs.132.38 lakhs (2013: Rs.132.38 lakhs) (2012: Rs. 132.38 lakhs) representing cost of residential flats including undivided interest in land.

6. Additions to Tangible Assets and Capital work in progress include:

a) Exchange (gain) / loss aggregating to Rs. 22,050.59 lakhs (2013: Rs.15,578.37 lakhs) (2012: Rs. 20,958.42 lakhs) capitalised as under:

Land Rs. 364.89 lakhs (2013: Rs. 644.04 lakhs) (2012: Rs. 1,396.41 lakhs), Building Rs. 2,654.21 lakhs (2013: Rs. 1,465.50 lakhs) (2012: Rs. 2,004.77 lakhs), Plant

and equipment Rs. 15,561.19 lakhs (2013: Rs. 6,724.56 lakhs) (2012: Rs. 9,778.54 lakhs), Furniture and fittings Rs. 358.27 lakhs (2013: Rs. 316.15 lakhs) (2012:

Rs. 420.79 lakhs), Vehicles and aircraft Rs. 35.35 lakhs (2013: Rs. 20.47 lakhs) (2012: Rs. 218.24 lakhs), Office equipment Rs. 435.58 lakhs (2013: Rs. 285.20

lakhs) (2012: Rs. 468.82 lakhs), Capital Work in progress Rs. 2,641.10 lakhs (2013: Rs. 6,122.46 lakhs) (2012: Rs. 6,670.85 lakhs).

b) Borrowing cost capitalised during the year : Rs. 303.90 lakhs (2013: Rs. 1,764.68 lakhs) (2012: Nil).

7. Other expenses capitalised Rs. 37.97 lakhs (2013: Rs. 30.33 lakhs) (2012: Rs. 225.63 lakhs). - Refer Notes 2.3 to the Financial Statements.

F - 27


Rs. Lakhs


01.04.2011 Additions /


Upto

31.03.2011

Charge

during the

year

Disposals

/Adjustments

Upto

31.03.2012 31.03.2012

Computer software

- Developed 2,446.84 6,178.48 - 8,625.32 2,446.83 106.22 - 2,553.05 6,072.27

- Acquired 7,337.34 1,948.24 - 9,285.58 4,549.37 1,354.98 - 5,904.35 3,381.23

Others

Technical knowhow

- Developed 21,050.13 3,199.31 - 24,249.44 292.42 3,736.27 - 4,028.69 20,220.75

- Acquired 11,087.10 1,046.47 - 12,133.57 5,691.66 1,338.00 - 7,029.66 5,103.91

-

TOTAL 41,921.41 12,372.50 - 54,293.91 12,980.28 6,535.47

19,515.75 34,778.16


development 11,303.03

Notes for FY 2013-14, FY 2012-13 and FY 2011-12:

1. Additions to Intangible assets and Intangible assets under development include:

a) Exchange (gain) / loss aggregating to Rs. 520.96 lakhs (2013: Rs. 279.96 lakhs) (2012: Rs. 276.55 lakhs).capitalised as under :

Software Rs. 284.04 lakhs (2013: Rs. 199.92 lakhs) (2012: Rs. 229.04 lakhs)., Technical Knowhow Rs. 10.17 lakhs (2013: Rs. 23.81 lakhs) (2012: Rs. 47.51 lakhs).,

Intangible assets under development Rs. 226.75 lakhs (2013: Rs. 56.23 lakhs) (2012: Nil).

b) Borrowing cost capitalised during the year: Rs.310.18 lakhs (2013: Rs. 888.39 lakhs) (2012: Rs. 78.30 lakhs). and Intangible assets under development Rs. 72.56

lakhs (2013: Rs. 49.68 lakhs) (2012: Rs. 78.49 lakhs).

c) Other expenses capitalised Rs. 1939.50 lakhs (2013: Rs. 2,020.28 lakhs) (2012: Rs. 2,283.49 lakhs) - Refer Notes 2.6 and 2.9 to the Financial Statements.

2. Intangible assets under development amounting to Rs.1,060.34 lakhs (2013: Nil) (2012: Nil). has been written off during the year and included under Research and

Development under Note 2.9 'Other Expenses' to the Financial Statements.

F - 28

1.13 NON-CURRENT INVESTMENTS

Rs. Lakhs

DESCRIPTION

March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2012 March 31, 2013 March 31, 2014 March 31, 2012 March 31, 2013 March 31, 2014

LONG TERM INVESTMENTS

A) Trade Investments

I) Investment in Equity Instruments

a) Equity Shares of Rs. 10 each

Hinduja Foundries Limited - 5,405,793 (2013: 5,405,793) (2012: 5,405,793) shares # 2,421.26 2,421.26 - - - - - - -

Albonair (India) Private Limited - Nil (2013: 4,000,000) (2012: 4,000,000) shares @ - - - - - - - - -

Defiance Technologies Limited - 80,000,000 (2013: 23,410,000) (2012: 23,410,000) shares - - - - - 8,192.41 - - -

Hinduja Leyland Finance Limited - 217,499,800 (2013: 30,500,000) (2012: 57,000,000) shares - - - - - 77,849.92 - - -

Ashok Leyland Nissan Vehicles Limited - 372,374,418 (2013: 253,611,500) (2012: 207,061,500) shares - - - - - 37,290.13 20,706.15 25,361.15 -

Irizar - TVS Limited - 6,105,000 (2013: 3,300,000) (2012: 3,300,000) shares - - - - - 1,287.26 - - -

Hinduja Leyland Finance Services Limited - 27,000 (2013: Nil) (2012: Nil) shares - - - - - 55.74 - - -

Ashok Leyland Wind Energy Limited - 18,031,250 (2013: Nil) (2012: Nil) shares - - - - - 7,802.12 - - -

Ashok Leyland Defence Systems Limited - 17,567 (2013: 17,567) (2012: 17,567) shares - - - - - - - - -

Automotive Coaches and Components Limited - Nil (2013: Nil) (2012: 5,170,664) shares - - - - - -

Ashley Aviation Limited - 1,960,000 (2013: 1,960,000) (2012: Nil) shares - - - - - - - - -

Ashley Alteams India Limited - 57,500,000 (2013: 42,500,000) (2012:40,000,000) shares - - - - - - 4,000.00 4,250.00 5,750.00

Ashok Leyland John Deere Construction Equipment Company Private Limited -153,568,150 (2013: 110,368,150)

(2012: 60,868,150) shares - - - - - - 6,086.82 11,036.82 15,356.82

Automotive Infotronics Limited (under liquidation) - 15,751,762 (2013: 15,751,762) (2012: 15,751,762) shares - - - - - - 1,575.18 1,575.18 1,575.18

Nissan Ashok Leyland Powertrain Limited - 74,021,705 (2013: 73,540,705) (2012: 73,540,705) shares - - - - - - 7,354.07 7,354.07 7,404.67

Nissan Ashok Leyland Technologies Limited - 26,025,000 (2013: 25,504,000) (2012: 25,504,000) shares - - - - - - 2,550.40 2,550.40 2,605.21

Ashley Bio-Fuels Limited - Nil (2013: Nil) (2012: Cost Rs. 140; 14 shares) - - - - - - - - -

b) Equity shares of Euro 1 each

Albonair GmbH - Nil (2013: 9,612,000) (2012: 9,612,000) shares @ - - - - - - - - -

c) Equity Shares of Rs.100 each

Gulf Ashley Motor Limited - 1,286,000 (2013: 579,190) (2012: 579,190) shares - - - - - 1,318.16 - - -

Ashley Transport Services Limited - Nil (2013: Nil) (2012: 7) shares - - - - - - - - -

d) Equity Shares of Common Stock of Par value US Dollars 0.01 per share

Defiance Testing and Engineering Services Inc. USA - Nil (2013: 49) (2012: 49) shares - - - - - - - - -

e) Equity Shares

Optare plc

- 1,678,704,162 (2013: 566,344,411) (2012: 566,344,411) Ordinary shares of British Pence 0.1 each - - - - - 14,989.44 - - -

- 195,557,828 (2013: 195,557,828) (2012: 195,557,828) Deferred shares of British Pence 0.9 each - - - - - - - - -

f) Equity shares of GBP 1 each

Ashok Leyland (UK) Limited - 105,300 (2013: 35,100) (2012: 100) shares - - - - - 102.10 - - -

g) Equity shares of Naira 1 each

Ashok Leyland (Nigeria) Limited - 9,999,999 (2013: 4,000,000) (2012: Nil) shares - - - - - 35.71 - - -

h) Equity shares of USD 20 each

Ashok Leyland (Chile) - 3,499 (2013: Nil) (2012: Nil) shares - - - - - 39.54 - - -

i) Equity shares of Srilankan Rupees. 10 each

Lanka Ashok Leyland, PLC - 1,008,332 (2013: 1,008,332) (2012: 1,008,332) shares - - - - - - - - -

j) Equity shares of UAE Dirhams of 1000 each

Ashok Leyland (UAE) LLC - 35,770 (2013: 14,600) (2012: 9,400) shares - - - - - - - - -

2,421.26 2,421.26 - - - 148,962.53 42,272.62 52,127.62 32,691.88

Less - Provision for diminution in value towards

Ashley Alteams India Limited - - - - - - - 2,779.50 2,943.00

Automotive Infotronics Limited (under liquidation) - - - - - - - 1,119.02 1,425.18

Ashley Bio-Fuels Limited (Fully provided - Rs. 140) - - - - - - - - -

Ashley Transport Services Limited (Fully provided - Rs. 700) - - - - - - - - -

Aggregate provision for diminution in value of equity Investments - - - - - - - 3,898.52 4,368.18

Total Investment in Equity Instruments (Net) (A) 2,421.26 2,421.26 - - - 148,962.53 42,272.62 48,229.10 28,323.70

Fellow Subsidiary Subsidiary Joint Venture

As at As at As at

F - 29

1.13 NON-CURRENT INVESTMENTS (CONTINUED)

Rs. Lakhs

DESCRIPTION




I) Investment in Equity Instruments


Hinduja Foundries Limited - 5,405,793 (2013: 5,405,793) (2012: 5,405,793) shares # - - - - - 2,421.26 2,421.26 2,421.26 2,421.26

Albonair (India) Private Limited - Nil (2013: 4,000,000) (2012: 4,000,000) shares @ 400.00 400.00 - - - - 400.00 400.00 -

Defiance Technologies Limited - 80,000,000 (2013: 23,410,000) (2012: 23,410,000) shares 2,341.00 2,341.00 - - - - 2,341.00 2,341.00 8,192.41

Hinduja Leyland Finance Limited - 217,499,800 (2013: 30,500,000) (2012: 57,000,000) shares - - - 5,700.00 3,050.00 - 5,700.00 3,050.00 77,849.92

Ashok Leyland Nissan Vehicles Limited - 372,374,418 (2013: 253,611,500) (2012: 207,061,500) shares - - - - - - 20,706.15 25,361.15 37,290.13

Irizar - TVS Limited - 6,105,000 (2013: 3,300,000) (2012: 3,300,000) shares 367.50 367.50 - - - - 367.50 367.50 1,287.26

Hinduja Leyland Finance Services Limited - 27,000 (2013: Nil) (2012: Nil) shares - - - - - - - - 55.74

Ashok Leyland Wind Energy Limited - 18,031,250 (2013: Nil) (2012: Nil) shares - - - - - - - - 7,802.12

Ashok Leyland Defence Systems Limited - 17,567 (2013: 17,567) (2012: 17,567) shares 1.76 1.76 1.76 - - - 1.76 1.76 1.76

Automotive Coaches and Components Limited - Nil (2013: Nil) (2012: 5,170,664) shares 488.27 - - - - - 488.27 - -

Ashley Aviation Limited - 1,960,000 (2013: 1,960,000) (2012: Nil) shares - 196.00 196.00 - - - - 196.00 196.00

Ashley Alteams India Limited - 57,500,000 (2013: 42,500,000) (2012:40,000,000) shares - - - - - - 4,000.00 4,250.00 5,750.00

Ashok Leyland John Deere Construction Equipment Company Private Limited -153,568,150 (2013: 110,368,150)

(2012: 60,868,150) shares - - - - - - 6,086.82 11,036.82 15,356.82

Automotive Infotronics Limited (under liquidation) - 15,751,762 (2013: 15,751,762) (2012: 15,751,762) shares - - - - - - 1,575.18 1,575.18 1,575.18

Nissan Ashok Leyland Powertrain Limited - 74,021,705 (2013: 73,540,705) (2012: 73,540,705) shares - - - - - - 7,354.07 7,354.07 7,404.67

Nissan Ashok Leyland Technologies Limited - 26,025,000 (2013: 25,504,000) (2012: 25,504,000) shares - - - - - - 2,550.40 2,550.40 2,605.21

Ashley Bio-Fuels Limited - Nil (2013: Nil) (2012: Cost Rs. 140; 14 shares) - - - - - - - - -

b) Equity shares of Euro 1 each

Albonair GmbH - Nil (2013: 9,612,000) (2012: 9,612,000) shares @ 5,963.18 5,963.18 - - - - 5,963.18 5,963.18 -

c) Equity Shares of Rs.100 each

Gulf Ashley Motor Limited - 1,286,000 (2013: 579,190) (2012: 579,190) shares 579.19 579.19 - - - - 579.19 579.19 1,318.16

Ashley Transport Services Limited - Nil (2013: Nil) (2012: 7) shares - - - 0.01 - - 0.01 - -

d) Equity Shares of Common Stock of Par value US Dollars 0.01 per share

Defiance Testing and Engineering Services Inc. USA - Nil (2013: 49) (2012: 49) shares 691.15 3,411.15 - - - - 691.15 3,411.15 -

e) Equity Shares

Optare plc

- 1,678,704,162 (2013: 566,344,411) (2012: 566,344,411) Ordinary shares of British Pence 0.1 each 5,842.79 5,842.79 - - - - 5,842.79 5,842.79 14,989.44

- 195,557,828 (2013: 195,557,828) (2012: 195,557,828) Deferred shares of British Pence 0.9 each - - - - - - - - -

f) Equity shares of GBP 1 each -

Ashok Leyland (UK) Limited - 105,300 (2013: 35,100) (2012: 100) shares 0.08 30.79 - - - - 0.08 30.79 102.10

g) Equity shares of Naira 1 each -

Ashok Leyland (Nigeria) Limited - 9,999,999 (2013: 4,000,000) (2012: Nil) shares - 14.25 - - - - 14.25 35.71

h) Equity shares of USD 20 each -

Ashok Leyland (Chile) - 3,499 (2013: Nil) (2012: Nil) shares - - - - - - - 39.54

i) Equity shares of Srilankan Rupees. 10 each -

Lanka Ashok Leyland, PLC - 1,008,332 (2013: 1,008,332) (2012: 1,008,332) shares 57.46 57.46 57.46 - - - 57.46 57.46 57.46

j) Equity shares of UAE Dirhams of 1000 each

Ashok Leyland (UAE) LLC - 35,770 (2013: 14,600) (2012: 9,400) shares 1,168.52 1,937.93 5,407.91 - - - 1,168.52 1,937.93 5,407.91

17,900.90 21,143.00 5,663.13 5,700.01 3,050.00 2,421.26 68,294.79 78,741.88 189,738.80


Ashley Alteams India Limited - - - - - - - 2,779.50 2,943.00

Automotive Infotronics Limited (under liquidation) - - - - - - - 1,119.02 1,425.18

Ashley Bio-Fuels Limited (Fully provided - Rs. 140) - - - - - - - - -

Ashley Transport Services Limited (Fully provided - Rs. 700) - - - 0.01 - - 0.01 - -

Aggregate provision for diminution in value of equity Investments - - - 0.01 - - 0.01 3,898.52 4,368.18

Total Investment in Equity Instruments (Net) (A) 17,900.90 21,143.00 5,663.13 5,700.00 3,050.00 2,421.26 68,294.78 74,843.36 185,370.62

As at

TOTAlAssociate Others

As at As at

F - 30


Rs. Lakhs

DESCRIPTION



II) Investment in Preference Shares

a) Hinduja Foundries Limited

1,500,000 (2013: 1,500,000) (2012:1,500,000)10% Cumulative Non-Convertible Redeemable Preference shares

of Rs. 100 each 1,500.00 1,500.00 - - - - - - - 1,000,000 (2013: 1,000,000) (2012:1,000,000) 6% Cumulative Non-Convertible Redeemable Preference shares

of Rs. 100 each paid up value of Rs 66.67 per share 666.67 666.67 - - - - - - - 30,000,000 (2013: 30,000,000) (2012: Nil) 9% Cumulative Non-Convertible Redeemable Preference shares of Rs.

100 each - 30,000.00 - - - - - - -

b) Ashley Aviation Limited

1,800,000 (2013: Nil) (2012: Nil) 6% Cumulative Redeemable Non-Convertible Preference shares of Rs. 10 each - - - - - - - - -

Total Investment in Preference Shares (B) 2,166.67 32,166.67 - - - - - - -

III) Investment in Ownership Interest

Ownership interest in share capital in Czech koruna

Avia Ashok Leyland Motors s.r.o. - Nil (2013: 2%) (2012: 2%) @ - - - - - - - - -


Avia Ashok Leyland Motors s.r.o. @ - - - - - - - - -

Total - Investments in ownership interest (C) - - - - - - - - -

Total - Trade Investments - net (D = A+B+C) 4,587.93 34,587.93 - - - 148,962.53 42,272.62 48,229.10 28,323.70

B) Other Investments

I) Investment in Equity Shares


Mangalam Retail Services Limited - 37,470 (2013: 24,980) (2012: 24,980) shares - - - - - 4.47 - - -

Ashley Airways Limited (under liquidation) - Nil (2013: 1,470,000) (2012: 1,470,000) shares - - - - - - - - -

Ashley Holdings Limited - Nil (2013: 472,475,000) (2012: 319,877,500) shares - - - - - - - - -

Ashley Investments Limited - Nil (2013: 474,255,000) (2012: 322,657,500) shares - - - - - - - - -

Chennai Willingdon Corporate Foundation - 100 (2013: 100) (2012: 100) shares (Cost Rs.900) - - - - - - - - -

Ashok Leyland Project Services Limited - Nil (2013: 3,442,400) (2012: 3,442,400) shares - - - - - - - - -

Hinduja Energy (India) Limited - 61,147,058 (2013: 61,147,058) (2012: Nil) shares - - - - - - - - -

Hinduja Global Solutions Limited - 5,079 (2013: 2,029) (2012: 2,029) shares # - - - - - - - - -

ICICI Bank Limited - Nil (2013: Nil) (2012: 24,231) shares # - - - - - - - - -

Hinduja Ventures Limited - 5,079 (2013: 2,029) (2012: 2,029) shares # - - - - - - - - -

IndusInd Bank Limited - 5,063,923 (2013: 13,013,923) (2012: 20,113,923) shares # - - - - - - - - -

b) Equity shares of Rs. 100 each partly paid-up

Adyar Property Holding Co. Limited - 400 (2013: 400) (2012: 400) shares (Rs. 65 paid up) - - - - - - - - -

c) Equity Shares of Rs. 2 each

Hinduja Properties Limited - 747,960 (2013: Nil) (2012: Nil) shares - - - - - - - - -

Total Investment in Equity Instruments (E) - - - - - 4.47 - - -


a) 2 % Non-Cumulative Non-Convertible Redeemable Preference shares of Rs. 10 each



b) 6 % Non-Cumulative Non-Convertible Redeemable Preference shares of Rs. 10 each



Total Investment in Preference Shares (F) - - - - - - - - -

III) Investment in Government Securities

National Savings Certificate of the face value of Rs. 0.50 lakh (G) - - - - - - - - -

IV) Investment in Debentures or Bonds

Non convertible redeemable bonds of Rs. 10 Lakhs each

ICICI Bank Limited - 20 (2013: 20) ( 2012: 20) debentures # (H) - - - - - - - - -

Total - Other Investments (I = E+F+G+H) - - - - - 4.47 - - -

Grand Total (D+I) 4,587.93 34,587.93 - - - 148,967.00 42,272.62 48,229.10 28,323.70

Fellow Subsidiary Subsidiary Joint Venture

As at As at As at

F - 31


Rs. Lakhs

DESCRIPTION





a) Hinduja Foundries Limited

1,500,000 (2013: 1,500,000) (2012:1,500,000)10% Cumulative Non-Convertible Redeemable Preference shares

of Rs. 100 each - - - - - 1,500.00 1,500.00 1,500.00 1,500.00

1,000,000 (2013: 1,000,000) (2012:1,000,000) 6% Cumulative Non-Convertible Redeemable Preference shares

of Rs. 100 each paid up value of Rs 66.67 per share - - - - - 666.67 666.67 666.67 666.67

30,000,000 (2013: 30,000,000) (2012: Nil) 9% Cumulative Non-Convertible Redeemable Preference shares of Rs.

100 each - - - - - 30,000.00 - 30,000.00 30,000.00

b) Ashley Aviation Limited

1,800,000 (2013: Nil) (2012: Nil) 6% Cumulative Redeemable Non-Convertible Preference shares of Rs. 10 each - - 180.00 - - - - - 180.00

Total Investment in Preference Shares (B) - - 180.00 - - 32,166.67 2,166.67 32,166.67 32,346.67

III) Investment in Ownership Interest

Ownership interest in share capital in Czech koruna

Avia Ashok Leyland Motors s.r.o. - Nil (2013: 2%) (2012: 2%) @ - - - 639.18 747.58 - 639.18 747.58 -


Avia Ashok Leyland Motors s.r.o. @ - - - 626.53 744.32 - 626.53 744.32 -

Total - Investments in ownership interest (C) - - - 12.65 3.26 - 12.65 3.26 -

Total - Trade Investments - net (D = A+B+C) 17,900.90 21,143.00 5,843.13 5,712.65 3,053.26 34,587.93 70,474.10 107,013.29 217,717.29

B) Other Investments

I) Investment in Equity Shares


Mangalam Retail Services Limited - 37,470 (2013: 24,980) (2012: 24,980) shares 2.50 2.50 - - - - 2.50 2.50 4.47

Ashley Airways Limited (under liquidation) - Nil (2013: 1,470,000) (2012: 1,470,000) shares 14.70 14.70 - - - - 14.70 14.70 -

Ashley Holdings Limited - Nil (2013: 472,475,000) (2012: 319,877,500) shares 31,987.75 47,247.50 - - - - 31,987.75 47,247.50 -

Ashley Investments Limited - Nil (2013: 474,255,000) (2012: 322,657,500) shares 32,265.75 47,425.50 - - - - 32,265.75 47,425.50 -

Chennai Willingdon Corporate Foundation - 100 (2013: 100) (2012: 100) shares (Cost Rs.900) - - - - - - - - -

Ashok Leyland Project Services Limited - Nil (2013: 3,442,400) (2012: 3,442,400) shares - - - 344.24 344.24 - 344.24 344.24 -

Hinduja Energy (India) Limited - 61,147,058 (2013: 61,147,058) (2012: Nil) shares - - - - 18,711.00 18,711.00 - 18,711.00 18,711.00

Hinduja Global Solutions Limited - 5,079 (2013: 2,029) (2012: 2,029) shares # - - - 4.05 4.05 12.45 4.05 4.05 12.45

ICICI Bank Limited - Nil (2013: Nil) (2012: 24,231) shares # - - - 10.52 - - 10.52 - -

Hinduja Ventures Limited - 5,079 (2013: 2,029) (2012: 2,029) shares # - - - 4.06 4.06 16.24 4.06 4.06 16.24

IndusInd Bank Limited - 5,063,923 (2013: 13,013,923) (2012: 20,113,923) shares # - - - 15,138.90 9,795.03 3,811.40 15,138.90 9,795.03 3,811.40

b) Equity shares of Rs. 100 each partly paid-up

Adyar Property Holding Co. Limited - 400 (2013: 400) (2012: 400) shares (Rs. 65 paid up) - - - 0.26 0.26 0.26 0.26 0.26 0.26

c) Equity Shares of Rs. 2 each

Hinduja Properties Limited - 747,960 (2013: Nil) (2012: Nil) shares - - - - - 56.94 - - 56.94

Total Investment in Equity Instruments (E) 64,270.70 94,690.20 - 15,502.03 28,858.64 22,608.29 79,772.73 123,548.84 22,612.76


a) 2 % Non-Cumulative Non-Convertible Redeemable Preference shares of Rs. 10 each

Ashley Holdings Limited - Nil (2013: 3,250,000) (2012: 3,250,000) shares 325.00 325.00 - - - - 325.00 325.00 -

Ashley Investments Limited - Nil (2013: 3,250,000) (2012: 3,250,000) shares 325.00 325.00 - - - - 325.00 325.00 -

b) 6 % Non-Cumulative Non-Convertible Redeemable Preference shares of Rs. 10 each

Ashley Holdings Limited - Nil (2013: 11,750,000) (2012: 11,750,000) shares 1,175.00 1,175.00 - - - - 1,175.00 1,175.00 -

Ashley Investments Limited - Nil (2013: 11,750,000) (2012: 11,750,000) shares 1,175.00 1,175.00 - - - - 1,175.00 1,175.00 -

Total Investment in Preference Shares (F) 3,000.00 3,000.00 - - - - 3,000.00 3,000.00 -

III) Investment in Government Securities

National Savings Certificate of the face value of Rs. 0.50 lakh (G) - - - 0.50 0.50 0.50 0.50 0.50 0.50

IV) Investment in Debentures or Bonds


ICICI Bank Limited - 20 (2013: 20) ( 2012: 20) debentures # (H) - - - 200.56 200.56 200.56 200.56 200.56 200.56

Total - Other Investments (I = E+F+G+H) 67,270.70 97,690.20 - 15,703.09 29,059.70 22,809.35 82,973.79 126,749.90 22,813.82

Grand Total (D+I) 85,171.60 118,833.20 5,843.13 21,415.74 32,112.96 57,397.28 153,447.89 233,763.19 240,531.11

Notes:

1. Investments are fully paid-up unless otherwise stated.

2. "@" represents investments held for sale from March 2014 and carried at lower of cost (as reduced by provision

made for diminution) and fair value. Those include additional investments made by the Company and investments

(given below) taken over persuant to amalgamation.

[Refer Note 1.16 and 3.16 to the Financial Statements]

Particulars

Avia Ashok Leyland Motors s.r.o.

Albonair (India) Private Limited

Albonair GmbH

3. "#" represents quoted investments

Particulars

Total investments (net)

Cost of quoted investments

Market value of quoted investments

Cost of Unquoted investments

a) Ashley Alteams India Limited

b) Hinduja Foundries Limited

4. The shares in respect of the following companies can be disposed off /

encumbered only with the consent of banks / financial institutions who

have given loans to these companies :

As at

TOTAlAssociate Others

As at As at

F - 32


F - 33

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.14 LONG-TERM LOANS AND ADVANCES

a) Capital Advances

i. Unsecured, considered good 14,212.16 1,677.15 1,035.41

ii. Unsecured, considered doubtful 1.00 1.00 1.00

Less: Provision 1.00 1.00 1.00

14,212.16 1,677.15 1,035.41

b) Security Deposits - Unsecured, considered good 1,347.58 1,351.00 1,461.43

c) Loans and advances to Related Parties

[Refer Note 3.5 to the Financial Statements]

- Unsecured, considered good

i. Long term monetary assets in foreign currency 9,784.31 - 8,886.53

ii. Others 232.49 3,192.70 3,350.01

d) Balances with customs, port trust, central excise etc.

Unsecured, considered doubtful 1,428.06 1,428.06 1,428.06

Less: Provision 1,428.06 1,428.06 1,428.06

- - -

e) Other Loans and Advances - Unsecured, considered

good (unless otherwise stated)

i. Material advance (doubtful) 4.27 4.27 4.27

ii. Material advance 33.93 - -

iii. Employee advances 851.90 463.37 392.49

iv. Sales tax paid under protest 2,382.01 2,722.07 4,682.10

v. Advance Income tax (net) 3,040.54 3,449.09 6,677.07

vi. MAT Credit entitlement 22,572.94 33,391.94 33,391.94

vii. Share capital advance 5,000.00 - -

viii. Other advances 1,366.09 3,686.09 7,399.55

35,251.68 43,716.83 52,547.42

Less: Provision 4.27 4.27 4.27

60,823.95 49,933.41 67,276.53

Of the above,

Due from Directors / Officers 0.11 0.06 0.01

As at March 31,

2012

As at March 31,

2013

As at March 31,

2014


1.15 OTHER NON-CURRENT ASSETS

a) Long-term trade receivables

- Unsecured considered good 12.13 6.69 32.90

b) Unamortised loan raising expenses 730.61 1,196.52 1,430.44

c) Earmarked Bank Balance in Escrow account

(Receivable in respect of sale of long-term

investment) - - 1,845.65

742.74 1,203.21 3,308.99

F - 34

As at March 31,

2012

As at March 31,

2013 As at March 31, 2014

Nos / % Rs. Lakhs

Nos /

% Rs. Lakhs

Nos / % Rs.

Lakhs

1.16 CURRENT INVESTMENTS

Carrying value of Trade Investments (unquoted)

held for sale:

a) Ownership interest in share capital in Czech

koruna

- Avia Ashok Leyland Motors s.r.o.* - - - - 100% 159.60

b) Equity Shares of Rs. 10 each

- Albonair (India) Private Limited - - - - 1,00,00,000 2,114.80

c) Equity Shares of Euro 1 each

- Albonair GmbH - - - - 3,93,67,000 36,163.08

- - 38,437.48

* The carrying value of ownership interest in

Avia Ashok Leyland Motors s.r.o. is net of

diminution in its value aggregating Rs. 24,996.46

lakhs (including Rs. 744.32 lakhs provided upto

March 31, 2013 (March 31, 2012:Rs. 626.53

lakhs)).

As at March 31, 2012 As at March 31, 2013 As at March 31, 2014


1.17 INVENTORIES

(a) Raw materials and Components (including

patterns and dies) 78,988.15 74,089.20 50,556.00

(b) Work-in -progress 17,229.95 12,095.13 2,958.69

(c) Finished goods 100,557.62 71,171.61 40,651.12

(d) Stock-in-trade - Traded goods

(i) Engines 210.16 656.65 28.58

(ii) Commercial vehicles 40.62 853.92 1,037.45

(iii) Spare parts and auto components

(including works made) 16,262.42 21,587.79 15,565.67

16,513.20 23,098.36 16,631.70

(e) Stores, spares and consumable tools 9,773.60 9,143.39 8,064.65

(f) Certified Emmission Reductions (CER's) - 4.39 8.15

223,062.52 189,602.08 118,870.31

F - 35



Notes:

1) Goods in transit included under the above heads are

as below:

(a) Raw Materials and components 9,266.97 4,324.69 899.78

(b) Stock-in-trade - Traded goods

(i) Engines 169.88 195.11 -

(ii) Commercial Vehicles 40.62 - 90.47

(iii) Spares parts and auto components

(including works made) 535.32 526.99 102.91

(c) Stores, spares and consumable tools 14.67 15.14 -

2) Certified Emission Rights

Number of CER's held - 19,600 57,985

Number of CER's under certification 19,600 38,385 -



1.18 TRADE RECEIVABLES

Trade Receivables - Unsecured

(i)Considered good 123,076.42 141,941.13 129,901.05

(ii) Considered doubtful 39.47 39.47 564.32

123,115.89 141,980.60 130,465.37

Less: Provision 39.47 39.47 564.32

123,076.42 141,941.13 129,901.05

Age analysis of trade receivables

Outstanding for more than six months from the

date they are due 24,812.84 15,165.85 8,709.58

Others 98,263.58 126,775.28 121,191.47

123,076.42 141,941.13 129,901.05



1.19 CASH AND BANK BALANCES

a. Cash and Cash Equivalents

i) Balances with Banks in Current account 2,723.32 677.97 392.63

ii) Cheques, drafts on hand 0.55 82.59 93.37

iii) Cash and stamps on hand 22.44 20.53 19.90

2,746.31 781.09 505.90

b. Other bank balances

- Earmarked accounts

Unclaimed Dividend accounts 509.27 613.15 659.59

In Deposit accounts - - 3.57

509.27 613.15 663.16

3,255.58 1,394.24 1,169.06

F - 36



1.20 SHORT-TERM LOANS AND ADVANCES

Unsecured, Considered Good

(a) Loans and advances to related parties

[ Refer Note 3.5 to the Financial Statements]

i. Current portion of Long term monetary

assets in foreign currency 9,728.47 18,001.93 2,675.51

ii. Others 6,061.57 4,526.78 2,997.25

(b) Security deposits 112.25 347.38 330.70

(c) Employee advances 1,576.18 2,238.93 1,744.50

(d) Material advances 11,154.29 11,663.03 17,138.87

(e) Balances with customs, port trust, central

excise etc. 8,125.00 7,657.82 4,930.62

(f) Others 35,899.67 42,698.31 50,253.65

72,657.43 87,134.18 80,071.10

Of the above

1.Due from Directors / Officers 0.05 0.05 0.05

2.Others include

- VAT credit 19,037.35 28,842.00 37,081.18

- Intercorporate Deposits - - 3,000.00

- Sales tax 2,799.39 2,934.79 2,711.51

- Service tax 944.75 1,369.55 1,829.29

- Prepaid expenses 3,456.99 1,956.59 1,534.85

- Entry tax 1,824.41 1,720.08 1,089.35



1.21 OTHER CURRENT ASSETS

a) Interest accrued :

- Loans and advance to Related Parties

[Refer Note 3.5 to the Financial Statements] 688.84 528.05 961.62

- Others 48.38 176.86 75.62

b) Export incentive receivables 7,344.89 6,499.96 5,001.74

c) Receivable on sale of immovable properties - - 10,623.04

d) Current portion of unamortised loan raising

expenses 254.57 412.88 432.48

8,336.68 7,617.75 17,094.50

F - 37

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.1 REVENUE FROM OPERATIONS

a) Sale of products

- Commercial vehicles

Manufactured

1,184,618.44 1,031,833.53 793,811.00

Traded

16,348.06 91,517.14 103,960.68

- Engines and Gensets

34,921.00 48,351.63 41,783.90

- Spare parts and others

155,399.93 181,458.13 121,257.30

(A) 1,391,287.43 1,353,160.43 1,060,812.88

b) Revenue from services (B) 8,266.77 13,825.46 10,248.62


- Contract manufacturing

2,637.88 11,849.87 9,430.02

- Export Incentives

8,945.23 8,286.31 4,140.48

- Scrap sales

7,255.54 7,501.82 7,159.13

- Others

1,248.42 174.18 39.68

(C) 20,087.07 27,812.18 20,769.31

(A+B+C) 1,419,641.27 1,394,798.07 1,091,830.81

Less: Commission, rebate and

discounts

47,560.77 64,942.18 35,746.28

1,372,080.50 1,329,855.89 1,056,084.53

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.2 OTHER INCOME

a) Interest income from

i. Long-term investments 14.94 14.90 14.90

ii. Others, including bills discounting 1,358.39 3,309.44 1,718.64

1,373.33 3,324.34 1,733.54

b) Dividend income from

i. Current investments 392.30 57.12 29.27

ii. Long-term investments 513.76 699.15 441.25

906.06 756.27 470.52

F - 38

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


c) Other non-operating income

i. Cash discount earned 444.92 404.46 310.94

ii. Profit on sale of fixed assets - net 348.03 417.26 938.92

iii. Others 962.69 1,332.82 3,198.15

1,755.64 2,154.54 4,448.01

4,035.03 6,235.15 6,652.07

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.3 COST OF MATERIALS CONSUMED

a) Forgings and castings

65,312.66 48,787.84 33,593.08

b) Plates, sheets, bars, steel tubes and angles 54,563.93 49,919.13 37,270.39

c) Tyres, tubes and flaps

91,672.53 61,361.34 64,465.26

d) Finished and other items

700,824.84 593,903.66 455,678.71

912,373.96 753,971.97 591,007.44

Less: Issues capitalized

225.63 30.33 37.97

912,148.33 753,941.64 590,969.47

Of the above

1. Imported items - amount

61,957.30 52,016.19 20,861.36

- percentage

6.79% 6.90% 3.53%

2. Indigenous items - amount

850,416.66 701,955.78 570,146.08

- percentage

93.21% 93.10% 96.47%

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.4 PURCHASES OF STOCK-IN-TRADE -

TRADED GOODS

a) Engines 1,396.42 2,460.62 371.18

b) Commercial vehicles 15,658.63 89,063.65 100,076.18

c) Spare parts and auto components 33,682.32 39,649.67 26,455.40

50,737.37 131,173.94 126,902.76

F - 39

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.5 CHANGES IN INVENTORIES OF

FINISHED GOODS, WORK-IN-PROGRESS

AND STOCK-IN-TRADE

a) Changes in Inventories

- Work-in-progress 9,052.08 5,134.82 9,136.44

- Finished / Traded goods (26,554.85) 22,800.85 36,987.15

Net change (17,502.77) 27,935.67 46,123.59

b) Movement in Excise duty content in Finished /

Traded goods 801.47 (737.98) (3,736.49)

(16,701.30) 27,197.69 42,387.10

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.6 EMPLOYEE BENEFITS EXPENSE

a) Salaries, wages and bonus 80,464.95 84,251.95 77,455.43

b) Contribution to provident, gratuity and other

funds 8,744.45 9,161.61 8,608.07

c) Welfare expenses 14,409.87 15,260.22 14,367.55

103,619.27 108,673.78 100,431.05

Less: Employee expenses capitalised 1,579.85 1,122.44 463.82

102,039.42 107,551.34 99,967.23

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.7 FINANCE COSTS

a) Interest Expense 22,500.13 35,232.99 40,092.72

b) Other borrowing costs* 3,181.98 5,158.33 5,886.40

25,682.11 40,391.32 45,979.12

Less: Interest cost capitalised 156.79 2,702.75 686.64

25,525.32 37,688.57 45,292.48

* Other borrowing costs include:

- Loan raising expenses amortised 216.97 383.34 509.53

- Premium on forward contracts amortised 1,081.46 1,120.68 2,331.25

- Bill discounting charges 1,872.31 3,643.79 3,036.43

F - 40

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.8 DEPRECIATION AND AMORTISATION

EXPENSE

A) Tangible assets

(i) Buildings 4,118.59 4,592.68 5,166.74

(ii) Plant and machinery 22,137.11 22,392.35 22,493.85

(iii) Furniture and fittings 837.02 996.86 1,117.90

(iv) Vehicles and aircrafts 963.65 1,059.00 1,038.74

(v) Office equipment 1,896.15 2,155.49 2,183.62

(vi) Assets given on lease

- Buildings 18.84 20.91 21.34

- Plant and machinery - 0.39 0.28

- Furniture and fittings 9.65 11.11 11.11

- Office equipment 8.02 5.91 2.00

29,989.03 31,234.70 32,035.58

Less: Transfer from Revaluation reserve

[Refer Note 3.2.9 (b) to the Financial Statements] 1,243.18 1,237.00 1,181.62

Total on Tangible assets (A) 28,745.85 29,997.70 30,853.96

B) Intangible assets

(i) Computer software

- Developed 106.22 827.35 1,328.99

- Acquired 1,354.98 1,665.26 1,655.33

(ii) Technical knowhow

- Developed 3,736.27 4,060.05 2,037.76

- Acquired 1,338.00 1,527.99 1,827.56

Total on Intangible assets (B) 6,535.47 8,080.65 6,849.64

Total(A + B) 35,281.32 38,078.35 37,703.60

Note:

Depreciation on Plant and machinery include:

- Impairment charge 200.27 71.51 244.80

F - 41

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.9 OTHER EXPENSES

(a) Consumption of stores and tools 7,108.62 7,398.31 5,025.02

(b) Power and fuel 7,766.96 8,599.82 6,103.71

(c) Rent 1,377.98 2,994.48 2,820.09

(d) Repairs and maintenance

- Buildings 2,783.76 2,875.20 2,255.47

- Plant and machinery 9,967.27 11,033.71 10,169.78

(e) Insurance 748.90 665.62 647.72

(f) Rates and taxes, excluding taxes on income 680.06 974.49 751.71

(g) Selling and administration expenses - net 30,385.19 35,370.17 26,554.00

(h) Service and product warranties 16,482.15 21,368.83 13,336.94

(i) Packing and forwarding charges 23,221.23 30,361.32 30,823.98

(j) Annual Maintenance Contracts 9,592.67 14,181.76 12,600.26

(k) Research and development 6,943.65 5,682.69 7,322.03

(l) Diminution in value of investments 26.54 - -

(l) Bad and doubtful debts / advances provided /

written-off (net of recovery) 218.00 - 524.85

117,302.98 141,506.40 118,935.56

Less: Expenses capitalised 703.64 897.84 1,475.68

116,599.34 140,608.56 117,459.88

1. Rent includes amortisation of cost / value of

leasehold land and land given on lease Rs. 523.31

lakhs (2013: Rs. 522.25 lakhs) (2012:Rs 518.52

Lakhs) as reduced by transfer of Rs. 334.27 lakhs

(2013: Rs. 334.27 lakhs) (2012: 334.28 Lakhs)

from Revaluation reserve. [Refer Note 3.2.9 (b)

to the Financial Statement]

184.24 187.98 189.04

2. Selling and administration expenses include:

- Director's sitting fees 20.60 22.20 19.80

- Commission to Non Whole-time Directors 287.24 191.80 -

F - 42

Year ended

March 31, 2012

Year ended

March 31, 2013

Year ended

March 31, 2014


2.10 EXCEPTIONAL ITEMS

a) Profit / (Loss) on sale of Long-term

investments

- Indusind Bank Limited - 25,238.31 30,133.85

- Hinduja Leyland Finance Limited 14,440.00 7,950.00 -

- Defiance Testing and Engineering

Services Inc., USA - - 6,736.59

- Defiance Technologies Limited 1,576.00 - -

- ICICI Bank Limited - 266.71 -

- Ashley Bio Fuel Limited (749.74) - -

- Ashley Transport Services Limited (592.85) - -

- Avia Ashok Leyland Motors s.r.o (14,513.63) - -

- Others - (483.10) 0.47

159.78 32,971.92 36,870.91

b) Diminution in the value of investments

- Ashley Alteams Limited - (2,779.50) (163.50)

- Automotive Infotronics Limited

(under liquidation) - (1,119.02) (306.16)

- Avia Ashok Leyland Motors s.r.o - (117.79) (487.66)

- (4,016.31) (957.32)

c) Profit on sale of Immovable Properties

[Refer note 3.2.9 c) to the Financial Statements] - - 19,327.24

d) Voluntary Retirement Scheme

[Refer note 3.17 to the Financial Statements] - - (4,674.94)

159.78 28,955.61 50,565.89

F - 43

3.1 Information regarding Imports (c.i.f)

2012 2013 2014


a)Raw materials 44,039.02

40,391.32

9,852.68

b)Trading goods and others 2,151.80

3,339.31

7,566.27

c)Spares and tools 1,568.08

504.24

391.40

d)Capital items 18,421.61

28,063.70

3,884.27

66,180.51 72,298.57

21,694.62

3.2. Other Information (including foreign currency transactions)

3.2.1 Expenditure incurred in foreign currency

2012 2013 2014


a)Royalty

245.00

199.51

94.47

b)Professional and consultation fees

654.38

1,415.30

1,604.14

c)Interest and commitment charges

7,986.79

9,136.12

8,937.59

d)Commission on sales

15,434.60

10,672.26

10,315.74

e)Research and development

1,488.93

353.25

506.75

f) Travel

485.99

515.30

293.74

g)Other expenses

- Freight charges 2,914.63

3,654.59

1,807.55

- Product warranty 851.85

375.94

1,143.69

- Others 1,836.44

3,669.93

3,298.48

5,602.92

7,700.46

6,249.72

31,898.61

29,992.20

28,002.15

3.2.2 Dividend remitted in foreign currency *

2012 2013 2014


a)Number of non-resident shareholders 2

2

2

b)Number of shares on which dividend was remitted 514,218,712

1,028,437,424

1,028,437,424

c)Dividend remitted during the year relating to the

previous year

10,284.37

10,284.37

6,170.62

* Dividend paid to other Non-Resident shareholders

is in Indian Rupee.

3.2.3 Earnings in foreign currency

2012 2013 2014


a)Export of goods - FOB value 154,035.97 142,543.34 124,229.51

b)Royalty, knowhow, professional and consultation

fees 1,122.48 69.95 -

c)Interest and dividend 903.82 1,344.94 818.16

d)Others [ Includes freight, insurance and

commission earned ] 8,533.10 7,818.30 4,155.77

164,595.37 151,776.53 129,203.44

F - 44

3.2.4 Auditors' remuneration

2012 2013 2014


Included under Selling and administration expenses -

net [ Refer Note - 2.9 to the Financial Statements]

a)For Financial Audit 50.00 70.00 70.00

b)For cost audit 2.00 3.07 6.00

c)For taxation matters 8.50 8.75 10.95

d)For other services - review of accounts,

certification work, etc. 47.10 59.97 67.23

e)For reimbursement of expenses 2.59 4.27 7.53

3.2.5 Total Research and development costs charged to the Statement of Profit and Loss

2012 2013 2014


Total Research and development costs charged to the

Statement of Profit and Loss

[including amount shown under Note 2.9 to the

Financial Statements ] 28,198.34 30,551.62 27,177.73

3.2.6 Impact of exchange (gain) / loss for the year in the Statement of Profit and Loss due to:

2012 2013 2014


a) Translation / Settlement (net) 1,660.07 (1,492.94) (4,912.72)

b) Amortisation of exchange differences 168.88 117.63 (54.76)

c) Depreciation on exchange differences capitalised 1,377.33 2,251.63 4,251.06

3.2.7 Contingent liabilities

2012 2013 2014


a) Contingent Liabilities

i) Claims against the company not acknowledged as

debts (net)- Sales Tax 3,114.08 3,748.55 11,675.71

- Others 2,865.19 2,793.46 2,458.83

ii) Guarantees [net of Counter Guarantees Rs. NIL

(2013: Rs. 30,840.89 Lakhs; 2012: Nil)] 47,593.90 13,500.47 18,272.15

The outflow in respect of the above is not practicable

to ascertain in view of the uncertainties involved.

F - 45

3.2.8 Commitments

2012 2013 2014


a) Capital commitments (net of advances) not

provided for [ including 45,018.73 12,027.18 5,057.83

Rs.1,791.98 Lakhs (2013: Rs.636.41 Lakhs; 2012

:Rs.1,892.08 Lakhs) in respect of Intangible assets]

b) Uncalled Liability on Partly paid shares /

investments 0.14 0.14 0.14

c) Other commitments

Financial support given to certain subsidiaries, joint

ventures, etc.

The outflow in respect of the above is not practicable

to ascertain in view of the uncertainties involved.

3.2.9 a) Useful life of Tangible and Intangible Assets

2012 2013 2014

Useful life (yrs) Useful life (yrs) Useful life (yrs)

(1) Useful life lower than that derived from the rates specified in

Schedule XIV to the Companies Act, 1956

a)Buildings - Revalued buildings are depreciated over the balance useful life

as determined by the valuers.

b)Non-factory service installations

(i)In Customer premises 12 12 12

(ii)Lease improvements 3 3 3

c)Plant and machinery

(i)Assets subject to impairment - revised carrying amount over its remaining

useful life

(ii)Windmills 12 12 12

d)Furniture and fittings 8 8 8

e)Furniture and fittings - lease improvements 3 3 3

f)Vehicles

(i)Cars and motorcycles 3 3 3

(ii)Trucks and buses 5 5 5

g)Office equipment 8 8 8

h)Office equipment - Data processing system 5 5 5

(2) Useful life not prescribed in Schedule XIV to the Companies Act,

1956

Intangible assets

a)Computer software

(i)Developed 5 / 10 5 / 10 5 / 10

(ii)Acquired 5 5 5

b)Technical knowhow

(i)Developed 6 6 6 / 10

(ii)Acquired 5 / 6 5 / 6 5 / 6 / 10

F - 46

b) Depreciation for the year computed on assets revalued as on March 31, 2009 over the balance useful life on straight line

method includes a net charge of Rs. 1,515.89 lakhs (2013: Rs. 1,571.27 lakhs; 2012: Rs.1,577.46 lakhs) [Rs. 1,181.62

lakhs (2013: Rs.1,237.00 lakhs; 2012: Rs.1,243.18 lakhs) in Note 2.8 to the Financial Statements and Rs. 334.27 lakhs

(2013: Rs.334.27 lakhs; 2012: Rs.334.28 lakhs) in Note 2.9 to the Financial Statements respectively ] being the excess

over the depreciation computed bythe method followed by the Company prior to revaluation / period of lease in respect

of leasehold land and the same has been transferred from Revaluation Reserve to the Statement of Profit and Loss.

c) In respect of previously revalued items of fixed assets sold / disposed, the Company has, during the FY’14 changed its

earlier accounting practice to adjust the amount in revaluation reserve of such assets against the carrying value of such

assets and recognized the consequent profit / sale thereof. The impact of the said change is a higher profit on sale /

disposal of immovable properties by Rs. 10,756.56 Lakhs for the year ended March 31, 2014 (2013: Nil; 2012: Nil)

3.3. Earnings per share

2012 2013 2014

Profit after tax as per Statement of Profit and Loss

(in Rs. lakhs) (A) 56,597.66 43,370.67 2,938.11

Weighted average number of equity shares

outstanding (B) 2,660,676,634 2,660,676,634 2,660,676,634

Basic and Diluted earnings per share (Face value

Re. 1) (in Rs.) (A / B) 2.13 1.63 0.11

3.4. Segment information

The Company’s primary segment is identified as business segment based on nature of products, risks, returns and the internal

business reporting system and secondary segment is identified based on the geographical location of the customers as per

Accounting Standard 17. The Company is principally engaged in a single business segment viz., commercial vehicles and

related components. The “Geographical segment” has been considered for disclosure as secondary segment.

Rs Lakhs

Particulars Year In India Outside India Unallocated Total

Revenue from external customers 2012 1,222,504.68 149,575.82 - 1,372,080.50

2013 1,187,721.75 142,134.14 - 1,329,855.89

2014 936,322.44 119,762.09 - 1,056,084.53

Segment assets 2012 904,907.11 50,033.61 236,633.99 1,191,574.71

2013 928,962.09 54,549.45 326,158.67 1,309,670.21

2014 859,433.76 34,228.63 387,137.18 1,280,799.57

Capital expenditure during the year 2012 53,893.45 53.38 27,166.70 81,113.53

2013 68,005.39 19.71 22,936.39 90,961.49

2014 33,975.04 23.56 4,584.91 38,583.51

a) Revenue from external customers comprises of income from sale of products, services and other operating revenues.

[Refer Note 2.1 to the Financial Statements]

b) Carrying amount of Segment assets comprises of non - current assets and current assets identified to the respective

segments. However Segment assets in India also include certain common assets used to generate revenue in both

segments but not feasible of allocation.

c) Unallocated assets and capital expenditure includes current and non current assets other than considered in (b) above.

d) Capital expenditure during the year represents net additions to Tangible and Intangible assets and movement in Capital

work in progress.

F - 47

3.5(A). Related party disclosure For FY 2013-2014

a) List of parties where control exists

Holding company

Hinduja Automotive Limited, United Kingdom

Machen Holdings SA

(Holding Company of Hinduja Automotive Limited, United Kingdom)

Machen Development Corporation, Panama

(Holding Company of Machen Holdings SA)

Amas Holdings SA

(Holding Company of Machen Development Corporation, Panama)

Subsidiaries

i) With effect from April 1, 2013:


Ashley Services Limited………………………………………….. upto June 30, 2013

Avia Ashok Leyland Motors s.r.o

Avia Trucks UK Limited, Great Britain

Avia Ashok Leyland Rus, Russia

Ashok Leyland Nissan Vehicles Limited

Albonair GmbH, Germany

Albonair Automotive Technology Co. Ltd., China

Ashok Leyland (Nigeria) Limited

Ashok Leyland (UK) Limited

Defiance Technologies Limited

Defiance Tech GmbH

Defiance Tech, USA

Defiance Testing and Engineering Services Inc. USA………… sold on September 30, 2013

Gulf Ashley Motors Limited

Mangalam Retail Services Limited

Optare plc

Optare UK Ltd

Optare Group Ltd

Darwen LPD Ltd *

Optare Aftersales Ltd *

Jamesstan Investments Ltd (Holding Co of Optare)

Optare Holdings Ltd (Holding Co of Optare)

Optare (Leeds) Ltd

Autotec Vehicles Ltd *

Autobus Classique Ltd *

Optare PCV Ltd *

Chalgrave Ltd *

East Lancashire Busbuilders Ltd

Ashok Leyland (Chile)

Hinduja Leyland Finance Limited

Hinduja Leyland Finance Services Limited

Ashok Leyland Wind Energy Limited

ii) With effect from December 10, 2013

Irizar TVS Limited…………………………………………… Associate upto December 9, 2013

b)Other related parties

Fellow subsidiaries

Hinduja Foundries Limited……………………………………… upto January 29, 2014

Hinduja Auto Components Limited

Hinduja Automotive (UK) Limited

F - 48

Associates

Ashley Airways Limited (under liquidation)

Ashley Aviation Limited

Ashley Holdings Limited…………………………………………. upto April 1, 2013

Ashley Investments Limited……………………………………… upto April 1, 2013

Ashok Leyland Defence Systems Limited

Ashok Leyland (UAE) LLC

Lanka Ashok Leyland PLC

Joint Ventures

Ashley Alteams India Limited

Automotive Infotronics Limited(under liquidation)

Ashok Leyland John Deere Construction Equipment Company Private Limited

Nissan Ashok Leyland Powertrain Limited

Nissan Ashok Leyland Technologies Limited

Key management personnel

Mr. Vinod K Dasari, Managing Director

Mr. R Seshasayee (Executive Vice Chairman upto March 31, 2013)

* Certain subsidiaries of Optare plc which were dormant as of earlier year(s) have been dissolved during FY 2014.

3.5(B). Related party disclosure for FY 2012 and FY 2013


Holding company


Machen Holdings SA




Amas Holdings SA


b)Other related parties

Fellow subsidiaries

Hinduja Foundries Limited



Associates

Albonair GmbH, Germany



Ashley Aviation Limited………………………………………………………. from November 8,2012

Ashley Holdings Limited

Ashley Investments Limited


Ashok Leyland (Nigeria) Limited……………………………………………. from March 6,2013


Ashok Leyland (UK) Limited

Automotive Coaches and Components Limited…………………………... upto March 31,2013

Defiance Technologies Limited

Defiance Testing and Engineering Services, Inc. USA

Gulf Ashley Motor Limited

Irizar TVS Limited

Lanka Ashok Leyland, PLC

Mangalam Retail Services Limited

Optare plc

F - 49

Joint Ventures


Automotive Infotronics Limited


Ashok Leyland Nissan Vehicles Limited




Mr. R Seshasayee, Executive Vice Chairman


F - 50

3.5 Related Party disclosure - ….. Continued

c) Related Party Transactions – summary Rs. Lakhs

Fellow Subsidiary* Subsidiary

2012 2013 2014 2012 2013 2014

Transactions during the year ended March 31

1 Purchase of raw materials, components and traded goods ( net of CENVAT / VAT ) 23,269.23 20,339.09 9,297.73 - - 101,121.84

2 Sales and Services ( net of excise duties ) 10.45 - - - - 31,552.11

3 Other Operating Income 1,068.92 652.12 226.77 - - 1,388.31

4 Other expenditure incurred / (recovered) (net) 23.95 117.61 67.88 - - 7,160.42

5 Advance / Current accounts - Net increase / ( decrease ) - - - - - 608.71

6 Interest and other income - - 5.69 - - 1,169.34

7 Purchase of Assets - - - - - 583.24

8 Dividend income - - - - - -

9 Dividend payments - - - - - -

10 Remuneration to key management personnel - - - - - -

11 Financial guarantees given - - - - - 14,964.75

12 Financial guarantees released - - 3,619.00 - - 12,765.50

13 Counter guarantees received - - - - - -

14 Counter guarantee dissolved - - - - - 30,840.89

15 Acquisition of investments - 30,000.00 - - - 26,352.33

16 Disposal of investments - - - - - 9,941.96

17 Advance given for share capital - - - - - 25,108.07

18 Loans given - - 1,000.00 - - 15,782.51

19 Loans repaid - - 1,000.00 - - 27,010.98

20 Interest expense - - - - - -

21 Sale of assets - - - - - -

Balances as on March 31

1 Debtors 11.98 - - - - 5,505.40

2 Loans and advances (including interest accrued) ** 2,375.92 - - - - 16,724.46

3 Advance for Share Capital ** - - - - - 1,395.45

4 Creditors for materials and expenses 1,022.64 3,239.06 - - - 11,213.82

5 Financial guarantees given -

-

- for working capital (maximum limit GBP 2.36 million) - - - - - -

- others 6,783.33 3,619.00 - - - 14,964.75


For details of investments as at March 31, 2014 March 31, 2013 and March 31, 2012 refer Note 1.13 and Note 1.16 to the Financial Statements.

* relates to Hinduja Foundries Limited upto January 29, 2014

** Refer Notes 1.14, 1.20 and 1.21 to the Financial Statements

F - 51



Associates Joint Ventures

2012 2013 2014 2012 2013 2014


1 Purchase of raw materials, components and traded goods ( net of CENVAT / VAT ) 20,991.61 12,965.47 4,075.74 21,396.04 89,213.96 2,734.52

2 Sales and Services ( net of excise duties ) 114,224.43 75,062.51 41,430.20 1,859.59 3,697.24 595.42

3 Other Operating Income - 0.29 10.15 3,281.02 14,581.17 3,230.94

4 Other expenditure incurred / (recovered) (net) 2,338.19 1,954.64 183.72 279.23 1,773.85 75.45

5 Advance / Current accounts - Net increase / ( decrease ) (513.02) 813.03 - 20.87 437.09 26.72

6 Interest and other income 976.13 1,210.62 255.30 57.64 652.65 16.27

7 Purchase of Assets 72.28 - - - - 114.17

8 Dividend income 134.19 251.94 48.70 - - -

9 Dividend payments - - - - - -

10 Remuneration to key management personnel - - - - - -

11 Financial guarantees given 10,205.70 487.06 - - - -

12 Financial guarantees released - 2,171.40 - - -

13 Counter guarantees received 30,840.89 - - - -

14 Counter guarantee dissolved - - - - - -

15 Acquisition of investments 41,417.69 34,149.88 1,099.76 8,083.00 9,855.00 5,820.00

16 Disposal of investments 24,202.52 10,600.00 14.70 - - -

17 Advance given for share capital - - - - 3,190.00 -

18 Loans given 22,621.12 10,662.69 - - - -

19 Loans repaid 15,783.94 10,591.99 - - - -

20 Interest expense 97.11 - - - - -

21 Sale of assets - - - 11.60 - -


1 Debtors 24,559.08 19,343.14 3,227.74 1,775.25 1,797.96 680.45

2 Loans and advances (including interest accrued) ** 23,405.34 22,762.22 248.31 711.21 296.15 502.64

3 Advance for Share Capital ** 3.06 0.20 - - 3,190.00 -

4 Creditors for materials and expenses 2,997.93 2,273.44 908.57 4,182.87 7,033.13 1,006.93


-

- for working capital (maximum limit GBP 2.36 million) 991.53 2,328.52 - - - -

- others 14,284.17 12,617.84 - 2,714.70 2,779.80 3,307.40

6 Counter guarantees received - 30,840.89 - - - -



F - 52



Holding Company # Key Management Personnel

2012 2013 2014 2012 2013 2014


1 Purchase of raw materials, components and traded goods ( net of CENVAT / VAT ) - - - - - -

2 Sales and Services ( net of excise duties ) - - - - - -

3 Other Operating Income - - - - - -

4 Other expenditure incurred / (recovered) (net) 139.71 175.23 97.23 - - -

5 Advance / Current accounts - Net increase / ( decrease ) - - - (0.44) (0.05) -

6 Interest and other income - - - - - -

7 Purchase of Assets - - - - - -

8 Dividend income - - - - - -

9 Dividend payments 10,272.37 10,272.37 8,138.63 0.82 0.82 0.36

10 Remuneration to key management personnel - - - 569.39 625.03 212.49

11 Financial guarantees given - - - - - -

12 Financial guarantees released - - - - - -


14 Counter guarantee dissolved - - - - - -

15 Acquisition of investments - - - - - -

16 Disposal of investments - - - - - -

17 Advance given for share capital - - - - - -

18 Loans given - - - - - -

19 Loans repaid - - - - - -

20 Interest expense - - - - - -

21 Sale of assets - - - - - -


1 Debtors - - - - - -

2 Loans and advances (including interest accrued) ** - 0.78 - 0.16 0.11 0.06

3 Advance for Share Capital ** - - - - - -

4 Creditors for materials and expenses 97.52 175.23 167.26 176.99 167.67 -


-

- for working capital (maximum limit GBP 2.36 million) - - - - - -

- others - - - - - -



# relates to Hinduja Automotive Limited


F - 53



Total

2012 2013 2014


1 Purchase of raw materials, components and traded goods ( net of CENVAT / VAT ) 65,656.88 122,518.52 117,229.83

2 Sales and Services ( net of excise duties ) 116,094.47 78,759.75 73,577.73

3 Other Operating Income 4,349.94 15,233.58 4,856.17

4 Other expenditure incurred / (recovered) (net) 2,781.08 4,021.33 7,584.70

5 Advance / Current accounts - Net increase / ( decrease ) (492.59) 1,250.07 635.43

6 Interest and other income 1,033.77 1,863.27 1,446.60

7 Purchase of Assets 72.28 - 697.41

8 Dividend income 134.19 251.94 48.70

9 Dividend payments 10,273.19 10,273.19 8,138.99

10 Remuneration to key management personnel 569.39 625.03 212.49

11 Financial guarantees given 10,205.70 487.06 14,964.75

12 Financial guarantees released - - 18,555.90

13 Counter guarantees received - 30,840.89 -

14 Counter guarantee dissolved - - 30,840.89

15 Acquisition of investments 49,500.69 74,004.88 33,272.09

16 Disposal of investments 24,202.52 10,600.00 9,956.66

17 Advance given for share capital - 3,190.00 25,108.07

18 Loans given 22,621.12 10,662.69 16,782.51

19 Loans repaid 15,783.94 10,591.99 28,010.98

20 Interest expense 97.11 - -

21 Sale of assets 11.60 - -


1 Debtors 26,346.31 21,141.10 9,413.59

2 Loans and advances (including interest accrued) ** 26,492.63 23,059.26 17,475.47

3 Advance for Share Capital ** 3.06 3,190.20 1,395.45

4 Creditors for materials and expenses 8,477.95 12,888.53 13,296.58


- for working capital (maximum limit GBP 2.36 million) 991.53 2,328.52 -

- others 23,782.20 19,016.64 18,272.15

6 Counter guarantees received - 30,840.89 -



F - 54

d) Significant Related Party Transactions

Rs. Lakhs

2012 2013 2014

1 Purchase of raw materials, components and traded goods

(net of CENVAT / VAT)

Hinduja Foundries Limited @ 20,339.09 9,297.73

Automotive Coaches And Components Ltd 6,814.78 2,290.27 -

Irizar TVS Limited 12,994.67 10,195.11 @

Ashley Alteams India Limited 3,445.39 3,783.91 @

Ashok Leyland Nissan Vehicles Limited 17,420.63 84,905.40 97,524.9

2 Sales and Services (net of taxes)

Ashok Leyland (UAE) LLC 16,057.21 24,541.54 21,978.38

Gulf Ashley Motor Limited 21,156.28 20,885.82 20,631.79

Lanka Ashok Leyland PLC 73,095.20 29,177.13 19,461.86

Ashok Leyland Nissan Vehicles Limited 705.13 2,447.49 8,816.35

Ashok Leyland John Deere Construction Equipment Company Private Limited 499.02 1,249.75 @

Ashley Alteams India Limited 232.83 - @

Nissan Ashok Leyland Technologies Limited 323.27 - @

3 Other Operating Income


Nissan Ashok Leyland Powertrain Limited 764.78 3,292.25 2,561.91

Nissan Ashok Leyland Technologies Limited - 318.29 527.03

4 Other Expenditure incurred / (recovered) (net)

Defiance Technologies Limited 1,174.49 1,637.18 1,156.77

Gulf Ashley Motor Limited 162.08 269.60 771.62

HLF Services Limited - - 997.98

Ashok Leyland Nissan Vehicles Limited 318.57 1,660.83 2,801.69

Defiance Testing & Engineering Services Inc., USA 640.54 13.70 -

Ashok Leyland John Deere Construction Equipment Company Private Limited (40.90) - @

5 Advance/Current account - Net increase / ( decrease )

Ashok Leyland Defence Systems Limited - (180.37) -

Ashok Leyland (UAE) LLC - 837.12 -

Ashok Leyland John Deere Construction Equipment Company Private Limited - 139.69 87.48

Avia Ashok Leyland Motors s.r.o, Czech Republic @ - 97.45

Automotive Coaches And Components Ltd (499.72) - -

Irizar TVS Limited (13.30) (95.00) @

Ashok Leyland Nissan Vehicles Limited 20.87 235.06 511.26

Nissan Ashok Leyland Powertrain Limited - 20.32 (60.76)

Ashley Alteams India Limited - 59.42 @

Automotive Infotronics Limited - (53.92) @

F - 55


Rs. Lakhs

2012 2013 2014

6 Interest and other income

Albonair GmbH 107.10 270.77 132.34

Defiance Testing & Engineering Services Inc., USA 457.91 293.87 69.74

Automotive Coaches And Components Ltd 142.51 - -

Defiance Technologies Limited 50.09 140.37 372.65

Optare plc 22.93 305.18 426.63

Nissan Ashok Leyland Technologies Limited 57.41 477.19 16.27

Ashley Alteams India Limited 0.22 168.56 @

Ashley Aviation Limited - 81.96 225.00

7 Dividend income

Lanka Ashok Leyland PLC 134.19 251.94 48.70

8 Acquisition of Investments

Ashley Holdings Limited 17,634.00 15,259.75 -

Ashley Investments Limited 17,808.00 15,159.75 -

Optare plc 817.54 - -


Nissan Ashok Leyland Powertrain Limited 1,911.00 - -

Albonair GmbH @ - 15,085.38

Ashok Leyland John Deere Construction Equipment Company Private

Limited 1,850.00 4,950.00 4,320.00

9 Disposal of Investments

Ashley Holdings Limited 11,801.27 5,320.00 -

Ashley Investments Limited 11,801.27 5,280.00 -

Gulf Ashley Motor Limited 599.99 - -

Defiance Testing & Engineering Services Inc., USA - - 9,941.96

10 Advance given for share capital

Ashley Services Limited * - - 23,713.00

Ashok Leyland Nissan Vehicles Limited - 2,940.00 -

11 Loans given

Albonair GmbH 4,835.70 6,055.57 2,795.14

Defiance Technologies Limited 998.00 1,527.00 900.00

Avia Ashok Leyland Motors s.r.o, Czech Republic - - 9,040.78

Optare plc 3,759.24 3,080.12 2,600.38

12 Loans repaid

Ashok Leyland (UAE) LLC 2,453.63 3,566.38 -

Albonair GmbH - - 15,033.03

Avia Ashok Leyland Motors s.r.o, Czech Republic - - 6,312.94

Defiance Testing & Engineering Services Inc., USA - 5,564.89 2,614.75

Optare plc 1,161.58 1,460.71 2,601.78

F - 56


Rs. Lakhs

2012 2013 2014

13 Purchase of assets

Albonair GmbH - - 583.24

Automotive Infotronics Limited - - 114.17

14 Financial guarantees given

Optare plc 9,696.95 487.06 14,964.75

15 Financial Guarantees released

Optare plc - - 11,232.10

Hinduja Foundries Limited - - 3,619.00

Ashok Leyland (UAE) LLC - - 2,171.40

16 Counter Guarantees received

Ashley Holdings Limited - 15,148.54 -

Ashley Investments Limited - 15,692.35 -

17 Counter Guarantee dissolved

Ashley Services Limited - - 30,840.89

18 Remuneration to key management personnel

Mr. R Seshasayee 321.05 345.72 -

Mr. Vinod K Dasari 248.34 279.31 212.49

19 Sale of Asset

Automotive Infotronics Limited 11.60 - -

* Cancelled pursuant to amalgamation of Ashley Services Limited with the

Company [Refer Note 3.16 to the Financial Statements].

@ Not material for the respective years as defined in Accounting Standard 18.

e. Details of Advances in the nature of Loans (excluding interest accrued) to Subsidiary / Associate companies

Rs. Lakhs

Name of the Subsidiary / Associate

2012

Status Outstanding

amount

Maximum loan

outstanding

during the year

Investment

in shares of

the

Company

Direct

investment in

shares of

subsidiaries of

the Company

Avia Ashok Leyland Motors s.r.o - - - - -

Albonair GmbH Associate 5,005.23 5,005.23 - -

Ashok Leyland (UAE) LLC Associate 4,524.03 6,815.59 - -

Automotive Coaches and Components

Limited Associate 1,200.00 1,500.00 - -

Defiance Technologies Limited Associate 923.00 923.00 - -

Defiance Testing & Engineering Services

Inc., USA Associate 7,376.88 7,700.23 - -

Irizar TVS Limited Associate 95.00 95.00 - -

AL Nigeria - - - - -

Optare plc Associate 2,606.64 2,606.64 - -

F - 57

Rs. Lakhs


2013

Status Outstanding

amount

Maximum loan

outstanding

during the year

Investment

in shares of

the

Company

Direct

investment in

shares of

subsidiaries

of the

Company

Avia Ashok Leyland Motors s.r.o - - - - -

Albonair GmbH Associate 11,119.20 11,119.20 - -

Ashok Leyland (UAE) LLC Associate - 3,580.33 - -


Limited Associate 1,706.13 3,039.69 - -

Defiance Technologies Limited Associate 2,450.00 2,450.00 - -

Defiance Testing & Engineering Services Inc.,

USA Associate 2,442.83 8,132.33 - -

Irizar TVS Limited Associate - 95.00 - -

AL Nigeria - - - - -

Optare plc Associate 4,193.60 4,534.79 - -

Rs. Lakhs


2014

Status Outstanding

amount

Maximum loan

outstanding

during the year

Investment

in shares of

the

Company

Direct

investment in

shares of

subsidiaries

of the

Company

Avia Ashok Leyland Motors s.r.o Subsidiary 6,292.64 9,654.21 - 742.13

Albonair GmbH Subsidiary - 11,119.20 - 324.96

Ashok Leyland (UAE) LLC Associate - - - -


Limited - - - - -

Defiance Technologies Limited Subsidiary 3,350.00 3,350.00 - 984.74

Defiance Testing & Engineering Services Inc.,

USA Subsidiary - 2,672.55 - -

Irizar TVS Limited Subsidiary - - - -

AL Nigeria Subsidiary - 19.71 - -

Optare plc Subsidiary 5,088.02 6,793.99 - 32,924.10

3.6 Disclosures in respect of Joint Ventures

a) List of joint ventures

Sl

No. Name of the Joint Venture Name of the Business

Proportion of

ownership

interest as at

March 31, 2012

Proportion of

ownership

interest as at

March 31,

2013

Proportion

of

ownership

interest as at

March 31,

2014

Country of

residence /

Incorporation

1 Nissan Ashok Leyland

Powertrain Limited

Manufacture of engines

for Light Commercial

Vehicles

48.68% 48.68% 49.00% India


Technologies Limited

Development of related

automotive technology 49.00% 49.00% 50.00% India

3

Ashok Leyland John

Deere Construction

Equipment Company

Private Limited

Manufacture of

construction equipment 50.00% 50.00% 50.00% India

F - 58

4 Ashley Alteams India

Limited

Manufacture of

aluminum high pressure

die castings.

50.00% 50.00% 50.00% India

5 Ashok Leyland Nissan

Vehicles Limited

Manufacture of Light

Commercial Vehicles

(LCV)

49.05% 49.04% Has become

subsidiary India

6 Automative Infrotonics

Limited

Design, development

and adoption of digital

electronics products for

transportation sector

50.00% 50.00% Under

Liquidation India

b) Financial interest in jointly controlled entities

Rs. Lakhs

Sl

No Name of the Joint Venture

Current status of

Operations and

Financials

Company’s share of

Year Assets Liabilities Income Expenses

As at March 31 For the year ended March 31


Powertrain Limited

Operating

company

2012 8,482.22 1,898.91 3,087.65 3,616.58

2013 10,694.57 4,166.62 13,272.73 13,328.11

2014 11,162.20 5,098.45 10,922.59 11,420.92


Technologies Limited

Operating

company

2012 4,252.40 7,612.72 1,726.01 3,334.34

2013 5,529.71 9,900.20 3,254.35 4,264.51

2014 3,982.50 9,998.50 5,587.00 7,002.50

3

Ashok Leyland John Deere

Construction Equipment

Company Private Limited

Operating

company

2012 10,795.63 7,898.62 2,010.17 4,683.43

2013 11,955.97 8,000.63 5,977.98 9,869.66

2014 10,733.75 6,370.05 3,289.37 7,201.92

4 Ashley Alteams India

Limited

Operating

company

2012 9,658.76 8,799.37 5,682.49 6,660.64

2013 8,735.93 8,827.14 6,136.83 7,468.72

2014 8,836.08 8,556.51 6,016.34 7,006.60

5 Ashok Leyland Nissan

Vehicles Limited

Operating

company

2012 34,847.17 17,121.95 11,569.41 13,176.97

2013 63,855.62 43,085.18 57,819.21 60,929.80

2014 @ @ @ @

6 Automative Infrotonics

Limited

Operating

company

2012 905.62 334.02 290.41 526.94

2013 749.58 294.89 518.60 634.84

2014 @ @ @ @

@ Not Applicable in view of remarks in paragraph 3.6. a) above.

Notes:

i) Contingent liabilities, incurred in relation to interest injoint ventures as on March 31, 2014 is Rs. Nil (2013: Rs Nil)

(2012:Nil).

ii) Share in contingent liabilities of joint ventures themselves for which the company is contingently liable as at March

31, 2014Rs. 242.65 lakhs (2013 : Rs. 32,943.35 lakhs) (2012 : Rs. 23,068.87 lakhs)

iii) Capital commitments in relation to interests in joint ventures as on March 31, 2014 Rs.Nil (2013: Rs Nil) (2012: Rs

Nil)

iv) Share in Capital commitments of joint ventures themselves as on March 31, 2014 Rs. 293.90 lakhs (2013: Rs. 5,151.15

lakhs) (2012: Rs. 8,701.99 lakhs)

v) The information furnished above with regard to the year 2012 and 2014 are based on audited figures made available to

the company.

vi) Figures given above under expenses are excluding taxes.

F - 59

3.7 The Company had given on finance lease, certain vehicles. The lease was for a fixed period and was terminable with the

consent of both the parties. There are no exceptional / restrictive covenants in the lease agreement. During the FY 2014, the

lease agreements were terminated

Financial information relating to the above lease are as under: Rs. Lakhs

Particulars 2012 2013 2014

a) Total of minimum lease payments

- Receivable not later than 1 year 805.68 1,456.00 -

- Receivable later than 1 year and not later than 5 years 1,271.30 1,173.94 -

- Receivable later than 5 years - - -

b) Unearned Finance income 440.90 396.29 -

c) Present value of minimum lease payments

- Receivable not later than 1 year 680.04 1,328.00 -

- Receivable later than 1 year and not later than 5 years 847.74 904.28 -

- Receivable later than 5 years - -

d)Unguaranteed residual value - - -

e)Accumulated provision for uncollectible minimum lease payments receivable - - -

f) Contingent rents recognised in Statement of Profit and Loss during the year. - - -

3.8 Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures,

present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts

are taken for exposures materialising in the next twelve months. The company actively manages its currency / interest rate exposures

through a centralized treasury division and uses derivatives to mitigate the risk from such exposures. The use of derivative instruments

is subject to limits and regular monitoring by appropriate levels of management. The limits and monitoring systems are periodically

reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of underlying assets,

liabilities or transactions, as derivatives are used only for risk management.

The information on derivative instrument is as follows:

A) Derivative instruments outstanding:

Details Details Currency Amount (Foreign currency in Million) Amount Rs in Lakhs

2012 2013 2014 2013 2014

Foreign Exchange

Contracts

- USD / INR Sold USD 138.10 111.34 38.41 60,441.73 23,015.96

- USD / INR Bought USD 116.55 170.33 87.52 92,464.64 52,440.56

- EUR / USD Bought EUR 2.08 1.80 1.21 1,254.26 1,001.54

- GBP / USD Bought GBP - 1.74 0.25 1,430.78 249.41

- EURO / USD Sold EUR 1.00 10.00 - 6,949.50 -

- USD / JPY Sold USD 2.17 1.01 0.25 549.22 149.79

F - 60

Currency Swaps

-USD / JPY Sold USD - 298.33 190.67 161,950.25 114,237.93

-USD / JPY Bought USD 320.00 - - - -

Refer Item no.6.3 and 6.4 in significant accounting policies for the accounting treatment of such derivatives

B) Foreign currency exposures not hedged by a derivative instrument including firm commitments and highly probable

transactions

Details Currency Amount (Foreign currency in Million) Amount Rs in Lakhs

2012 2013 2014 2012 2013 2014

Amount receivable on

account of sale of

goods, loans, bank

balances, etc.

USD 116.70 66.74 103.11 59,370.46 36,229.48 61,778.95

EUR 7.46 6.50 0.13 5,062.38 4,516.03 106.04

AED - - 0.59 - - 95.71

KES - - 8.92 - - 61.82

ZAR - - 0.40 - - 22.46

GBP 3.22 5.21 5.68 2,621.89 4,282.72 5,666.91

MUR - - 0.41 - - 8.15

BDT - - 0.00 - - 0.02

Amount payable on

account of purchase of

goods,

loans, interest etc.

USD 371.73 290.31 356.32 189,115.75 157,592.71 213,489.48

EUR 10.86 5.30 4.10 7,370.43 3,686.20 3,388.68

JPY 1,242.62 98.59 - 7,699.58 568.69 -

GBP 3.28 2.43 0.45 2,672.66 1,998.11 452.02

CHF 0.02 - 0.03 11.33 - 18.49

SGD - 0.09 - - 41.26 -

AED - - 0.60 - - 98.63

KES - - 53.19 - - 368.62

ZAR - - 1.52 - - 85.88

EGP - - 0.00 - - 0.25

MUR - - 0.08 - - 1.64

3.9 Accounting for long term monetary items in foreign currency, forward contracts and Advances designated as cash

flow hedge

3.9.1 Exchange difference in Long term monetary items in foreign currency

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from those at which

they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are adjusted to the cost of the

assets. In other cases, such exchange differences are accumulated in “Foreign currency monetary item translation difference account”

and amortised by recognition as income or expense in each year over the balance term till settlement occurs but not beyond March

31, 2020 (notified earlier as March 31,2011). The un-amortized net exchange difference in respect of long term monetary items

relating to other than acquisition of depreciable assets, is a loss of Rs. 592.89 lakhs as at March 31, 2014 (March 31, 2013: Rs. 96.35

lakhs) (March 31, 2012: Net gain of: Rs. 415.27 lakhs). These amounts have now been reflected as part of the "Reserves and

Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India

F - 61

3.9.2 Forward contracts and Advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 – Financial instruments:Recognition and measurement, issued

by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of forward contracts for firm

commitments and highly probable forecast transactions meeting necessary criteria for designation as "Cash flow hedges".The gains

and losses on effective Cash flow hedges are recognized in Hedge Reserve Account till the underlying forecast transaction occurs.

3.10 Employee benefits

a) Defined benefit plans - As per Actuarial valuation as at March 31, 2014

Rs. Lakhs

Gratuity

2014 2013 2012 2011 2010

A) Expense recognised in the Statement of Profit

and Loss for the year ended March 31

Current service cost 1,014.43 1,021.78 933.84 847.73 795.50

Interest cost 1,630.16 1,506.57 1,478.53 1,327.97 1,227.16

Expected return on plan assets (1,800.74) (1,810.63) (1,634.00) (1,494.17) (1,406.11)

Net actuarial (gain) / loss recognised during

the year

906.22 1,306.78 1,224.12 1,403.86 191.71

Total expense 1,750.07 2,024.50 2,002.48 2,085.39 808.26

B) Actual return on plan assets

Expected return on plan assets 1,800.74 1,810.63 1,634.00 1,494.17 1,406.11

Actuarial gain/ (loss) on plan assets - - - - -

Actual return on plan assets 1,800.74 1,810.63 1,634.00 1,494.17 1,406.11

C) Net Asset/ (Liability) recognised in the Balance

Sheet

Present value of the obligation 21,768.69 22,188.19 20,468.08 18,554.51 16,689.58

Fair value of plan assets 20,019.15 20,163.07 18,463.69 16,466.18 15,877.10

Funded status [ surplus/ (deficit)] (1,749.54) (2,025.12) (2,004.39) (2,088.33) (812.48)

Net Asset/ (Liability) recognised in the

Balance Sheet (1,749.54) (2,025.12) (2,004.39) (2,088.33) (812.48)

D) Change in Present value of the Obligation during

the year

Present value of obligation as at beginning of

the year 22,188.19 20,468.08 18,554.51 16,689.58 15,348.29

Current service cost 1,014.43 1,021.78 933.84 847.73 795.50

Interest cost 1,630.16 1,506.57 1,478.53 1,327.97 1,227.16

Benefits paid (3,970.31) (2,115.02) (1,722.91) (1,714.63) (873.08)

Actuarial (gain) / loss on obligation 906.22 1,306.78 1,224.12 1,403.86 191.71

Present value of obligation as at end of the

year 21,768.69 22,188.19 20,468.08 18,554.51 16,689.58

E) Change in the Fair Value of Plan Assets during

the year

Fair value of plan assets as at beginning of the

year 20,163.07 18,463.69 16,466.18 15,877.10 14,595.56

Expected return on plan assets 1,800.74 1,810.63 1,634.00 1,494.17 1,406.11

Contributions 2,025.65 2,003.77 2,086.42 809.54 748.51

Benefits paid (3,970.31) (2,115.02) (1,722.91) (1,714.63) (873.08)

Actuarial gain / (loss) on plan assets - - - - -

Fair value of plan assets as at end of the year 20,019.15 20,163.07 18,463.69 16,466.18 15,877.10

F - 62

Rs. Lakhs

Gratuity

2014 2013 2012 2011 2010

F) Experience adjustments in

Plan liabilities - loss / (gain) 906.22 1,306.78 1,224.12 1,403.86 191.71

Plan assets - (loss) / gain - - - - -

G) Major categories of plan assets as a percentage of

total plan

100% Qualifying insurance policy

Compensated absences

2014 2013 2012 2011 2010


and Loss for the year ended March 31

Current service cost 634.89 630.70 667.11 639.56 525.76

Interest cost 506.52 501.60 456.94 369.02 366.54

Expected return on plan assets - - - - -

Net actuarial (gain) / loss recognised during

the year

(1,113.29) 299.48 (172.12) 719.78 (758.60)

Total expense 28.12 1,431.78 951.93 1,728.36 133.70




Actual return on plan assets - - - - -


Sheet

Present value of the obligation 5,801.32 6,733.57 6,363.52 6,011.81 4,942.07

Fair value of plan assets - - - - -

Funded status [ surplus/ (deficit)] (5,801.32) (6,733.57) (6,363.52) (6,011.81) (4,942.07)


Balance Sheet (5,801.32) (6,733.57) (6,363.52) (6,011.81) (4,942.07)

D) Change in Present value of the Obligation during

the year

Present value of obligation as at beginning of

the year 6,733.57 6,363.52 6,011.81 4,942.07 4,966.00


Interest cost 506.52 501.60 456.94 369.02 366.54

Benefits paid (960.37) (1,061.72) (600.22) (658.62) (157.63)

Actuarial (gain) / loss on obligation (1,113.29) 299.47 (172.12) 719.78 (758.60)


year 5,801.32 6,733.57 6,363.52 6,011.81 4,942.07


the year

Fair value of plan assets as at beginning of

the year - - - - -


Contributions 960.37 1,061.72 600.22 658.62 157.63

Benefits paid

(960.37) (1,061.72) (600.22) (658.62) (157.63)

F - 63

Rs. Lakhs

Compensated absences

2014 2013 2012 2011 2010


Fair value of plan assets as at end of the year - - - - -


Plan liabilities - loss / (gain) (190.64) (475.60) (628.16) 719.78 (181.28)


G) Major categories of plan assets as a percentage

of total plan

Unfunded

Other defined benefit plans

2014 2013 2012 2011 2010


and Loss

for the year ended March 31


Interest cost 47.48 53.29 46.81 39.48 40.92


Net actuarial (gain) / loss recognised

during the year

51.89 (46.10) 26.75 111.02 (18.17)

Total expense 167.31 78.09 140.84 214.33 79.07




Actual return on plan assets - - - - -


Sheet

Present value of the obligation 694.91 644.68 672.76 638.26 563.16

Fair value of plan assets - - - - -

Funded status [ surplus/ (deficit)] (694.91) (644.68) (672.76) (638.26) (563.16)


Balance Sheet (694.91) (644.68) (672.76) (638.26) (563.16)

D) Change in Present value of the Obligation

during the year

Present value of obligation as at beginning

of the year 644.68 672.76 638.26 563.16 607.11


Interest cost 47.48 53.29 46.81 39.48 40.92

Benefits paid (117.08) (106.17) (106.44) (139.23) (123.02)

Actuarial (gain) / loss on obligation 51.89 (46.10) 26.75 111.02 (18.17)


year 694.91 644.68 672.76 638.26 563.16

F - 64

Rs. Lakhs

Other defined benefit plans

2014 2013 2012 2011 2010


the year

Fair value of plan assets as at beginning of

the year - - - - -


Contributions 117.08 106.17 106.44 139.23 123.02

Benefits paid (117.08) (106.17) (106.44) (139.23) (123.02)


Fair value of plan assets as at end of the

year - - - - -


Plan liabilities - loss / (gain) 69.19 (8.62) (6.89) 111.02 (3.73)


G) Major categories of plan assets as a percentage

of total plan

Unfunded

H) Actuarial Assumptions 2014 2013 2012 2011 2010

Discount rate 8.00% 8.00% 8.00% 8.00% 8.00%

Salary escalation 2.75% 3.20% 4.25% 4.00% 5.10%

Expected rate of return on plan assets 9.88% 8.00% 8.00% 8.00% 8.00%

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other

relevant factors, such as supply and demand in the employment market.

b) Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan

assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation.

c) During the year the company has recognised the following amounts in the Statement of Profit and Loss in Note 2.6 to the Financial

Statements

- Salaries and wages include compensated absences Rs. 28.12 lakhs (2013: Rs. 1,591.33 lakhs) (2012: Rs. 951.93 lakhs).

- Contribution to provident, gratuity and other funds include Provident fund and family pension Rs. 4,503.87 lakhs (2013: Rs.

4,647.48 lakhs) (2012: Rs. 4,175.98 lakhs), super annuation Rs. 1,929.23 lakhs (2013: Rs.1,466.89 lakhs) (2012: Rs.1,263.40

lakhs), gratuity Rs. 1,750.07 lakhs (2013: Rs. 2,024.50 lakhs) (2012: Rs. 2,002.48 lakhs) and other funds Rs. 424.90 lakhs

(2013: Rs. 1,022.73 lakhs) (2012: Rs. 1,279.50 lakhs).

- Welfare expenses include contribution to employee state insurance plan Rs. 25.78 lakhs (2013: Rs.65.56 lakhs) (2012:

Rs.76.28 lakhs), retirement benefits charged/ (reversed) of Rs. 73.96 lakhs (2013: Rs. 56.05 lakhs) (2012: Rs. (22.09 lakhs))

and other defined employee benefits Rs. 36.01 lakhs (2013: Rs. 12.09 lakhs) (2012: Rs. 100.39 lakhs).

F - 65

3.11 The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been

determined on the basis of information available with the Company. The amount of principal and interest outstanding is

given below:

Rs. lakhs

Particulars 2012 2013 2014

i) Principal Amount paid after appointed date during the year 5,095.20 265.57 268.78

ii)Amount of interest due and payable for the delayed payment of Principal amount 33.97 64.93 4.01

iii)Principal amount remaining unpaid as at year end (over due) 715.35 10.27 14.96

iv)Principal amount remaining unpaid as at year end (not due) 8,051.91 215.90 2,170.91

v)Interest due and payable on principal amount unpaid as at the year end 28.27 0.74 0.24

vi)Total amount of interest accrued and unpaid as at year end 62.24 65.67 4.24

F - 66

3.12 Details of expenditure incurred on in-house Research and Development (R & D) facilities:

Capital expenditure is on incurrence basis, hence includes net additions in Capital Work - In – Progress

Rs. Lakhs

Approved R&D facilities R&D facility - approval

applied for Total

Particulars

Included in

Notes to the

Financial

Statements

2012 2013 2014 2012 2013 2014 2012 2013 2014

(i) Capital expenditure

(a) Land

1.11 and 1.12

71.63 - - - - - 71.63 - -

(b) Buildings 1,777.23 1,006.13 408.05 - - - 1,777.23 1,006.13 408.05

1,848.86 1,006.13 408.05 - - - 1,848.86 1,006.13 408.05

(c) Capital equipments 13,808.27 6,536.03 7,032.65 - 58.47 - 13,808.27 6,594.50 7,032.65

(ii) Revenue expenditure (net)

(a) Salaries/Wages 2.6 10,867.35 11,470.75 9,521.62 - 470.47 - 10,867.35 11,941.22 9,521.62

(b) Material/Consumables/spares 2.3 7,469.88 5,834.70 4,987.31 - 139.18 - 7,469.88 5,973.88 4,987.31

(c) Utilities 2.9 514.44 827.64 694.78 - 15.47 - 514.44 843.11 694.78

(d) Other expenditure directly

related to R&D 2.9

3,650.56 5,328.31 4,004.74 - 416.57 - 3,650.56 5,744.88 4,004.74

(e) Total revenue expenditure

(Total of (ii) (a) to (ii) (d)) 22,502.23 23,461.40 19,208.45 - 1,041.69 - 22,502.23 24,503.09 19,208.45

(iii) Total R&D expenditure

(Total of (i) (c) and (ii) (e)) 36,310.50 29,997.43 26,241.10 - 1,100.16 - 36,310.50 31,097.59 26,241.10

(iv) Less: Amount received by R & D

facilities 2.1 and 2.9

807.50 711.42 617.19 - - - 807.50 711.42 617.19

(v) Net amount of R & D expenditure

(iii) - (iv) 35,503.00 29,286.01 25,623.91 - 1,100.16 - 35,503.00 30,386.17 25,623.91

F - 67

3.13 Net Current tax expense for the year comprises of:

Rs. Lakhs

2012 2013 2014

Minimum Alternate Tax 14,030.00 10,819.00 -

Less: Minimum Alternate Tax Credit Entitlement 6,278.00 10,819.00 -

Current Tax 7,752.00 - -

F - 68

3.14(A) Details of Long Term Borrowings:

March 31, 2014

March 31, 2013

Non

Current

Current

maturities Total

Particulars of Redemption / Repayment

Non

Current

Current

maturities Total

Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs Rs. Lakhs

a. Secured Borrowings:

i. Debenture Series

9.85% AL 22 15,000.00 - 15,000.00 June 21, 2018 - - -

10.15% AL 20 15,000.00 - 15,000.00 December 28, 2017 15,000.00 - 15,000.00

10.20% AL 18 10,000.00 - 10,000.00 June 28, 2017 10,000.00 - 10,000.00

10.25% AL16 10,500.00 4,500.00 15,000.00 Rs. 6,000 lakhs on October 14, 2016 and Rs. 4,500

lakhs each on October 14, 2015 and 2014 15,000.00 - 15,000.00

9.70% AL 21 15,000.00 - 15,000.00 June 21, 2016 - - -

10.05% AL 19 15,000.00 - 15,000.00 December 28, 2015 15,000.00 - 15,000.00

8.20% AL 15 7,000.00 - 7,000.00 July 22, 2015 7,000.00 - 7,000.00

10.10% AL 17 20,000.00 - 20,000.00 June 28, 2015 20,000.00 - 20,000.00

8.20% AL 14 - 7,000.00 7,000.00 July 22, 2014 7,000.00 - 7,000.00

8.20% AL 13 - - - July 22, 2013 - 7,000.00 7,000.00

107,500.00 11,500.00 119,000.00

89,000.00 7,000.00 96,000.00

ii. Term Loans:

TL – 7 50,000.00 - 50,000.00 4 equal instalments on December 16, 2018, 2017, 2016,

2015 - - -

TL – 1 3,333.33 3,333.33 6,666.66 3 equal instalments on February 5, 2016, February 16,

2015, February 17 2014 6,666.67 3,333.33 10,000.00

TL - 2 5,000.00 5,000.00 10,000.00 3 equal instalments on June 1, 2015, 2014, 2013 10,000.00 5,000.00 15,000.00

TL - 3 - 6,666.67 6,666.67 2 equal instalments on March 22, 2015, 2014 6,666.66 6,666.67 13,333.33

TL - 4 - 5,000.00 5,000.00 2 equal instalments on November 30, 2014, 2013 5,000.00 5,000.00 10,000.00

TL - 5 - 5,000.00 5,000.00 2 equal instalments on November 30, 2014, 2013 5,000.00 5,000.00 10,000.00

TL - 6 - - - September 4, 2013 - 1,666.67 1,666.67

58,333.33 25,000.00 83,333.33

33,333.33 26,666.67 60,000.00

F - 69

Debentures and term loans from banks aggregating Rs. 202,333.33 lakhs (2013: Rs.156,000.00 Lakhs) are secured by a first charge on pari-passu basis on all assets of the

Company excluding certain immovable properties (residential buildings, windmill related assets and certain immovable assets) and movable fixed assets (such as aircraft and

windmill) of the Company.

b. Unsecured Borrowings:

i. ECB Loans

March 31, 2014

March 31, 2013

Non

Current

Current

maturities Total


Non

Current

Current

maturities Total


ECB -12 38,944.75 - 38,944.75 June 26, 2020 - Rs. 11,983.00 lakhs and June 26, 2019,

2018, 2017 - Rs. 8,987.25 lakhs each - - -

ECB -11 17,974.50 - 17,974.50 3 equal instalments on March 25, 2019, 2018, 2017 16,285.50 - 16,285.50

ECB -1 44,936.25 - 44,936.25 3 equal instalments on June 9, 2018, 2017, 2016 40,713.75 - 40,713.75

ECB -2 14,978.75 - 14,978.75 3 equal instalments on October 24, 2017, 2016, 2015 13,571.25 - 13,571.25

ECB -3 26,961.75 2,995.75 29,957.50 September 20, 2017 - Rs. 12,582.15 lakhs, 2016 - Rs.

11,383.85 lakhs, 2015 and 2014 - Rs. 2,995.75 lakhs each 27,142.50 - 27,142.50

ECB -10 11,983.00 - 11,983.00 July 12, 2015 10,857.00 - 10,857.00

ECB -4 - 39,943.33 39,943.33 2 equal instalments on June 30, 2014, 2013 36,190.00 36,190.00 72,380.00

ECB -5 - - - August 24, 2013 - 1,809.50 1,809.50

ECB -6 - - - July 10, 2013 - 4,523.75 4,523.75

ECB -7 - - - June 18, 2013 - 4,523.75 4,523.75

ECB -8 - - - May 10, 2013 - 1,809.50 1,809.50

155,779.00 42,939.08 198,718.08

144,760.00 48,856.50 193,616.50

F - 70

March 31, 2014

March 31, 2013

Non Current Current maturities Total Particulars of Redemption /

Repayment

Non Current Current maturities Total


ii. Interest free sales

tax loans

Programme II 7,931.22 214.30 8,145.52 Varying amounts repayable on a

monthly basis ending in March 2028. 5,596.52 150.88 5,747.40

Programme I - 118.24 118.24 Varying amounts repayable on a

monthly basis ending in April 2014. 118.24 1,317.53 1,435.77

7,931.22 332.54 8,263.76

5,714.76 1,468.41 7,183.17

iii. Loans from Others

-Loan 5 106.96 408.32 515.28

Varying amounts repayable on a

quarterly basis ending in July 2015 515.28 378.78 894.06

-Loan 4 - 248.07 248.07


quarterly basis ending in October 2014 248.07 307.82 555.89

-Loan 3 - 27.29 27.29


quarterly basis ending in October 2014 27.29 33.86 61.15

-Loan 2 - 167.08 167.08


quarterly basis ending in August 2014 167.08 314.22 481.30

-Loan 1 - 18.38 18.38


quarterly basis ending in August 2014 18.38 34.56 52.94

106.96 869.14 976.10

976.09 1,069.24 2,045.33

The above Term loans, External Commercial Borrowings and Loans from Financial institution carry varying rates of interest with the maximum rate of interest going upto 10.25%

(2013: 10.25%) per annum. The weighted average rate of interest of these loans is around 6.8% (2013 : 6.5%) per annum.

F - 71

3.14(B) Details of Long Term Borrowings:

March 31, 2013 March 31, 2012

Non

Current

Current

maturities Total


Non

Current

Current

maturities Total


a. Secured Loans:

I. Debenture Series

10.15% AL 20 15,000.00 - 15,000.00 December 28, 2017 - - -

10.20% AL 18 10,000.00 - 10,000.00 June 28, 2017 - - -

10.25% AL16 15,000.00 - 15,000.00 Rs. 6,000 lakhs on October 14, 2016 and Rs. 4,500 lakhs

each on October 14, 2015 and 2014 15,000.00 - 15,000.00

10.05% AL 19 15,000.00 - 15,000.00 December 28, 2015 - - -

8.20% AL 15 7,000.00 - 7,000.00 July 22, 2015 7,000.00 - 7,000.00

10.10% AL 17 20,000.00 - 20,000.00 June 28, 2015 - - -

8.20% AL 14 7,000.00 - 7,000.00 July 22, 2014 7,000.00 - 7,000.00

8.20% AL 13 - 7,000.00 7,000.00 July 22, 2013 7,000.00 - 7,000.00

89,000.00 7,000.00 96,000.00

36,000.00 - 36,000.00

ii. Term Loans:

TL - 1 6,666.67 3,333.33 10,000.00

3 equal instalments on February 5, 2016, February 16,

2015, February 17 2014. 10,000.00 - 10,000.00

TL - 2 10,000.00 5,000.00 15,000.00 3 equal instalments on June 1, 2015, 2014, 2013 15,000.00 - 15,000.00

TL - 3 6,666.66 6,666.67 13,333.33 3 equal instalments on March 22, 2015, 2014, 2013 13,333.33 6,666.67 20,000.00

TL - 4 5,000.00 5,000.00 10,000.00 3 equal instalments on November 30, 2014, 2013, 2012 10,000.00 5,000.00 15,000.00

TL - 5 5,000.00 5,000.00 10,000.00 3 equal instalments on November 30, 2014, 2013, 2012 10,000.00 5,000.00 15,000.00

TL - 6 - 1,666.67 1,666.67 3 equal instalments on September 4, 2013, 2012, 2011 1,666.67 1,666.67 3,333.34

33,333.33 26,666.67 60,000.00

60,000.00 18,333.34 78,333.34

F - 72

Debentures and term loans from banks aggregating Rs. 156,000.00 lakhs (2012: Rs.114,333.34 Lakhs) are secured by a first charge on pari-passu basis on all assets of the

Company excluding certain immovable properties (residential buildings and windmill related assets) and movable fixed assets (such as aircraft and windmill) of the company.

b. Unsecured Loans:

i. ECB Loans

March 31, 2013

March 31, 2012

Non

Current

Current

maturities Total


Non

Current

Current

maturities Total


ECB -11 16,285.50 - 16,285.50 3 equal instalments on March 25, 2019, 2018 and 2017 - - -

ECB -1 40,713.75 - 40,713.75 3 equal instalments on June 9, 2018, 2017, 2016 7,631.25 - 7,631.25

ECB -2 13,571.25 - 13,571.25 3 equal instalments on October 24, 2017, 2016, 2015 12,718.75 - 12,718.75

ECB -3 27,142.50 - 27,142.50 September 20, 2017 - Rs. 11,399.85 lakhs, 2016 - Rs.

10,314.15 lakhs, 2015 and 2014 - Rs. 2,714.25 lakhs each 25,437.50 - 25,437.50

ECB -10 10,857.00 - 10,857.00 Repayable on 12th July 2015 - - -

ECB -4 36,190.00 36,190.00 72,380.00 3 equal instalments on June 30, 2014, 2013, 2012 67,833.33 33,916.67 101,750.00

ECB -5 - 1,809.50 1,809.50 3 equal instalments on August 24, 2013, 2012 and 2011 1,695.83 1,695.83 3,391.66

ECB -6 - 4,523.75 4,523.75 3 equal instalments on July 10, 2013, 2012 and 2011 4,239.59 4,239.58 8,479.17

ECB -7 - 4,523.75 4,523.75 3 equal instalments on June 18, 2013, 2012 and 2011 4,239.59 4,239.58 8,479.17

ECB -8 - 1,809.50 1,809.50 3 equal instalments on May 10, 2013, 2012 and 2011 1,695.83 1,695.83 3,391.66

ECB -9 - - - 3 equal instalments on March 2, 2013, 2012 and 2011 - 4,239.58 4,239.58

144,760.00 48,856.50 193,616.50

125,491.67 50,027.07 175,518.74

F - 73

March 31, 2013

March 31, 2012

Non

Current

Current

maturities Total


Non

Current

Current

maturities Total

Rs.

Lakhs Rs. Lakhs

Rs.

Lakhs Rs. Lakhs Rs. Lakhs

Rs.

Lakhs

No. of

instalments

Instalment

Amount

(Rs. Lakhs)

Period

iii

.

Loans

from

Financial

institution

976.09 1,069.24 2,045.33 12 108.99 Quarterly installments starting from 1st August,2012 to 1st

May,2015. 1,151.27 550.44 1,701.71

16 95.63

Two installments every three months starting from

November 30, 2012 to October 31, 2014.

8 78.43

Two installments every three months starting from

November 30 2011 to October 31, 2012.

13 46.78

Two installments every three months starting from April

30, 2010 to October 31, 2011.

The above Term loans, External Commercial Borrowings and Loans from Financial institution carry varying rates of interest with the maximum rate of interest going upto

10.25% (2012: 10.75%) per annum. The weighted average rate of interest of these loans is around 6.5% (2012: 6%) per annum.

March 31, 2013

March 31, 2012

Non

Current

Current

maturities Total Particulars of Redemption /

Repayment

Non

Current

Current

maturities Total


ii. Interest free

sales tax loans

Programme II 5,596.52 150.88 5,747.40


monthly basis ending on March

2027.

5,256.40 186.63 5,443.03

Programme I 118.24 1,317.53 1,435.77


monthly basis ending on April

2014.

1,435.77 1,181.74 2,617.51

5,714.76 1,468.41 7,183.17

6,692.17 1,368.37 8,060.54

F - 74

3.15(A) Details of Short Term Borrowings

March 31, 2014 Particulars of Repayment March 31, 2013

Amount

Amount

Rs. Lakhs

Rs. Lakhs

Secured Borrowings

- STL8 3,300.00 Aug 13, 2014 -

- STL9 791.30 May 28, 2014 -

- STL6 - September 20, 2013 2,714.25

- STL7 - September 16, 2013 5,000.00

- STL5 - June 5, 2013 2,171.40

- STL4 - June 3, 2013 10,857.00

- Working Capital

Demand Loans 23,805.69

Repayable on demand 47,270.00

27,896.99

68,012.65

The above loans are secured by way of hypothecation of inventories (excluding stores and spares related to plant and machinery), Bills receivable, Book Debts and all other

movables both present and future of the Company to the extent of Rs. 1,65,000.00 Lakhs (2013: Rs. 1,50,000 Lakhs).


Amount

Amount

Rs. Lakhs

Rs. Lakhs

Unsecured Borrowings

- STL10 9,274.42 May 28, 2014 -

- STL11 9,586.40 May 30, 2014 -

- STL12 11,983.00 July 28, 2014 -

- STL3 - June 5, 2013 8,685.60

30,843.82

8,685.60

The above loans carry varying rates of interest with the maximum rate of interest going upto 10.40% (2013 : 10.25%) per annum. The weighted average rate of interest of these

loans is around 9.0% (2013 : 8.7%) per annum.

F - 75

3.15(B) Details of Short Term Borrowings


Amount

Amount

Rs. Lakhs

Rs. Lakhs

Secured Loans

- STL6 2,714.25 Sep 20, 2013 -

- STL7 5,000.00 Sep 16, 2013 -

- STL5 2,171.40 June 5, 2013 -

- STL4 10,857.00 June 3, 2013 -

-Working Capital Demand

Loans

47,270.00 Repayable on demand -

68,012.65

-

The above loans are secured by way of hypothecation of inventories (excluding stores and spares related to plant and machinery),

Bills receivable, Book Debts and all other movables both present and future of the company to the extent ofRs. 1,50,000.00 lakhs.


Amount

Amount

Rs. Lakhs

Rs. Lakhs

Unsecured Loans

- STL3 8,685.60 June 5, 2013 -

- STL2 - May 22, 2012 5,087.50

- STL1 - April 18, 2012 5,087.50

8,685.60

10,175.00

The above loans carry varying rates of interest with the maximum rate of interest going upto 10.25% (2012 : 7%) per annum.The

weighted average rate of interest of these loans is around 9.5% (2012 : 6.9%) per annum.

3.16 a) Accounting for Amalgamation

The Company had invested in certain associate companies, i.e. Ashley Investments Limited (AIL) and Ashley Holdings

Limited(AHL) (both engaged in holding Strategic investments primarily in Auto and Auto Component Segment),

Ashok Leyland Project Services Limited (ALPS) (engaged in consultancy services for promoting projects in thermal

power, wind energy etc.) and Ashley Services Limited (ASL) (engaged in trading in commodities, providing technical

and management support). Under a scheme of amalgamation sanctioned by the Honourable High Court of Madras vide

its order dated July 31, 2013, AHL, AIL and ALPS merged with ASL, effective April 1, 2013. Consequent thereto, ASL

became a wholly owned subsidiary of the Company as on the Appointed date of April 1, 2013.

In a subsequent development, on March 21, 2014, the Honourable High Court of Madras approved the scheme for

amalgamation of ASL(amalgamating company) with the Company from the Appointed Date of July 1, 2013. The said

Scheme became effective on March 27, 2014 on filing with the Registrar of Companies. The said Scheme of

Amalgamation was also approved by all the three Stock Exchanges in India with which the Company's shares have

been listed, namely, Madras Stock Exchange, Bombay Stock Exchange and National Stock Exchange vide their

approvals dated December 19, 2013, January 23, 2014, and January 22, 2014 respectively."

F - 76

b) Combination of authorised capital

Pursuant to the aforesaid amalgamation and in terms of the said approved Scheme, the authorised share capital of the

Company stands increased by the authorised share capital of ASL aggregating to Rs.219,210.00 Lakhs. The sub division

in terms of class of share capital is as follows:

Particulars No of shares Face Value per share Rs.

Equity Shares 2135,60,00,000 1.00 2135,60,00,000

Redeemable Non- Cumulative Non- Convertible

Preference Shares 3,65,00,000 10.00 36,50,00,000

Non-Convertible Redeemable Preference Shares 20,00,000 100.00 20,00,00,000

Accordingly, effective July 1, 2013, the authorised capital of the Company stands at Rs. 259,210.00 lakhs

c) Accounting treatment

The Company has followed the accounting treatment prescribed in the said approved Scheme of Amalgamation, as

follows:

i. The amalgamation of ASL with the Company has been accounted by the Company in the books by using the

Pooling of interests method in accordance with the said approved Scheme of Amalgamation and Accounting

Standard (AS) 14 as notified under the Companies Act, 1956

Accordingly, the Company has recorded all the assets and liabilities, and reserves of ASL at their respective book

values as appearing in the books of ASL as at July 1, 2013, the details of which are as follows:


ASSETS

Fixed Assets- Tangible 1.81


Long term loans and advances 3,730.63

Current assets:

- Cash and Cash Equivalents 28.04

- Short term loans and advances 9.90

LIABILITIES

Current liabilities 99.99

RESERVES

Capital Reserve 8,793.10

Deficit in Statement of Profit and Loss (4.77)

ii. Further, as provided in the said approved Scheme of Amalgamation, the shares of ASL held by the Company as on

July 1, 2013 directly and / or through its nominee(s), constituting the entire paid up equity and preference share

capital of ASL amounting to Rs. 1,14,080.24 Lakhs and share application monies pending allotment in the books of

the Company aggregating to Rs. 7,650.00 Lakhs stood cancelled. No shares or consideration was required to be

issued / paid by the Company, as ASL was a Wholly - Owned Subsidiary of the Company.

F - 77

3.17 Exceptional Items - Voluntary retirement scheme

The Company announced Voluntary Retirement Schemes (2013) during the FY 2014 for executives who could opt for an

early separation from services of the Company. VRS compensation of Rs. 4,674.94 Lakhs (2013 : Nil) (2012: Nil)

represents the amount settled, in respect of those executives who exercised their option and separated from the employment

upto March 31, 2014.

3.18 The figures for the previous year have been reclassified / regrouped / amended, wherever necessary.




June 26, 2014

Chennai

F - 78

INDEPENDENT AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF

ASHOK LEYLAND LIMITED

Report on the Consolidated Financial Statements

1. We have audited the accompanying consolidated financial statements of Ashok Leyland Limited (the “Company”), its

subsidiaries and jointly controlled entities (the Company, its subsidiaries and jointly controlled entities constitute “the

Group”), which comprise the Consolidated Balance Sheet as at 31st March, 2014, the Consolidated Statement of Profit and

Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting

policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

2. The Company’s Management is responsible for the preparation of these consolidated financial statements that give a true and

fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group

in accordance with the accounting principles generally accepted in India. This responsibility includes the design,

implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial

statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our

audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those

Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance

about whether the consolidated financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated

financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of

material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated

financial statements that give a true and fair view in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An

audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting

estimates made by the Management, as well as evaluating the overall presentation of the consolidated financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion, to the best of our information and according to the explanations given to us, and based on the consideration of

the reports of the other auditors on the financial statements of the subsidiaries, jointly controlled entities and associates and

based on the consideration of the unaudited financial statements / consolidated financial statements of the subsidiaries and

jointly controlled entity, referred to below in the Other Matters paragraph, the aforesaid consolidated financial statements

give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2014;

(b) in the case of the Consolidated Statement of Profit and Loss, of the loss of the Group for the year ended on that

F - 79

date; and

(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that

date.

Other Matters

7. Financial statements / consolidated financial statements of two subsidiaries and one jointly controlled entity which reflect

total assets (net) of Rs.23,918.38 lakhs as at March 31, 2014, total revenue (net) of Rs 18,725.07 lakhs and net cash flows

amounting to Rs.134.87 lakhs for the year ended on that date, have been audited by either one of us.

8. We did not audit the financial statements of seven subsidiaries and three jointly controlled entities, whose financial

statements reflect total assets (net) of Rs.530,274.92 lakhs as at 31st March, 2014, total revenues of Rs.79,645.34 lakhs and

net cash flows amounting to Rs.2,653.47 lakhs for the year ended on that date, as considered in the consolidated financial

statements.

The consolidated financial statements also include the Group’s share of net profit of Rs.992.43 lakhs for the year ended 31st

March, 2014, as considered in the consolidated financial statements, in respect of four associates, whose financial statements

have not been audited by us.

The above financial statements have been audited by other auditors whose reports have been furnished to us by the

Management and our opinion, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries,

jointly controlled entities and associates, is based solely on the reports of the other auditors.

9. The consolidated financial statements include the unaudited financial statements / consolidated financial statements of four

subsidiaries and one jointly controlled entity whose financial statements / consolidated financial statements reflect total assets

(net) of Rs.29,224.85 lakhs as at 31st March, 2014, total revenue of Rs.59,104.99 lakhs and net cash flows amounting to

Rs.1338.34 lakhs for the year ended on that date, as considered in the consolidated financial statements. Our opinion, in so

far as it relates to the amounts included in respect of these subsidiaries and jointly controlled entity, is based solely on such

unaudited financial statements / consolidated financial statements.

Our opinion is not qualified in respect of these matters.

For M.S. Krishnaswami & Rajan


Registration No. 01554S

Sd/-

M.S. Murali

Partner


For Deloitte Haskins & Sells LLP


Firm’s Registration No. 117366W/W-100018

Sd/-

A. Siddharth

Partner


May 22, 2014

Chennai

F - 80

As at March 31, 2014

Consolidated Balance Sheet as at March 31, 2014 Note No. Rs. Lakhs

Particulars



Share capital 1.1 26,606.80

Reserves and surplus 1.2 372,316.16

398,922.96

Minority interest

65,211.15


Long-term borrowings 1.3 549,118.41

Deferred tax liabilities (Net) 1.4 A 41,141.98

Other long-term liabilities 1.5 962.54

Long-term provisions 1.6 12,671.94

603,894.87

Current liabilities

Short-term borrowings 1.7 126,448.80

Trade payables 1.8 259,243.96

Other current liabilities 1.9 286,735.29

Short-term provisions 1.10 12,973.96

685,402.01

TOTAL

1,753,430.99

ASSETS

Non-current assets

Fixed assets

Tangible assets 1.11 626,235.34

Intangible assets 1.12 52,856.63

Capital work-in-progress 1.11 27,015.17

Intangible assets under development 1.12 2,639.69

Goodwill (on consolidation)

78,173.00

Non-current investments 1.13 69,018.46

Deferred tax assets (Net) 1.4 B 1,000.97

Long-term loans and advances 1.14 238,481.76

Other non-current assets 1.15 26,216.91

1,121,637.93

Current assets

Current Investments 1.16 47,438.06

Inventories 1.17 154,404.95

Trade receivables 1.18 138,108.69

Cash and bank balances 1.19 11,341.53

Short-term loans and advances 1.20 247,675.12

Other current assets 1.21 32,824.71

631,793.06

TOTAL

1,753,430.99

F - 81

Statement on Significant Accounting Policies and Notes to the Consolidated Financial Statements are an integral part of this

Consolidated Balance Sheet.

F - 82

Year Ended March

31, 2014

Consolidated Statement of Profit and Loss for the year ended March 31, 2014 Note No. Rs. Lakhs

Particulars

Income

Revenue from operations 2.1 1,211,437.89

Less: Excise Duty 62,765.93

Revenue from operations (Net) 1,148,671.96

Other income 2.2 9,244.94

Total Revenue 1,157,916.90

Expenses

Cost of materials consumed 703,011.90

Cost of services availed 1,278.52

Purchases of Stock-in-Trade - Traded goods 73,250.47

Changes in inventories of finished goods, work-in-progress and Stock-in-Trade 36,306.25

813,847.14

Employee benefits expense 2.3 134,558.33

Finance costs 2.4 80,548.82

Depreciation and amortization expense 2.5 52,996.51

Other expenses 2.6 158,064.13

Total Expenses 1,240,014.93

Loss before exceptional and extraordinary items and tax

(82,098.03)

Exceptional items 2.7 52,077.41

Loss before tax (30,020.62)

Tax expense:

Current tax 5,465.50

Deferred tax (12,315.34)

Loss after tax from continuing operations (23,170.78)

Share of profit of associates (net) 992.43

Minority interest (5,766.11)

Loss for the year (16,412.24)

Earnings per share (Face value Re.1) - Basic and Diluted (in Rs.) (Refer Note 3.3 to

the Financial Statements) (0.62)

F - 83

Statement on Significant Accounting Policies and Notes to the Consolidated Financial Statements are an integral part of this

Consolidated Statement of Profit and Loss.

F - 84

March 31, 2014

Consolidated Cash Flow Statement for the year ended March 31, 2014 Rs. Lakhs


(Loss) before tax (30,020.62)

Adjustments for :

Depreciation, amortisation and impairment - net of capitalization 52,996.51

Other amortisations 189.04

Bad and doubtful debts / advances provided / written-off (net of recovery) 982.07

Provisions relating to vehicle financing 1,248.45

Foreign exchange (gains) / losses 18.83

Loss / (Profit) on disposal of tangible assets (20,248.62)

Loss / (Profit) on sale of long-term investments (37,965.10)

Diminution in value of long-term investments 487.66

Stock compensation expenses 2.80

Voluntary Retirement Scheme expense 4,694.42

Finance costs - net of capitalisation 51,827.00

Interest income (4,121.99)

Dividend income (590.40)

Operating profit before working capital changes 19,500.05


Liabilities and provisions (59,784.45)



Loans and Advances (40,331.21)

Other non-current and current assets (7,373.20)

Voluntary Retirement Compensation paid - Exceptional item (4,694.42)

Cash (used in) operations (737.73)

Income tax paid (9,662.61)

Net cash flow (used in) operating activities [A] (10,400.34)


Payments for acquisition of assets (40,805.06)

Proceeds on sale of fixed assets 1,789.59

Proceeds on sale of tangible assets - Exceptional item 9,733.47

Proceeds from sale of long-term investments - Exceptional item 52,059.74

Purchase of long-term investments (53,479.32)

Purchase of interest in a subsidiary (919.76)

Debenture application money given (8,800.00)

Inter Corporate Deposits – given (5,000.00)

Inter Corporate Deposits – repaid 2,000.00

Interest received 4,229.51

Dividend received 590.40

F - 85

March 31, 2014

Rs. Lakhs

Related Party Loans and advances given / repaid (Net) 1,079.50

Taxes paid (204.06)

Net cash flow (used in) investing activities [B] (37,725.99)


Issues of shares to minority shareholders 33,411.79

Proceeds from long-term borrowings 256,763.51

Repayments of long-term borrowings (158,643.53)

Repayments of short-term borrowings (net) (15,948.76)

Debenture / Loan raising expenses paid (893.00)

Interest paid (49,883.40)

Dividend paid and tax thereon (18,677.15)

Net cash flow from financing activities [C] 46,129.46

Net cash (outflow) [A+B+C] (1,996.87)

Opening cash and cash equivalents 12,674.64

Add: Pursuant to amalgamation [Refer Note 3.13] 28.04

Exchange fluctuation on foreign currency bank balances (68.50)

Closing cash and cash equivalents [Refer Note 1.19 a.] 10,637.31

F - 86

Statement of Significant Accounting policies forming part of the consolidated financial statements for the year ended

March 31, 2014

1. Accounting convention

Financial statements are prepared in accordance with the Generally Accepted Accounting Principles in India to comply 1.1

with the Accounting Standards notified under Section 211 (3C) of the Companies Act 1956(“the 1956 Act”)[which

continues to be applicable in respect of section 133 of the Companies Act’2013(“the 2013 Act”) in terms of general

circular 15/2013 dated 13 September,2013 of the Ministry of Corporate Affairs] and the relevant provision of the 1956 Act/

2013 Act as applicable. The financial statements have been prepared on accrual basis under historical cost convention

except for certain categories of fixed assets that are carried at re-valued amounts.

All assets and liabilities have been classified as current or non-current as per the group’s normal operating cycle and other 1.2

criteria set out in the revised schedule VI to the Companies Act, 1956. Based on the nature of products and the time

between the acquisition of assets for processing and their realisation in cash and cash equivalents, the group has determined

its operating cycle as twelve months for the purpose of current-non-current classification of assets and liabilities.

The preparation of the financial statements, in conformity with the generally accepted accounting principles, requires 1.3

management to make estimates and assumptions that are considered in the reported amounts of assets and liabilities on the

date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the

year. Estimates are based on historical experience, where applicable and other assumptions that management believes are

reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with

in the period in which the results are known/ materialize.

2. Tangible and Intangible assets

2.1 Cost of all civil works (including electrification and fittings) is capitalised with the exception of alterations and

modifications of a capital nature to existing structures where the cost of such alteration or modification is Rs 100,000 and

below. Other fixed assets, including intangible assets and assets given on lease, where the cost exceeds Rs. 10,000 and the

estimated useful life is two years or more, is capitalised. Cost of initial spares and tools is capitalised along with the

respective assets. Cost of fixed assets is net of eligible credits under CENVAT / VAT Scheme. Expenditure directly

related and incidental to construction / development and borrowing costs in para 3 below are capitalised upto the date the

assets are ready for their intended use. Exchange differences are capitalised to the extent dealt with in para 9.2 below.

Certain categories of fixed assets were revalued and are carried at the revalued amounts less accumulated depreciation and

impairment loss, if any. Increase in the net book value on such revaluation is credited to “Revaluation Reserve Account”.

Upon the sale, disposal, extinguishment of the revalued assets the amount of revaluation reserve against such assets is

adjusted against their carrying values and the difference between the sale proceeds of such assets and the adjusted carrying

value are recognised in the Statement of profit and loss.

2.2 Tangible fixed assets and intangible assets, that are not yet ready for their intended use, are carried at costs, comprising

direct cost and other incidental/attributable expenses and reflected under capital work in progress/intangible assets under

development, respectively.

2.3 Assets are depreciated / amortised, as below, on straight line basis:

a) Leasehold land over the period of lease;

b) Leasehold land and buildings, as revalued, is calculated on the respective revalued amounts, over the balance useful

life as determined by the valuers in the case of buildings and as per (a) above in the case of land;

F - 87

c) Buildings, plant and machinery (except assets subject to impairment) and other assets, including assets given on

lease and assets in leased premises / customer premises, over their estimated useful lives or lives derived from the

rates prescribed in Schedule XIV to the Companies Act, 1956, whichever is lower;

d) Assets subject to impairment, on the asset's revised carrying amount, over its remaining useful life.

e) Intangible assets are amortized over their estimated useful life.

2.4 Depreciation/amortisation is provided on a pro-rate basis from the month the assets are put to use during the financial year.

In respect of assets sold or disposed off during the year, depreciation/amortisation is provided upto the month of sale or

disposal of the assets.

2.5 The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment. If any,

indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the

carrying amount exceeds the recoverable amount.

3. Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets, are added to the cost of those

assets, upto the date when the assets are ready for their intended use. Expenditure incurred on issue of debentures is adjusted

against Securities Premium Account. Expenditure incurred on raising loans is amortised over the period of such borrowings.

Premium paid on prepayment of borrowing is amortised over the unexpired period thereof or six months, whichever is less.

All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

4. Investments

Long term investments are stated at cost. However, provision for diminution is made to recognise a decline, if any, other than

temporary, in the carrying value of the investment. Current investments are valued at lower of cost and fair value.

5. Repossessed stocks (pertaining to financing activity included in other current assets)

Repossessed Assets are valued at net realizable value.

6. Receivables under financing activity

All loan exposures to borrowers with instalment structure are stated at the full agreement value after netting off:

a) Unearned income

b) Collections appropriated up to the year end and

c) Loan assigned

Provision for standard asset is made as per internal estimates, based on past experience, realization of security, and other

relevant factors, on the outstanding amount of standard assets subject to minimum provisioning requirement specified by

RBI.

Provision for non-performing assets is made subject to minimum provisioning requirements as specified by RBI

F - 88

7. Inventories

7.1 Inventories are valued at lower of cost and net realisable value; cost being ascertained on the following basis:

- Stores, raw materials and components and work-in-progress: On monthly moving weighted average basis.

- Spares, consumable tools: weighted average basis.

- In respect of works made components, cost includes applicable production overheads

- finished/trading goods under absorption costing method

7.2 Cost includes taxes and duties and is net of eligible credits under CENVAT / VAT Schemes.

7.3 Cost of patterns and dies is amortised over a period of five years.

7.4 Surplus / obsolete / slow moving inventories are adequately provided for.

8. Foreign currency transactions and derivatives

8.1 Foreign currency transactions are recorded at the rates prevailing on the date of the transaction. Monetary assets and

liabilities in foreign currency are translated at closing rate. Exchange differences arising on settlement or translation of

monetary items other than those mentioned in para 8.2 below are recognised as income or expense in the Statement of

Profit and Loss in the period it arises.

8.2 Exchange differences on translation or settlement of long term foreign currency monetary items (i.e. whose term of

settlement exceeds twelve months from date of its origination) at rates different from those at which they were initially

recorded or reported in the previous financial statements, insofar as it relates to acquisition of depreciable assets are

adjusted to the cost of the assets and depreciated over remaining useful life of such assets. In other cases, these are

accumulated in “Foreign currency monetary item translation difference account” and amortised by recognition as income

or expense in each period over the balance term of such items till settlement occurs but not beyond March 31, 2020.

8.3 The Group uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating

to firm commitments and highly probable forecast transactions. The group designates such forward contracts in a cash flow

hedging relationship by applying the hedge accounting principles set out in Accounting standard-30 “Financial Instruments

– Recognition and measurement” issued by ICAI. Gains and losses on these forward contracts designated as “effective cash

flow hedges” are recognized in the “hedge reserve account” till the underlying forecasted transaction occurs. Any

ineffective portion however, is recognized immediately in the statement of profit and loss.

8.4 Gains and losses on all other derivatives (including forward contracts not designated as Cash flow hedge) are recognised in

the Statement of Profit and Loss in the period it arises. Premium or discount on forward contracts is amortized over the life

of the contract.

8.5 Investments in equity capital of companies registered outside India are carried in the Balance Sheet at the rates prevailing

on the date of the transaction.

8.6 Income / expenditure of overseas branches are recognised at the average rate prevailing during the month in which

transaction occurred.

9. Segment Reporting

The Group operates in a single business segment i.e. Automotive segment, which is the group’s primary segment determined

on the basis of on nature of products risks, returns and internal business reporting system. The automotive segment includes

the business of manufacturing and trading in Medium and Heavy Commercial Vehicle, Light Commercial Vehicles,

Passenger vehicles, automotive aggregates (engines, spare parts, etc.), Vehicle financing and Engineering Design services.

F - 89

10. Revenue recognition

a. Sale of products

Revenue from sale of products, net of returns, is recognised on despatch or appropriation of goods in accordance with the

terms of sale and is inclusive of excise duty. Price escalation claims are recognised to the extent there is reasonable

certainty of its realisation.

b. Sale of services

Revenue from services is recognised in accordance with the specific terms of contract on performance.

c. Income from financial services

Interest / finance income from assets on finance / loan included in revenue from operations represents interest income

arrived at based on internal rate of return method. Interest income is recognised as it accrues on a time proportion basis

taking into account the amount outstanding and the rate applicable, except in the case of nonperforming assets (NPA)

where it is recognised upon realisation.

d. Income on securitisation/assignment

1. In respect of transfer of financial assets by way of securitisation or bilateral assignments, the said assets are

derecognized upon contractual transfer thereof, and transfer of substantial risks and rewards to the purchaser. The

gain arising on transfer of financial assets by way of securitisation or bilateral assignments, if received in cash, is

amortised over the tenure of the related financial assets, and if received by way of excess interest spread, is

recognised based on the contractual accrual of the same. Loss on sale, if any is charged to statement of profit and

loss immediately at the time the sale is effected.

2. Upfront income pertaining to loan origination is accounted for upfront as and when it becomes due.

e. Income from energy generated

Revenue from energy generated through windmills is recognized based on the contracted rates with the customers and

the credit granted by the regulatory authorities to the said customers for units generated.

f. Other operating revenues

Other operating revenues comprise of income from ancillary activities incidental to the operations of the Group and is

recognised when the right to receive the income is established as per the terms of the contract.

g. Other income

Interest income is accounted on accrual basis. Dividend income is accounted as and when the right to receive the

dividend is established.

F - 90

11. Leases

Where the group is a lessor

a. Leases in which the group transfers substantially all the risks and rewards of ownership of the asset are classified as

finance leases. Assets given under finance lease are recognised as a receivable at an amount equal to the net investment

in the lease. After the initial recognition, the group apportions lease rentals between principal repayment and interest

income so as to achieve a constant periodic rate of return on the net investment outstanding in respect of the finance

lease. The interest income is recognised in the Statement of Profit and Loss. Initial direct costs such as legal costs,

brokerage costs, etc., are recognised immediately in the Statement of Profit and Loss.

b. Leases in which the group does not transfer substantially all the risks and rewards of ownership of the asset are classified

as operating leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is

recognised in the Statement of Profit and Loss on a straight line basis over the lease terms. Costs, including depreciation,

are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs

etc. are charged to the Statement of Profit and Loss in the period of incurrence.

12. Government grants

Grants in the form of capital/investment subsidy are treated as Capital reserve. Export incentives and incentives in the nature

of subsidies given by the Government are reckoned in revenue in the year of eligibility.

13. Research and Development Costs

Revenue expenditure on the design and production of prototypes is charged to the Statement of Profit and Loss as and when

incurred. Product development costs, including knowhow developed / acquired, incurred on new vehicle/ engine platforms,

variants on existing platforms and aggregates are recognised as Intangible assets only when product’s technical feasibility is

established and amortised over their estimated useful life.

14. Employee benefits

14.1 Employee benefit expenses include salary, wages, performance incentives, compensated absences, medical benefits and

other perquisites. It also includes post employment benefits such as provident fund, superannuation fund, gratuity,

pensionary benefits etc.

14.2 Short term employee benefit obligations are estimates and provided for.

14.3 Post-employment benefits and other long term employee benefits

- Defined contribution plans

Group’s contribution to provident fund, superannuation fund, employee state insurance and other funds are

determined under the relevant schemes and/or statute and charged to the statement of profit and loss in the period

of incurrence when the services are rendered by the employees.

F - 91

In respect of provident fund contributions made to a trust administered by the group, the interest rate payable to

the members of the trust shall not be lower than the statutory rate of interest declared by the Central government

under the Employees Provident Fund and Miscellaneous Provision Act, 1952 and shortfall, if any, shall be

contributed by the group and charges to the statement of profit and loss.

- Defined benefit plans and compensated absence

Group’s liability towards gratuity, other retirement benefits and compensated absences are actuarially determined

at each balance sheet date using projected unit credit method. Actuarial gains and losses are recognised in the

statement of profit and loss in the period of occurrence.

14.4 Termination benefits

Expenditure on termination benefits (including expenditure on voluntary retirement scheme) is recognized in the statement

of profit and loss in the period of incurrence.

15. Provision and contingencies

A provision is recognized when the group has a present obligation as a result of past events and it is probable that an outflow

of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are

reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in

the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

Provision for product warranties is made for contractual obligations in accordance with the policy in force and is estimated

for the unexpired period.

16. Provision for non-performing assets and doubtful assets

Non-performing assets (‘NPA’) including loans and advances and receivables are identified as bad / doubtful based on the

duration of the delinquency. NPA provisions are made based on the management’s assessment of the degree of impairment

and the level of provisioning meets the Non-Banking Financial (Non-Deposit Accepting or Holding). Companies Prudential

Norms (Reserve Bank) Directions, 2007,as amended by Reserve Bank of India from time to time. These provisioning norms

are considered the minimum and additional provision is made based on perceived credit risk where necessary.

17. Provision for standard assets

Provisions for standard assets are made as per the RBI notification DNBS.PD.CC.No.207/3.02.002/2010-11 dated 17

January 2011.

18. Income taxes

18.1 Income tax expenses comprise current and deferred taxes. Current tax is determined on income for the year chargeable to

tax in accordance with the Income Tax Act, 1961 and after considering credit for Minimum Alternate Tax available under

the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of adjustments to

future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit associated with

it will flow to the group resulting in payment of normal income tax.

F - 92

18.2 Deferred tax is recognised on timing differences; being the difference between taxable income and accounting income that

originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax assets are recognised

for timing differences other than unabsorbed depreciation carry forward losses only to the extent that there is a reasonable

certainty that there will be sufficient future taxable income to realise the assets. Deferred tax asset pertaining to unabsorbed

depreciation and carry forward of losses are recognised only to the extent there is a virtual certainty of its realisation.

18.3 Foreign companies recognize tax assets / liabilities in accordance with applicable local laws.

19. Cash flow statement

Cash flow statements are reporting using the indirect method, whereby profit/(loss) before extraordinary items/exceptional items

and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipt of

payments. The cash flows from operating, investing and financing activities of the group are segregated based on available

information including taxes paid relating to these activities.

Notes annexed to and forming part of the Consolidated Financial Statements


1.1 CAPITAL Rs. Lakhs

Authorised

a) 2535,60,00,000 Equity shares of Re.1 each 253,560.00

b) 3,65,00,000 Redeemable Non-Cumulative Non-Convertible Preference Shares of Rs.10

each

3,650.00

c) 20,00,000 Non-Convertible Redeemable Preference Shares of Rs.100 each 2,000.00

259,210.00

Issued

a) 201,45,66,829 Equity shares of Re.1 each 20,145.67

b) 64,63,14,480 Equity shares of Re.1 each issued through Global Depository Receipts 6,463.14

26,608.81

Subscribed and fully paid up

a) 201,43,62,154Equity shares of Re.1 each 20,143.62

b) 64,63,14,480 Equity shares of Re.1 each issued through Global Depository Receipts 6,463.14

26,606.76

Add: Forfeited shares (amount originally paid up in respect of 760 shares) 0.04

26,606.80

Notes:

1. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 110,46,46,899 Equity shares and 54,86,669 Global

Depository Receipts (GDRs) equivalent to 32,92,00,140 Equity shares of Re.1 each aggregating to 53.89% of the

total share capital.

2. Shareholders other than the Holding Company holding more than 5% of the total share capital:

Life Insurance Corporation of India holds 24,05,15,574 Equity shares of Re.1 each aggregating to 9.04%.

3. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the company

a) The Equity share holders are entitled to receive dividends as and when declared; a right to vote in proportion to

holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the

provisions of the Companies Act, 1956.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the

provisions of the Companies Act, 1956. Each GDR holder is entitled to receive 60 equity shares of Re. 1 each, per

GDR, and their voting rights can be exercised through the Depository.

F - 93

1.2 RESERVES AND SURPLUS


Rs. Lakhs

a) Capital Reserve [Also Refer Note 3.13 c.] 8,882.60

b) Securities Premium Account 76,126.99

c) Debenture Redemption Reserve 7,250.00

d) Revaluation Reserve 117,392.67

e) General Reserve 94,341.48

f) Hedge Reserve 378.28

g) Foreign currency monetary item translation difference- (Net) (787.92)

h) Employee Stock option Outstanding Account 1.84

i) Statutory Reserve (As per Section 45 - IC of the Reserve Bank of

India Act, 1934) (includes current year transfer from surplus)

1,069.15

j) Surplus in Consolidated Statement of Profit and Loss

Balance as at the beginning of the year 83,397.23

Add : Current year profit / (loss) (16,412.24)

Add : Transferred from Debenture Redemption Reserve 1,750.00

Add: Pursuant to amalgamation [Refer Note 3.13 c.] (4.77)

Less : Transfer to Statutory Reserve- (Refer 1.2 (i) above) (1,069.15)

Balance as at the end of the year 67,661.07

372,316.16

1.3 LONG TERM BORROWINGS


i. Debentures 107,500.00

ii. Term Loan from banks 250,879.47


i. Long-term monetary item in foreign currency

- External Commercial Borrowings from banks

178,613.91

ii. Debentures 3,500.00

iii. Other loans and advances

Interest free sales tax loans 7,931.22

Others 693.81

549,118.41

Notes :

1. Refer Note 1.9 (a) for Current Maturities of Long Term Borrowings

2. Security and terms of repayment in respect of the above borrowings are detailed in Note 3.11

3. Of the Above, borrowings for vehicle financing is given below

Term Loans from banks - Secured 142,788.64

Debenture - Unsecured 3,500.00

Total 146,288.64

F - 94

1.4A DEFERRED TAX LIABILITIES (NET) As at March 31, 2014

Rs. Lakhs


i) Depreciation / Research and development expenditure 62,165.52

ii) Other timing differences 1,697.86


i) Voluntary retirement scheme compensation (1,281.84)

ii) Carry forward of Losses - Unabsorbed depreciation (17,714.25)

iii) Provision for compensated absences (1,971.87)

iv) Other timing differences (1,753.44)

41,141.98

1.4B DEFERRED TAX ASSETS (NET)


i) Depreciation / Research and development expenditure (77.32)


i) Contingency provision against standard assets 268.95

ii) Provision against non-performing assets 726.45

iii) Provision for employee benefits 24.33

iv) Other timing differences 58.56

1,000.97

1.5 OTHER LONG TERM LIABILITIES

a) Income received in Advance 13.00

b) Other payables

i) Capital Creditors 224.12

ii) Deposits 50.00

iii) Others 675.42

962.54

1.6 LONG-TERM PROVISIONS

a) Provision for Employee Benefits

i. Compensated absences 5,159.27

ii. Post retirement benefits 608.53

iii. Post retirement medical benefits 98.83

b) Provision for Product warranties 6,014.06

c) Contingency provision on standard assets (Relating to vehicle financing) 791.25

12,671.94

F - 95

1.7 SHORT TERM BORROWINGS As at March 31, 2014

Rs. Lakhs


Loans from Banks 95,522.83

(Includes Cash Credit, Working capital demand loan, Packing credit etc)


i) Short term loans (STL) from Banks 30,843.82

ii) Other Borrowings 82.15

126,448.80

Notes:

1. Maximum balance outstanding during the year for Commercial Paper is Rs. 60,000.00 lakhs.

2. Terms of repayment in respect of the above borrowings are detailed in Note 3.12

3. Loans from Banks include borrowings relating to vehicle financing Rs. 56,862.54 lakhs

1.8 TRADE PAYABLES

Trade payables - including acceptances 259,243.96

259,243.96

1.9 OTHER CURRENT LIABILITIES

a) Current maturities of Long term debts 174,428.99

b) Interest accrued but not due on borrowings 10,053.00

c) Income received in advance 1,099.16

d) Unclaimed dividends 659.59

e) Advance from Customers 14,175.90

f) Statutory Liabilities 17,175.79

g) Assignees towards collections in assigned assets (Relating to vehicle financing) 4,579.21

h) Other payables 64,563.65

286,735.29

Notes:

1. Details of security and terms of repayment in respect of the current maturities of long term debts are detailed in

Note 3.11

2. Other payables include:

- Foreign exchange (gain) / loss on Forward contracts – net 2,084.80

- Employee benefits 11,158.64

- Capital creditors 19,904.95

3. Current maturities of long term debts includes Rs. 90,210.78 lakhs relating to vehicle financing

1.10 SHORT-TERM PROVISIONS

a) Provision for employee benefits

i) Compensated absences 1,181.62

ii)Post retirement benefits 148.97

iii) Post retirement medical benefits 37.73

b) Others

i) Product warranties

9,466.09

ii) Provision for non-performing assets relating to vehicle financing

2,137.25

iii) Provision for income tax (net of advance tax)

2.30

12,973.96

F - 96

1.11 TANGIBLE ASSETS AND CAPITAL WORK IN PROGRESS

Rs. Lakhs

Notes:

1. Buildings include service installations of gross value Rs. 16,123.14 lakhs

2. Land and Buildings (other than those given on lease and installations) have been revalued as at March 31, 2009 after

considering depreciation / amortisation upto that date as per external valuer's report, on the governing principles of current

cost. The amount of increase on the revaluation done on March 31, 2009 was Rs. 1,36,486.44 lakhs and the revalued amount

substituted for historical cost of the fixed assets as at that date was Rs. 2,03,737.92 lakhs

3. A portion of the Buildings in Bhandara revalued at Rs. 950 lakhs is on a land, the title for which is yet to be transferred to the

Company

4. Sale deeds in respect of certain immovable properties (aggregating Rs.7,685.52 Lakhs in value) transferred during the year is

pending execution / registration.

5. Cost of Buildings as at March 31, 2014 includes:

a) Rs.3.42 lakhs being cost of shares in Housing Co-operative Society representing ownership rights in residential flats and

furniture and fittings thereat.

b) Rs.132.38 lakhs representing cost of residential flats including undivided interest in land.

6. Additions to Tangible Assets and Capital work in progress include:

a) Exchange (gain) / loss aggregating to Rs. 22,050.59 lakhs capitalised as under:

Land Rs. 364.89 lakhs, Building Rs. 2,654.21 lakhs , Plant and equipment Rs. 15,561.19 lakhs, Furniture and fittings Rs.

358.27 lakhs, Vehicles and aircraft Rs. 35.35 lakhs, Office equipment Rs. 435.58 lakhs and Capital Work in progress Rs.

2,641.10 lakhs.

b) Borrowing cost capitalised during the year : Rs. 996.06 lakhs.

7. Other expenses capitalised Rs. 37.97 lakhs.

Upto

31.03.2013

Land

- Freehold land 79,836.56 1,336.85 10,810.97 70,362.44 - - - - 70,362.44

- Leasehold land 42,164.87 13,859.81 - 56,024.68 2,361.15 522.41 (0.85) 2,884.41 53,140.27

- Leasehold land given on lease 126.41 - - 126.41 18.88 1.28 0.85 19.31 107.10

Buildings 151,032.97 13,234.29 1,197.82 163,069.44 27,569.71 5,413.89 343.10 32,640.50 130,428.94

Building given on lease 1,140.15 4.34 - 1,144.49 111.09 21.34 13.95 118.48 1,026.01


Plant and equipment given on lease 6.00 - - 6.00 2.29 0.28 0.30 2.27 3.73

Furniture and fittings 8,972.76 1,173.99 252.53 9,894.22 4,861.31 1,234.86 224.40 5,871.77 4,022.45

Furniture and fittings given on lease 88.87 - - 88.87 52.42 11.11 7.41 56.12 32.75



Office Equipment 22,728.42 847.18 693.75 22,881.85 16,625.97 2,611.54 675.04 18,562.47 4,319.38

Office Equipment given on lease 43.97 - - 43.97 43.75 2.00 4.40 41.35 2.62

Electrical and other installations on lease hold premises 354.52 0.15 1.11 353.56 184.59 8.04 0.79 191.84 161.72

Improvement on Leased Building 283.88 152.10 139.40 76.07 33.00 - 109.07 30.33

TOTAL 834,378.60 113,557.64 22,106.28 925,837.58 263,883.20 45,209.32 9,490.28 299,602.24 626,235.34

Less:


Amount considered as Rent [Refer Note 2.6] 523.69

TOTAL 43,504.01

Capital Work in Progress 27,015.17

DESCRIPTION

Disposals

/AdjustmentsTANGIBLE ASSETS 01.04.2013

Additions /

AdjustmentsDisposals

NET BLOCK

31.03.2014

GROSS BLOCK (COST / VALUATION)

31.03.2014

DEPRECIATION / AMORTISATION / IMPAIRMENT

Charge during

the year

Upto

31.03.2014

F - 97

1.12 INTANGIBLE ASSETS AND INTANGIBLE ASSETS UNDER DEVELOPMENT

Rs. Lakhs

Notes:

1. Additions to Intangible assets and Intangible assets under development include:

a) Exchange (gain) / loss aggregating to Rs. 520.96 lakhs capitalised as under :

Software Rs. 284.04 lakhs , Technical Knowhow Rs. 10.17 lakhs, Intangible assets under development Rs. 226.75

lakhs.

b) Borrowing cost capitalised during the year: Rs.310.18 lakhs and Intangible assets under development Rs. 72.56

lakhs.

c) Other expenses capitalised Rs. 3180.23 lakhs - Refer Notes 2.3 and 2.6

2. Intangible assets under development amounting to Rs.1,060.34 lakhs has been written off during the year and included

under Research and Development under Note 2.6 'Other Expenses'

1.13 NON-CURRENT INVESTMENTS As at March 31, 2014

Rs. Lakhs

Associates Others Total


I) Trade Investments

A) Investment in Equity Instruments

1) Associates



Cost of Acquisition (including goodwill of Rs.1.59 lacs) 1.76 - -

Add / (Less) : Group share of Profits / (Losses) upto 31.03.2014 1.93 - -

Carrying amount of Investment 3.69 - 3.69


Cost of Acquisition (including goodwill of Rs.112.38 lacs) 196.00 - -

Add / (Less) : Group share of Profits / (Losses) upto 31.03.2014 (196.00) - -

Carrying amount of Investment - - -

Upto

31.03.2013

Computer software

- Developed 15,162.42 367.16 - 15,529.58 3,380.40 1,328.99 - 4,709.39 10,820.19

- Acquired 12,994.87 552.59 - 13,547.46 8,726.52 2,042.62 - 10,769.14 2,778.32

Others

Technical knowhow

- Developed 35,554.51 2,685.03 54.58 38,184.96 10,901.40 4,292.26 16.54 15,177.12 23,007.84

- Acquired 13,449.01 13,402.29 - 26,851.30 8,772.39 1,828.63 - 10,601.02 16,250.28

TOTAL 77,160.81 17,007.07 54.58 94,113.30 31,780.71 9,492.50 16.54 41,256.67 52,856.63

Intangible assets under development 2,639.69

31.03.2014

NET BLOCK

Disposals

/Adjustments01.04.2013

Additions /

AdjustmentsDisposalsINTANGIBLE ASSETS

DESCRIPTION GROSS BLOCK (COST / VALUATION)

31.03.2014Charge

during the

DEPRECIATION / AMORTISATION / IMPAIRMENT

Upto

31.03.2014

F - 98


Rs. Lakhs


b) Equity shares of Srilankan Rupees 10 each

Lanka Ashok Leyland, PLC

Cost of Acquisition (including goodwill of Rs.21.45 lacs) 57.46

Add / (Less) : Group share of Profits / (Losses) upto 31.03.2014 2,361.86

Carrying amount of Investment 2,419.32 - 2,419.32

c) Equity shares of UAE Dirhams of 1000 each


Cost of Acquisition (including goodwill of Rs.1509.59 lacs) 5,407.91

Add / (Less) : Group share of Profits / (Losses) upto 31.03.2014 (469.44)

Carrying amount of Investment 4,938.47 - 4,938.47

2) Others

Equity Shares of Rs. 10 each

Hinduja Foundries Limited (54,05,793 shares) # - 2,421.26 2,421.26


1) Associates

6% Cumulative Non-Convertible Redeemable Preference

shares of Rs. 10 each

Ashley Aviation Limited - (1,800,000 shares) 180.00 - 180.00

2) Others

a) 10% Cumulative Non-Convertible Redeemable Preference


Hinduja Foundries Limited - (1,500,000 shares) - 1,500.00 1,500.00

b) 6% Cumulative Non-Convertible Redeemable Preference

shares of Rs. 100 each paid up value of Rs 66.67 per share

Hinduja Foundries Limited - (1,000,000 shares) - 666.67 666.67

c) 9% Cumulative Non-Convertible Redeemable Preference


Hinduja Foundries Limited- (30,000,000 shares) - 30,000.00 30,000.00

Total - Trade Investments (A) 7,541.47 34,587.93 42,129.40

F - 99


Rs. Lakhs


III) Other Investments

A) Investment in Equity Instruments

a) Equity shares of Rs. 10 each

Chennai Willingdon Corporate Foundation (Cost Rs.900) - (100

shares)

- - -

Hinduja Energy (India) Limited -(61,147,058 shares) - 18,711.00 18,711.00

Hinduja Global Solutions Limited - (5,079 shares) # - 12.45 12.45

Hinduja Ventures Limited - (5,079 shares) # - 16.24 16.24

IndusInd Bank Limited - (5,063,923 shares) # - 3,811.40 3,811.40

b) Equity shares of Rs. 100 each

Opulent ventures Private Limited (2,600 shares) - 1.30 1.30

c) Equity shares of Rs. 100 each partly paid-up

Adyar Property Holding Co. Limited (Rs. 65 paid up)- (400 shares) - 0.26 0.26

d) Equity Shares of Rs. 2 each

Hinduja Properties Limited (747,960 shares) - 56.94 56.94

B) Investment in Government Securities

National Savings Certificate of the face value of Rs. 0.50 lakh - 0.50 0.50

C) Investment in Debentures or Bonds


ICICI Bank Limited ( 20 Bonds ) # - 200.56 200.56

Non convertible redeemable debentures of Rs. 5 each

Arohan Financial Services Private Limited - 541.67 541.67

D) Investment in pass-through securities - 3,536.74 3,536.74

Total - Other Investments (B) - 26,889.06 26,889.06

Grand Total (A+B) 7,541.47 61,476.99 69,018.46

"#" represents quoted investments

Particulars March 31, 2014

Total investments 69,018.46

Cost of quoted investments 6,461.91

Market value of quoted investments 27,311.31

Cost of Unquoted investments 62,556.55

F - 100

1.14 LONG-TERM LOANS AND ADVANCES As at March 31, 2014

Rs. Lakhs

a) Capital Advances

i) Unsecured, considered good 4,373.06

ii) Unsecured, considered doubtful 1.00

Less: Provision 1.00

4,373.06

b) Security Deposits - Unsecured, considered good 2,566.28

c) Loans and advances to Related Parties [ Refer note 3.5 ]

Unsecured, considered good

i Long term monetary assets in foreign currency 6,292.64

ii. Others 6,559.51

d) Balances with customs, port trust, central excise etc.

Unsecured, considered doubtful 1,428.06

Less: Provision 1,428.06

-

e) Other Loans and Advances

- Secured

i) Receivables under financing activities 158,254.87

ii) Debenture Application money 4,400.00

162,654.87

- Unsecured, considered good unless otherwise stated

i) Material advance - considered doubtful 17.51

ii) Sales tax paid under protest 4,682.10

iii) Advance Income tax (net) 9,857.92

iv) MAT Credit entitlement 33,671.97

v) Other advances 7,823.41

56,052.91

Less : Provision 17.51

56,035.40

238,481.76

Notes:

1. Receivables represent loans and interest due in respect of vehicle financing and includes

Secured, Considered good 151,913.13

Secured, Considered doubtful 6,341.74

Total 158,254.87

2. Due from Directors / Officers

0.01

F - 101


Rs. Lakhs

1.15 OTHER NON-CURRENT ASSETS

a) Long-term trade receivables

- Unsecured considered good

32.90

b) Unamortised loan raising expenses 1,439.72

c) Earmarked bank balance in Escrow account 1,845.65

(Receivable in respect of sale of Long term investment)

d) Bank deposits held as security 22,833.64

(Cash collateral towards securitization/assignment of receivables relating to vehicle financing)

e) Other balances 65.00

26,216.91

1.16 CURRENT INVESTMENTS

Unquoted

a) Investments in debentures 458.34

b) Investments in pass through securities 8,542.24

c) Carrying value of Trade Investments held for sale

i) Ownership interest in share capital in Czech koruna

- Avia Ashok Leyland Motors s.r.o.* - (share -100%) 159.60

ii) Equity Shares of Rs. 10 each

- Albonair (India) Private Limited - (1,00,00,000 shares) 2,114.80

iii) Equity Shares of Euro 1 each

- Albonair GmbH - (3,93,67,000 shares) 36,163.08

47,438.06

* The carrying value of ownership interest in Avia Ashok Leyland Motors s.r.o. is net of

diminution in its value aggregating Rs. 24,996.46 lakhs

1.17 INVENTORIES

(a) Raw materials and Components (including patterns and dies) 66,298.48

(b) Work-in -progress 11,510.56

(c) Finished goods 47,224.37

(d) Stock-in-trade - Traded goods

(i) Engines 205.98

(ii) Commercial vehicles 4,138.38

(iii) Spare parts and auto components (including works made) 16,186.63

F - 102


Rs. Lakhs

(e) Stores, spares and consumable tools 8,819.45

(f) Certified Emission Reductions (CER's) 21.10

154,404.95

Notes

1) Goods in transit included under the above heads are as below:

(a) Raw Materials and components 899.78

(b) Stock-in-trade - Traded goods

(i) Commercial Vehicles 90.47

(ii) Spares parts and auto components (including works made) 102.91

2) Carbon Emission Rights

Number of CER's held : 57,985 nos

Number of CER's under certification : 30,000

1.18 TRADE RECEIVABLES

Trade Receivables - Unsecured

(i) Considered good 138,108.69

(ii) Considered doubtful 986.76

139,095.45

Less: Provision 986.76

138,108.69

Note:

Age analysis of trade receivables

Outstanding for more than six months from the date they are due 9,186.63

Others 128,922.06

138,108.69

1.19 CASH AND BANK BALANCES

a. Cash and Cash Equivalents

i) Balances with Banks in - Current account 5,171.09

- Deposit account 946.74

ii) Cheques, drafts on hand 128.15

iii) Cash and stamps on hand 4,391.33

10,637.31

b. Other bank balances

- Earmarked accounts

i) Unclaimed Dividend 659.59

ii) In Deposit accounts 3.57

iii) Margin money against bank guarantee 41.06

704.22

11,341.53

F - 103


Rs. Lakhs

1.20 SHORT-TERM LOANS AND ADVANCES

Secured considered good unless otherwise stated

(a) Receivables under financing activities 151,735.37

(b) Debenture Application money 4,400.00

Unsecured, Considered Good

(a) Loans and advances to related parties [Refer Note 3.5] 1,345.49

(b) Security deposit 338.22

(c) Employee advances 1,793.26

(d) Material advances 17,699.75

(e) Balances with customs, port trust, central excise etc. 9,918.81

(f) Others 60,444.22

247,675.12

Notes :

1. Due from Directors / Officers 0.05

2. Others mainly include

- VAT credit, Service tax and Entry tax 40,415.01

- Intercorporate Deposits 3,000.00

- Sales tax 2,711.51

- Prepaid expenses 1,534.85

3. Receivables under financing activity represent loans and interest due in

respect of vehicle financing and includes

- Secured, Considered good 145,654.88

- Secured, Considered doubtful 6,080.49

Total 151,735.37

1.21 OTHER CURRENT ASSETS

a) Interest accrued :

- Loans and advance to Related Parties [Refer Note 3.5] 552.35

- Others 80.22

b) Export incentive receivables 5,153.97

c) Current portion of unamortised loan raising expenses 435.83

d) Net assets of Automotive Infotronics (under liquidation) 1,308.90

e) Other Receivables 730.48

f) Repossessed assets (at realisable value) 12,608.19

g) Receivable on sale of immovable properties 10,623.04

h) Unbilled revenue 1,331.73

32,824.71

F - 104

2.1 REVENUE FROM OPERATIONS Year ended

March 31, 2014

Rs. Lakhs

a) Sale of products

- Commercial vehicles

Manufactured 861,588.59

Traded 105,873.08

- Construction Equipment 3,642.47

- Engines and Gensets 52,364.97

- Spare parts and others 127,769.97

(A) 1,151,239.08

b) Revenue from services (B) 28,276.40


- Contract manufacturing 1,269.80

- Export Incentives 4,473.69

- Scrap sales 7,254.55

- Others 2,252.36

(C) 15,250.40

d) Interest / Finance income relating to vehicle financing (D) 51,581.58

e) Income from energy generated (E) 2,338.25

(A+B+C+D+E) 1,248,685.71

Less: Commission, rebate and discounts 37,247.82

1,211,437.89

2.2 OTHER INCOME

a) Interest income from

i. Long-term investments 2,202.72

ii. Others, including bills discounting 1,919.27

4,121.99

b) Dividend income from

i. Current investments 149.15

ii. Long-term investments 441.25

590.40

c) Other non-operating income

i. Cash discount earned 352.29

ii. Profit on sale of fixed assets - net 954.23

iii. Others 3,226.03

4,532.55

9,244.94

F - 105

2.3 EMPLOYEE BENEFITS EXPENSE Year ended

March 31, 2014

Rs. Lakhs

a) Salaries, wages and bonus 110,399.75

b) Contribution to provident, gratuity and other funds 10,144.02

c) Welfare expenses 15,210.11

135,753.88

Less: Employee expenses capitalised 1,195.55

134,558.33

2.4 FINANCE COSTS

a) Interest expense 47,187.73

b) Interest expense relating to Vehicle financing 28,626.04

c) Other borrowing costs * 6,113.85

81,927.62

Less: Interest cost capitalised 1,378.80

80,548.82

Notes :

* Other borrowing costs include:

- Loan raising expenses amortised 509.53

- Premium on forward contracts amortised 2,331.25

- Bill discounting charges 3,036.43

F - 106

2.5 DEPRECIATION / AMORTISATION EXPENSE Year ended

March 31, 2014

Rs. Lakhs

A) Tangible assets

(i) Buildings 5,413.89

(ii) Plant and equipment 34,072.51

(iii) Furniture and fittings 1,234.86

(iv) Vehicles and aircrafts 1,277.06

(v) Office equipment 2,611.54

(vi) Assets given on lease

- Buildings 21.34

- Plant and Machinery 0.28

- Furniture and fittings 11.11

- Office equipment 2.00

(vii) Electrical and other installations on lease hold premises 8.04

(viii) Improvements on Leased Building 33.00

44,685.63

Less: Transfer from Revaluation reserve 1,181.62

Total -Tangible assets (A) 43,504.01

B) Intangible assets

(i) Computer software

- Developed 1,328.99

- Acquired 2,042.62

(ii) Technical knowhow

- Developed 4,292.26

- Acquired 1,828.63

Total on Intangible assets (B) 9,492.50

Total (A + B) 52,996.51

Note:

Impairment charge included in the above

- In respect of Plant and machinery 266.78

F - 107

2.6 OTHER EXPENSES Year ended

March 31, 2014

Rs. Lakhs

(a) Consumption of stores and tools 6,058.66

(b) Power and fuel 7,207.96

(c) Rent 5,772.16

(d) Repairs and maintenance

- Buildings 2,451.51

- Plant and machinery 9,795.60

(e) Insurance 1,283.32

(f) Rates and taxes, excluding taxes on income 1,772.66

(g) Selling and administration expenses - net 46,493.59

(h) Service and product warranties 16,229.26

(i) Packing and forwarding charges 30,954.17

(j) Annual Maintenance Contracts 12,628.20

(k) Research and development 9,758.13

(l) Bad and doubtful debts / advances provided / written-off (Net of recovery) 982.07

(m) Service provider fees 151.43

(n) Communication, printing and stationery 660.28

(o) Provisions and writeoffs relating to vehicle financing actvities 7,849.81

160,048.81

Less: Expenses capitalised 1,984.68

158,064.13

F - 108

2.7 EXCEPTIONAL ITEMS Year ended

March 31, 2014

Rs. Lakhs

a) Profit / ( Loss) on sale of Long-term investments

- Indusind Bank Limited 30,133.85

- Defiance Testing and Engineering Services Inc., USA 7,830.78

- Others 0.47

37,965.10

b) Diminution in the value of Long-term investments

- AVIA Ashok Leyland Motors s.r.o (487.66)

(487.66)

c) Voluntary Retirement Scheme (4,694.42)

[Refer note 3.14]

d) Profit on disposal of Tangible assets- net 19,294.39

[Refer note 3.15]

14,599.97

52,077.41

3.1 Basis of consolidation

3.1.1 The Consolidated Financial Statements relate to Ashok Leyland Limited (the Company) and its subsidiaries, joint

ventures and associates. The Company and its subsidiaries and its jointly controlled entities constitute the Group.

3.1.2 Principles of consolidation

a) The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21)

“Consolidated Financial Statements”, Accounting Standard 23 (AS 23) “Accounting for Investment in Associates in

Consolidated Financial Statements” and Accounting Standard 27 (AS 27) “Financial Reporting of Interests in Joint

Ventures” notified by the Companies (Accounting Standard) Rules, 2006.

b) This being the first year of consolidation, comparative figures of previous year has not been included.

c) The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis by

adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group

transactions and unrealised profits have been fully eliminated.

d) The difference between the cost of investment in the subsidiaries, over the net assets at the time of acquisition of shares

in the subsidiaries is recognised in the financial statements as Goodwill or Capital Reserve (net) as the case may be.

e) The difference between the proceeds from the disposal of investments in the subsidiary and the carrying amount of its

assets and liabilities as on the date of disposal is recognised as profit or loss on disposal of investments in the subsidiary

in the Statement of Profit and Loss.

f) Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the

minority shareholders at the dates on which investments are made by the Company in the subsidiary companies and

further movements in their share in the equity, subsequent to the dates of investments as stated above.

F - 109

g) The following subsidiary companies are considered in the consolidated financial statements

S.No. Name of the subsidiary company Country of

Incorporation

% of ownership interest

31-Mar-14

Direct subsidiaries

1 Defiance Technologies Limited and its subsidiaries India 100.00%

2 Hinduja Leyland Finance Limited India 65.84%

3 Ashok Leyland Nissan Vehicles Limited India 51.00%

4 Irizar - TVS Limited (w.e.f. December 10, 2013) India 61.67%

5 Ashok Leyland Wind Energy Limited India 60.00%

6 Gulf Ashley Motor Limited India 91.53%

7 Optare plc UK and its subsidiaries UK 75.11%

8 Defiance Testing and Engineering Services Inc. USA

(ceased to be a subsidiary w.e.f. September 30, 2013) USA Nil

9 Ashok Leyland (UK) Limited UK 100.00%

10 Ashok Leyland (Nigeria) Limited Nigeria 100.00%

11 Ashok Leyland (Chile) Chile 100.00%

12 Mangalam Retail Services Limited India 74.94%

13 HLF Services Limited India 84.22%

The financial statements of the subsidiary companies used in the consolidation are drawn upto the same reporting date

as of the Company i.e. year ended March 31, 2014.

Albonair GmbH, Albonair (India) Private Limited and Avia Ashok Leyland Motors s.r.o (subsidiaries of the Company)

have been “held for sale” and therefore, not considered for the preparation of the Consolidated Financial Statements.

h) The following Joint Venture companies are considered in the consolidated financial statements

Sl.No. Name of the Joint venture Country of

Incorporation

% of Ownership interest

31-Mar-14

1 Ashley Alteams India Limited India 50.00%

2 Ashok Leyland John Deere Construction Equipment

Company Private Limited India 50.00%

3 Automotive Infotronics Limited (under liquidation) * India 50.00%

4 Nissan Ashok Leyland Powertrain Limited India 49.00%

5 Nissan Ashok Leyland Technologies Limited India 50.00%

The financial statements of the joint venture companies have been combined by using proportionate consolidation in

accordance with Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint ventures". The financial

statements of the joint ventures used in the consolidation are drawn upto the same reporting date as of the Company i.e.

year ended March 31, 2014.

* the operations of Automotive Infotronics Limited (under liquidation) are not significant in relation to the Group’s

business.

F - 110

i) The following associates have been considered in the preparation of consolidated financial statements of the group in

accordance with Accounting Standard 23 “Accounting for Investment in Associates in Consolidated Financial

Statements”

S.No. Name of the Associate Country of

Incorporation

% of ownership interest

31-Mar-14

1 Ashok Leyland Defence Systems Limited India 26.00%

2 Ashley Aviation Limited India 49.00%

3 Ashok Leyland (UAE) LLC UAE 49.00%

4 Lanka Ashok Leyland Plc Sri Lanka 27.85%

The financial statements of the associates used in the consolidation are drawn upto the same reporting date as of the

Company i.e. year ended March 31, 2014.

3.2 Contingent liabilities and Capital commitments

A Contingent liabilities As at March 31, 2014

Rs. in lakhs

a) Claims against the Company not acknowledged as debts (net) - Sales tax 11,680.60

- Others 2,458.83

b) Guarantees 158.44

The outflow in respect of the above is not practicable to ascertain in view of the

uncertainties involved.

B a) Capital commitments (net of advances) not provided for 9,169.00

[including Rs.1,791.98 Lakhs in respect of Intangible assets]

b) Uncalled Liability on Partly paid shares / investments 0.14

c) Export obligation under EPCG scheme 82,266.09

d) Other commitments

Financial support given to certain subsidiaries, joint ventures, etc.

The outflow in respect of the above is not practicable to ascertain in view of the

uncertainities involved.

3.3 Earnings per share

March 31, 2014

(Loss) after tax as per Statement of Profit and Loss (in Rs. lakhs) ( A ) (16,412.24)

Weighted average number of equity shares outstanding ( B ) 2,660,676,634

Basic and Diluted earnings per share (Face value Re. 1) (in Rs.) ( A / B ) (0.62)

3.4. Segment information

The group's primary segment is identified as business segment based on nature of products, risks, returns and the

internal business reporting system as per Accounting Standard 17. The Group is principally engaged in a single

business segment viz., automotive segment including financial services and vehicle engineering services thereof.

F - 111

3.5. Related party disclosure


Holding Company


Machen Holdings SA




Amas Holdings SA


Subsidiaries held for sale


Albonair GmbH

Avia Ashok Leyland Motors s.r.o, Czech Republic

b) Other related parties

Fellow subsidiaries

Hinduja Foundries Limited…………………………………………………… upto January 29, 2014



Associates



Ashley Holdings Limited…………………………………………………….. upto April 1, 2013

Ashley Investments Limited………………………………………………… upto April 1, 2013



Lanka Ashok Leyland Limited PLC

Irizar TVS Limited………………………………………………………………. upto December 9, 2013

Joint Ventures


Automotive Infotronics Limited (under liquidation)






F - 112


c) Related Party Transactions – summary

Rs.

Lakhs

Fellow

Subsidiary * Associates

Joint

Ventures

Holding

Company

#

Key

Managem

ent

Personnel

Subsidiaries

held for sale Total

Transactions during the year

ended March 31, 2014

1 Purchase of raw

materials,components and

traded goods ( net of CENVAT

/ VAT ) 9,297.73 4,075.74 1,367.72 - - 1,971.78

16,712.97

2 Sales and Services ( net of

excise duties ) - 41,430.20 297.71 - - 283.18

42,011.09

3 Other Operating Income 226.77 10.15 1,641.09 - - - 1,878.01

4 Other expenditure incurred /

(recovered) (net) 67.88 183.72 37.75 97.23 - 180.84 567.42

5 Advance / Current accounts -

Net increase / ( decrease ) - - 12.75 - - 97.45 110.20

6 Interest and other income 5.69 255.30 8.14 - - 298.24 567.37

7 Purchase of Assets - - 57.09 - - 583.24 640.33

8 Dividend income - 48.70 - - - - 48.70

9 Dividend payments - - - 8,138.63 0.36 - 8,138.99

10 Remuneration to key

management personnel - - - - 212.49 - 212.49

11 Financial guarantees released 3,619.00 2,171.40 - - - 990.54 6,780.94

12 Acquisition of investments - 1,099.76 - - - 15,569.78

16,669.54

13 Disposal of investments - 14.70 - - - - 14.70

14 Advance given for share capital - - - - - 1,395.07 1,395.07

15 Loans given 1,000.00 - - - - 12,265.93

13,265.93

16 Loans repaid 1,000.00 - - - - 21,775.98

22,775.98

Balances as on March 31,

2014

1 Debtors - 3,227.74 342.57 - - 168.48 3,738.79

2 Loans and advances (including

interest accrued) ** - 248.31 251.51 - 0.06 6,340.12 6,840.00

3 Advance for Share Capital ** - - - - - 1,395.07 1,395.07

4 Creditors for materials and

expenses - 908.57 504.62 167.26 - 342.18 1,922.63

For details of investments as at March 31, 2014, Refer note 1.13 and note 1.16

* relates to Hinduja Foundries Limited

# relates to Hinduja Automotive Limited

** Refer Notes 1.14, 1.20 and 1.21

F - 113


Rs. Lakhs

For the year ended 31-03-2014

1 Purchase of raw materials, components and traded goods ( net of CENVAT / VAT)

Hinduja Foundries Limited 9,297.73

Irizar - TVS Limited 3,664.67

2 Sales and Services (net of taxes)

Ashok Leyland (UAE) LLC 21,978.38

Lanka Ashok Leyland PLC 19,461.86

3 Other Operating Income

Hinduja Foundries Limited 226.77

Nissan Ashok Leyland Powertrain Limited 1,306.57

Nissan Ashok Leyland Technologies Limited 263.52

4 Other Expenditure incurred/ recovered (net)

Hinduja Foundries Limited 67.88

Ashok Leyland Defence Systems Limited 73.05

Ashley Aviation Limited 110.67

Albonair GmbH 180.84

5 Advance/Current account - Net increase / ( decrease )

Avia Ashok Leyland Motors s.r.o, Czech Republic 97.45

Ashok Leyland John Deere Construction Equipment Company Private Limited 43.74

Nissan Ashok Leyland Powertrain Limited (30.99)

6 Interest and other income



Ashley Aviation Limited 225.00

7 Dividend income

Lanka Ashok Leyland PLC 48.70

8 Acquisition of Investments

Albonair GmbH 15,085.38

9 Advance given for share capital


10 Loans given by the company


Avia Ashok Leyland Motors s.r.o, Czech Republic 9,040.78

11 Loans repaid to the company


Avia Ashok Leyland Motors s.r.o, Czech Republic 6,312.94

12 Purchase of assets


Automotive Infotronics Limited 57.09

13 Financial Guarantees released

Hinduja Foundries Limited 3,619.00

Ashok Leyland (UAE) LLC 2,171.40


14 Remuneration to key management personnel

Mr. Vinod K Dasari 212.49

F - 114

3.6 Disclosures in respect of Joint Ventures

a) List of joint ventures

Sl

No. Name of the Joint Venture Name of the Business

Proportion of

ownership interest

Country of residence

/ Incorporation

1 Ashley Alteams India Limited(AAIL) Manufacture of aluminum high

pressure die castings 50.00% India

2 Ashok Leyland John Deere Construction

Equipment Company Private Limited (ALJD)

Manufacture of construction

equipment 50.00% India

3 Nissan Ashok Leyland Technologies Limited

(NALTL)

Development of related

automotive technology 50.00% India

4 Nissan Ashok Leyland Powertrain Limited

(NALPL)

Manufacture of engines for

Light Commercial Vehicles 49.00% India

b) Financial interest in jointly controlled entities considered for consolidation (before Inter Company

elimination)

Rs. Lakhs

Particulars AAIL ALJD NALTL NALPL



Share capital 5,750.00 15,356.82 2,602.50 7,402.17

Reserves and surplus (5,470.43) (10,993.12) (8,618.50) (1,338.42)


Long-term borrowings 4,616.47 2,812.50 8,865.39 1,960.00

Other long term liabilities - 195.26 - -

Long-term provisions 11.65 78.30 - -

Current liabilities

Short-term borrowings 609.03 170.67 - -

Trade payables 1,728.79 1,220.88 738.91 2,753.24

Other current liabilities 1,587.26 1,655.26 320.09 234.44

Short-term provisions 3.31 237.18 74.11 150.77

TOTAL 8,836.08 10,733.75 3,982.50 11,162.20

ASSETS

Non-current assets

Tangible assets 5,639.34 7,599.65 296.31 4,123.73

Intangible assets 42.75 5.79 1,855.90 -

Capital work-in-progress 31.58 268.73 - 2,022.81

Non-current investments 1.30 - - -

Long-term loans and advances 69.83 67.50 1,106.77 2,514.72

Other non-current assets 37.28 - - -

Current assets

Inventories 917.48 1,570.20 - 739.63

Trade receivables 1,583.31 484.25 411.46 1,563.97

Cash and bank balances 9.07 19.80 88.02 65.03

Short-term loans and advances 347.82 714.37 224.04 132.31

Other current assets 156.32 3.46 - -

TOTAL 8,836.08 10,733.75 3,982.50 11,162.20

F - 115

Rs. Lakhs

Particulars AAIL ALJD NALTL

NALPL

Income

Revenue from operations 6,582.39 3,669.91 5,582.19 10,600.57

Less: Excise Duty (570.49) (409.17) - -

Revenue from operations (Net) 6,011.90 3,260.74 5,582.19 10,600.57

Other income 4.44 28.63 4.81 322.02

Total Revenue 6,016.34 3,289.37 5,587.00 10,922.59

Expenses

Cost of materials consumed 3,409.62 3,291.73 - 9,563.52

Purchases of Stock-in-Trade - Traded goods 267.46 - - -

Changes in inventories of finished goods, work-in-

progress and Stock-in-Trade (131.21) (351.86) - (2.59)

Employee benefits expense 595.19 1,231.32 1,160.92 155.56

Finance costs 619.16 507.85 1,216.27 116.74

Depreciation and amortisation expense 770.85 382.98 1,820.33 436.64

Other expenses 1,475.53 2,139.90 2,804.98 1,151.05

Total Expenses 7,006.60 7,201.92 7,002.50 11,420.92

(Loss) before exceptional items and tax (990.26) (3,912.55) (1,415.50) (498.33)

Exceptional items - - - -

(Loss) before extraordinary items and tax (990.26) (3,912.55) (1,415.50) (498.33)

Extraordinary Items - - - -

(Loss) for the period from continuing operations (990.26) (3,912.55) (1,415.50) (498.33)

Notes:

i. Contingent liabilities, incurred in relation to interest in joint ventures as on March 31, 2014 is Rs. Nil

ii. Share in contingent liabilities of joint ventures themselves for which the company is contingently liable as at March

31, 2014 Rs. 242.65 lakhs.

iii. Capital commitments in relation to interests in joint ventures as on March 31, 2014 Rs.Nil

iv. Share in Capital commitments of joint ventures themselves as on March 31, 2014 Rs. 293.90 lakhs.

v. The information furnished above with regard to the year 2014 is based on audited figures made available to the

company.

vi. Figures given above under expenses are excluding taxes

3.7 Operating Lease

A general description of leasing agreements - The Group has entered into operating lease agreements for property from

various parties.

Operating lease commitments Rs Lakhs

Less than one year 1,212.19

1-5 years

3,345.83

> 5 years 5,382.40

F - 116

3.8 Foreign Exchange

Rs Lakhs

A Dividend Remitted in Foreign Currency *

a) Number of non resident shareholders

2

b) Number of shares on which dividend was remitted

1,028,437,424

c) Dividend remitted during the year relating to previous year

6,170.62

* Dividend paid to other Non-Resident shareholders is in Indian Rupees

B Derivatives

The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency

exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds.

Generally such contracts are taken for exposures materialising in the next twelve months. The company actively manages its

currency / interest rate exposures through a centralized treasury division and uses derivatives to mitigate the risk from such

exposures. The use of derivative instruments is subject to limits and regular monitoring by appropriate levels of management.

The limits and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is

mitigated by changes in the valuation of underlying assets, liabilities or transactions, as derivatives are used only for risk

management.

The information on derivative instrument is as follows:

i) Derivative instruments outstanding:

Details Details Currency

Amount (Foreign

currency in

Million)

Amount Rs in Lakhs

2014 2014

Foreign Exchange Contracts

- USD / INR Bought USD 38.41 23,015.96

- USD / INR Bought EUR 87.52 52,440.56

- EUR / USD Bought GBP 1.21 1,001.54

- GBP / USD Sold EUR 0.25 249.41

- USD / JPY Sold USD 0.25 149.79

Currency Swaps

-USD / JPY Sold USD 190.67 114,237.93

Refer Item no.8.3 and 8.4 in significant accounting policies for the accounting

treatment of such derivatives

F - 117

ii) Foreign currency exposures not hedged by a derivative instrument firm commitments and highly probable

transaction

Details

Currency Amount (Foreign

currency in Million) Amount Rs in Lakhs

Amount receivable on account of sale of goods, loans, bank

balances, etc.

USD 105.49 62,637.57

EURO 1.33 733.85

JPY 11.90 69.11

GBP 5.76 5,683.85

AED 0.59 95.71

KES 8.92 61.82

ZAR 0.40 22.46

MUR 0.41 8.15

BDT 0.01 0.02

Amount payable on account of purchase of goods,

loans, interest etc. USD 359.20 214,891.02

EUR 8.37 7,319.49

JPY 0.50 3.84

GBP 0.45 452.02

AED 0.60 98.63

KES 53.19 368.62

CHF 0.03 18.49

EGP 0.00 0.25

MUR 0.08 1.64

SEK 0.00 0.10

ZAR 0.01 0.63

JPY 39.35 228.48

3.9 Accounting for long term monetary items in foreign currency, forward contracts and Advances designated as

cash flow hedge

3.9.1 Exchange difference in Long term monetary items in foreign currency

Exchange difference on translation or settlement of long term foreign currency monetary items at rates different from

those at which they were initially recorded or April 1, 2007, in so far as it relates to acquisition of depreciable assets are

adjusted to the cost of the assets. In other cases, such exchange differences are accumulated in “Foreign currency

monetary item translation difference account” and amortised by recognition as income or expense in each year over the

balance term till settlement occurs but not beyond March 31, 2020 (notified earlier as March 31,2011). The un-amortized

net exchange difference in respect of long term monetary items relating to other than acquisition of depreciable assets, is

a loss of Rs. 787.92 lakhs as at March 31, 2014. These amounts have now been reflected as part of the "Reserves and

Surplus" in line with the guideline issued by the Institute of Chartered Accountants of India.

3.9.2 Forward contracts and Advances designated as cash flow hedges

The Company had adopted the principles of Accounting Standard 30 – Financial instruments: Recognition and

measurement, issued by the Institute of Chartered Accountants of India, with effect from April 1, 2008, in respect of

forward contracts for firm commitments and highly probable forecast transactions meeting necessary criteria for

designation as "Cash flow hedges". The gains and losses on effective Cash flow hedges are recognized in Hedge Reserve

Account till the underlying forecast transaction occurs.

F - 118

3.10 Employee benefits

Defined benefit plans - As per Actuarial valuation as at March 31,

2014 Rs Lakhs

Gratuity

(Funded)

Compensated

absences

(Unfunded)

Other defined

benefit plans

(Unfunded)

2014 2014 2014

A) Expense recognised in the Statement of Profit and Loss

for the year ended March 31

Current service cost 1,163.93 678.16 67.94

Interest cost 1,668.30 524.92 47.48

Expected return on plan assets (1,825.91) - -

Net actuarial (gain) / loss recognised during the year 821.11 (1,108.21) 51.89

Total expense 1,827.43 94.87 167.31


Expected return on plan assets 1,825.91 - -

Actuarial gain/ (loss) on plan assets 8.22 - -

Actual return on plan assets 1,834.13 - -

C) Net Asset/ (Liability) recognised in the Balance Sheet

Present value of the obligation 22,280.10 6,017.62 694.91

Fair value of plan assets 20,345.19 - -

Funded status [ surplus/ (deficit)] (1,934.91) (6,017.62) (694.91)

Net Asset/ (Liability) recognised in the Balance Sheet (1,934.91) (6,017.62) (694.91)

D) Change in Present value of the Obligation during the year

Present value of obligation as at beginning of the year 22,695.93 6,983.75 644.68

Current service cost 1,163.93 678.16 67.94

Interest cost 1,668.30 524.92 47.48

Benefits paid (4,077.39) (1,061.00) (117.08)

Actuarial (gain) / loss on obligation 829.33 (1,108.21) 51.89

Present value of obligation as at end of the year 22,280.10 6,017.62 694.91

E) Change in Fair Value of Plan Assets during the year

Fair value of plan assets as at beginning of the year 20,470.66 - -

Expected return on plan assets 1,825.91 - -

Contributions 2,117.79 1,061.00 117.08

Benefits paid (4,077.39) (1,061.00) (117.08)

Actuarial gain / (loss) on plan assets 8.22 - -

Fair value of plan assets as at end of the year 20,345.19 - -


Plan liabilities - loss / (gain) 821.12 (1,108.21) 51.89

Plan assets - (loss) / gain - - -

G) Actuarial Assumptions ( Range for the group )

Discount rate 8.00% to 9.20%

Salary escalation 2.75% to 10.00%

Expected rate of return on plan assets 8.00% to 9.88%

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and

other relevant factors, such as supply and demand in the employment market.

F - 119

3.11 Details of Long Term Borrowings:

March 31, 2014

Non Current Current

maturities Total



a. Secured Loans:

i. Debenture Series

9.85% AL 22 15,000.00 - 15,000.00 June 21, 2018

10.15% AL 20 15,000.00 - 15,000.00 December 28, 2017

10.20% AL 18 10,000.00 - 10,000.00 June 28, 2017

10.25% AL16 10,500.00 4,500.00 15,000.00 Rs. 6,000 lakhs on October 14, 2016 and Rs. 4,500

lakhs each on October 14, 2015 and 2014

9.70% AL 21 15,000.00 - 15,000.00 June 21, 2016

10.05% AL 19 15,000.00 - 15,000.00 December 28, 2015

8.20% AL 15 7,000.00 - 7,000.00 July 22, 2015

10.10% AL 17 20,000.00 - 20,000.00 June 28, 2015

8.20% AL 14 - 7,000.00 7,000.00 July 22, 2014

Total (A) 107,500.00 11,500.00 119,000.00

ii. Term Loans:

TL - 7 50,000.00 - 50,000.00 4 equal installments on December 16, 2018, 2017,

2016, 2015

TL - 1 3,333.33 3,333.33 6,666.66 3 equal installments on February 5, 2016, February

16, 2015, February 17 2014

TL - 2 5,000.00 5,000.00 10,000.00 3 equal installments on June 1, 2015, 2014, 2013

TL - 3 - 6,666.67 6,666.67 2 equal installments on March 22, 2015, 2014

TL - 4 - 5,000.00 5,000.00 2 equal installments on November 30, 2014, 2013

TL - 5 - 5,000.00 5,000.00 2 equal installments on November 30, 2014, 2013

S-TL - 1 17,500.00 - 17,500.00 Repayment commences after a moratorium of 3

years; in 16 equal quarterly installments of

Rs 1,093.75 Lakhs each with the last installment

ending by March 2020.

S-TL - 2 10,000.00 - 10,000.00 Repayment commences after a moratorium of 3

years; in 16 equal quarterly installments

of Rs 625 Lakhs each with the last installment

ending by August 2019

S-TL - 3 142,788.64 90,210.78 232,999.42 Repayable in varying installments (Monthly,

quarterly, half yearly and annual) with the last of

the installments being due in September 2038.

S-TL - 4 14,942.40 - 14,942.40 Repayable by June 2016

S-TL - 5 761.04 800.00 1,561.04 7 quarterly installment of Rs 225 Lakhs each and

ending by December 2015

S-TL - 6 - 188.60 188.60 Repayable by 30 June 2014

J-TL1 1,960.00 - 1,960.00 Repayment commences after a moratorium of 3

years; in 16 equal quarterly installments of Rs

122.5 Lakhs each with the last installment ending

by September 2019.

J-TL2 937.50 62.50 1,000.00 16 equal quarterly installments of Rs 62.5 Lakhs

each and ending by December 2018

J-TL3 1,781.56 647.36 2,428.92 15 equal quarterly installments of Rs 161.84 Lakhs

each and ending by January 2018

J-TL4 1,875.00 1,250.00 3,125.00 16 equal quarterly installments of Rs 312.5 Lakhs

each and ending by August 2016

Total (B) 250,879.47 118,159.24 369,038.71

F - 120

Notes:

Details of security in respect of the Debentures and Term Loans are given below:

1. Debenture Series and Term loans (TL-1 to TL-7) are secured by a first charge on pari-passu basis on all assets of the

Company excluding certain immovable properties (residential buildings, windmill related assets and certain immovable

assets) and movable fixed assets (such as Aircraft and Windmill) of the Company.

2. Term loan availed by a subsidiary from banks (S-TL-1 and S-TL-2) are secured by a first pari-passu charge on entire fixed

assets of the subsidiary (movable and immovable).

3. Term loans availed by a subsidiary from various banks (S-TL-3) are secured by way of hypothecation of designated assets

on finance / loan and future receivables therefrom, and investments in "pass through certificates" of the subsidiary . Certain

term loans are additionally secured by way of first charge on the profits of the subsidiary.

4. Term loan availed by a subsidiary from a bank (S-TL-4) are secured against property, plant and equipment, receivables and

inventories of the subsidiary.

5. Term loan availed by a subsidiary from a bank (S-TL-5) is secured by windmills owned by the subsidiary.

6. Term loan available by a subsidiary from a bank (S-TL-6), are secured by way of charge on immovable property and

movable property of the subsidiary including plant and machinery, spares, tools, finished and semi-finished goods, raw

material, and book debts of the subsidiary.

7. Term loan availed by a joint venture from a bank, (J-TL-1) is secured by a first charge over the entire fixed assets (movable

and immovable) of the joint venture entity.

8. Term loan availed by a joint venture from a bank (J-TL -4) is secured by exclusive first hypothecation charge on specific

plant & machinery, acquired / to be acquired under the project having aggregate value of Rs.4000 lakhs.

9. Term loan availed by a joint venture from a bank (J-TL-3) is secured by hypothecation all machineries and all current assets

and fixed assets of the joint venture and mortgage of immovable property (leasehold) belonging to the joint venture entity.

10. Term loan availed by a joint venture from a bank (J-TL 2) is secured by first pari-passu charge created on all the fixed assets

of the joint venture entity (including an equitable mortgage over land and building of the factory premises).

b) Unsecured Loans:

i. Debentures March 31, 2014 Particulars of Redemption / Repayment

Non

Current

Current

maturities Total


12% Subordinated

redeemable non-convertible

debenture

3,500.00 - 3,500.00 Rs.2,500 lakhs redeemable on March 28, 2021

and Rs. 1,000 lakhs redeemable on February 28,

2021

Total (C) 3,500.00 - 3,500.00

F - 121

ii. ECB Loans March 31, 2014 Particulars of Redemption / Repayment

Non

Current

Current

maturities Total


ECB -12 38,944.75 - 38,944.75 June 26, 2020 - Rs. 11,983.00 lakhs and June 26,

2019, 2018, 2017 - Rs. 8,987.25 lakhs each

ECB -11 17,974.50 - 17,974.50 3 equal installments on March 25, 2019, 2018,

2017

ECB -1 44,936.25 - 44,936.25 3 equal installments on June 9, 2018, 2017, 2016

ECB -2 14,978.75 - 14,978.75 3 equal installments on October 24, 2017, 2016,

2015

ECB -3 26,961.75 2,995.75 29,957.50 September 20, 2017 - Rs. 12,582.15 lakhs,

2016 - Rs. 11,383.85 lakhs, 2015 and

2014 - Rs.2,995.75 lakhs each

ECB -10 11,983.00 - 11,983.00 July 12, 2015

ECB -4 - 39,943.33 39,943.33 2 equal installments on June 30, 2014, 2013

S-ECB -1 - 156.50 156.50 Repayable By 30 June 2014

S-ECB -2 20,000.00 - 20,000.00 8 installments commencing after a moratorium

period of 3 years ending April 2019

J-ECB -1 2,834.91 472.49 3,307.40 Half yearly installments ending December 2017

Total (D) 178,613.91 43,568.07 222,181.98

iii. Interest free sales tax

loans

Programme II 7,931.22 214.30 8,145.52 Varying amounts repayable on a monthly basis

ending on March 2028.

Programme I - 118.24 118.24 Varying amounts repayable on a monthly basis

ending on April 2014.

Total (E) 7,931.22 332.54 8,263.76

iv. Loans from Others

Loan 5 106.96 408.32 515.28 Varying amounts repayable on a quarterly basis

ending in July 2015

Loan 4 - 248.07 248.07 Varying amounts repayable on a quarterly basis

ending in October 2014


ending in October 2014


ending in August 2014


ending in August 2014

J-Loan 1 586.85 - 586.85 Varying amounts repayable on a yearly basis

Total (F) 693.81 869.14 1,562.95

Total Long term

Borrowings

(A+B+C+D+E+F)

549,118.41 174,428.99 723,547.40

F - 122

3.12 Details of Short Term Borrowings

March 31, 2014 Particulars of Redemption /

Repayment

Amount

Rs. Lakhs

Secured Loans *

STL 8 3,300.00 August 13, 2014

STL 9 791.30 May 28, 2014

Working Capital

Demand Loans

23,805.69 Repayable on demand

S - STL 1 56,862.54 Repayable on demand



S - STL 4 59.14 Repayable on demand



J - STL 1 170.67 Repayable on demand

J - STL 2 526.88 Repayable on demand

Total (A) 95,522.83

Unsecured Loans

- STL 10 9,274.42 May 28, 2014

- STL 11 9,586.40 May 30, 2014

- STL 12 11,983.00 July 28, 2014

Total (B) 30,843.82

Other Borrowings 82.15 Repayable on demand

Total (C) 82.15

Total Short

Borrowings (A+B+C)

126,448.80

F - 123

Total Long term borrowings

(Refer 3.11 above)

723,547.40

Total Short term

borrowings(Refer 3.12 above)

126,448.80

Total Debts 849,996.20

Of the total debt of Rs.8,49,996.20 lakhs, debt relating to the vehicle financing amounted to Rs.293,361.96 lakhs

Notes:

* The security in respect of each of the said term loans said described below :

1. Short term loans availed by the company (STL 8, STL 9 and working capital demand loans) are secured by way of

hypothecation of inventories (excluding stores and spares related to plant and machinery), Bills receivable, Book Debts

and all other movables both present and future of the Company to the extent of Rs.1,65,000.00 lakhs.

2. The short term loans availed by a subsidiary (S-STL 1) are cash credit facilities and working capital demand loans which

are secured by way of a pari passu charge on the receivables due to the subsidiary other than those that are specifically

charged to the other lenders of the subsidiary.

3. Short term loans availed by a subsidiary (S-STL 2) are secured by way of a charge on immovable and moveable properties

(including plant and machinery, Spares, Tools, Finished and Semi finished goods, Raw Materials and book Debts) of the

subsidiary.

4. Short term loan availed by a Subsidiary (S-STL 3) is a working capital facility (Dealer financing facility) which is secured

by stock of vehicles, Spare Parts, Lubricants and related book debts of the subsidiary and (S-STL 4) is also a working

capital facility (Trade Advance) which is secured by stock of vehicles of the subsidiary.

5. Short term loans availed by a Subsidiary (S-STL 5) is a working capital limit from a bank (in the nature of pre-shipment

credit, post-shipment credit, invoice financing and overdraft facility) which is secured by way of hypothecation of book

debts of the subsidiary.

6. Short term loans availed by a subsidiary (S-STL 6) is in the nature of an overdraft facility which is secured against

property, plant and equipment, receivables and inventories of the subsidiary.

7. Short term loan availed by a Joint Venture (J-STL-1) is secured by way of a pari passu charge on stocks and book debts of

the Joint venture company.

8. Short term loans availed by a Joint Venture (J-STL-2) is secured by way of a first charge on the current assets i.e. stock of

raw materials, semi–finished goods and finished goods and book debts (not older than 120 days) of the Joint Venture

company.

3.13 Accounting for Amalgamation

a) The Company had invested in certain associate companies, i.e. Ashley Investments Limited (AIL) and Ashley Holdings

Limited(AHL) (both engaged in holding Strategic investments of the Company primarily in Auto and Auto Component

Segment), Ashok Leyland Project Services Limited (ALPS) (engaged in consultancy services for promoting projects in

thermal power,wind energy etc.) and Ashley Services Limited (ASL) (engaged in trading in commodities, providing

technical and management support). Under a scheme of amalgamation sanctioned by the Honourable High Court of

Madras vide its order dated July 31, 2013, AHL, AIL and ALPS merged with ASL, effective April 1, 2013. Consequent

thereto, ASL became a wholly owned subsidiary of the Company as on the Appointed date of April 1, 2013.

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In a subsequent development, on March 21,2014, the Honourable High Court of Madras approved the scheme for

amalgamation of ASL(amalgamating company) with the Company from the Appointed Date of July 1, 2013. The said

Scheme became effective on March 27, 2014 on filing with the Registrar of Companies.The said Scheme of

Amalgamation was also approved by all the three Stock Exchanges in India with which the Company's shares have been

listed, namely, Madras Stock Exchange, Bombay Stock Exchange and National Stock Exchange vide their approvals

dated December 19, 2013, January 23, 2014, and January 22, 2014 respectively.

b) Combination of authorised capital

Pursuant to the aforesaid amalgamation and in terms of the said approved Scheme , the authorised share capital of the

Company stands increased by the authorised share capital of ASL aggregating to Rs.219,210 Lakhs. The sub division in

terms of class of share capital is as follows:

Particulars No of shares Face Value

per share Rs.

Equity Shares 21,356,000,000 1.00 21,356,000,000.00

Redeemable Non- Cumulative

Non- Convertible Preference

Shares

36,500,000 10.00 365,000,000.00

Non-Convertible Redeemable

Preference Shares 2,000,000 100.00 200,000,000.00

Accordingly, effective July 1, 2013, the authorised capital of the company stands at Rs 259,210 Lakhs.

c) Accounting treatment

The Company has followed the accounting treatment prescribed in the said approved Scheme of Amalgamation, as

follows:

i) The amalgamation of ASL with the Company has been accounted by the Company in the books by using the

Pooling of interests method in accordance with the said approved Scheme of Amalgamation and Accounting

Standard (AS) 14 as notified under the Companies Act, 1956.

ii) Accordingly, the Company has recorded all the assets and liabilities, and reserves of ASL at their respective

book values as appearing in the books of ASL as at July 1, 2013, the details of which are as follows:


ASSETS

Fixed Assets- Tangible 1.81


Long term loans and advances 3,730.63

Current assets:

- Cash and Cash Equivalents 28.04

- Short term loans and advances 9.90

LIABILITIES

Current Liabilities 99.99

RESERVES

Capital Reserve 8,793.10

Deficit in Statement of Profit and Loss (4.77)

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iii) Further, as provided in the said approved Scheme of Amalgamation, the shares of ASL held by the Company as

on July 1, 2013 directly and / or through its nominee(s), constituting the entire paid up equity and preference

share capital of ASL amounting to Rs. 1,14,080.24 Lakhs and share application monies pending allotment in the

books of the Company aggregating to Rs. 7,650 Lakhs stood cancelled. No shares or consideration was required

to be issued / paid by the Company, as ASL was a Wholly - Owned Subsidiary of the Company.

3.14 Exceptional Items - Voluntary retirement scheme

The company announced a Voluntary Retirement Schemes (2013) during FY’14 for executives who could opt for an early

separation from services of the company. VRS compensation of Rs. 4,694.42 Lakhs represents the amount settled, in

respect of those executives who exercised their option and separated from the employment upto March 31, 2014.

3.15 In respect of previously revalued items of fixed assets sold / disposed, the Company has, during the year changed its earlier

accounting practice to adjust the amount in revaluation reserve of such assets against the carrying value of such assets and

recognized the consequent profit / sale thereof. The impact of the said change is a higher profit on sale / disposal of

immovable properties by Rs.10,756.56 Lakhs for the year ended March 31, 2014.

3.16 The performance of certain subsidiaries of the Company (one engaged in software services and another engaged in a bus

manufacturing facility in Europe) and Joint Ventures (one engaged in providing vehicle and engine technology services

and another engaged in manufacturing construction equipments) have been reporting losses for the past few years resulting

in erosion of their capital. The Company has evaluated and reviewed the performance of these companies and all necessary

steps are being taken to improve their performance. The Company is committed and confident of improved financial

performance of these companies in near future and they becoming profitable.

Signatures to the Statement of Significant Accounting Policies and Notes to the Financial Statements.