Hinduja Group flagship Ashok Leyland is looking at expansion of its commercial vehicle business with plans to introduce a slew of products.
The company, however, said that commercial vehicle makers are under profitability pressure due to increasing competition and cost of meeting stronger emission standards.
In an address to its shareholders, the company’s chairman Dheeraj G Hinduja said the company in the coming years will continue to provide thrust to the core business of commercial vehicles and build a portfolio of profitable segments.
“LCV (light commercial vehicle) strategy will get further sharpened and a slew of products is already in the pipeline,” Hinduja said in the company’s Annual Report for 2016-17.
Besides, enhancing customer profitability, identifying appropriate transport solutions will rank higher than just positioning products, he added.
On profitability, Hinduja said: “There is over capacity in the manufacturing system, especially in emerging market economies, leading to price wars. Put together, increasing competition and cost of meeting stronger emission standards are placing OEMs under profitability pressure”.
Commenting on the international business, Hinduja said that the vertical “will be a very important lever of growth with new bus plants planned in Africa.”
On defence business he said that the company would focus on tactical, armoured and tracked vehicles.
He added that the company’s aftermarket business will target market penetration, service delivery and profitability.
Besides, the power solutions business will be a pillar for growth expanding on the range through small and high horse power engines, Hinduja said.
The company also anticipates many developments in the economic and business environment, some of which are local phenomena and some triggered by global trends, he added.
The business environment in India is expected to undergo a radical transformation with the big push to build quality infrastructure in roads, ports, water-ways, airways and railways, Hinduja said.
On GST, he said that the law is expected to make logistics operations simpler and seamless.
“In the medium term, we can expect acceleration of fleet renewals, road transport becoming more efficient, regulation such as for fully built vehicles and norms in place to stop over loading, all of which should augur well for the domestic commercial vehicle industry,” he added.
Hinduja also noted that the product led business models were yielding ground to solutions based models anchored on digital platforms and in that process, OEMs were facing unorthodox rivals in the business such as technology start- ups.
