ASHOK LEYLAND Chairmans Speech

Dear Shareholder,

I have great pleasure in sharing with you the details of the continued winning momentum of your Company when the performance boundaries were further stretched by another notch last year. It is remarkable that this was achieved in a year when the overall industry volume was static, demonetization and implementation of BS IV emission norms had their dampening effects in sales volume development. Gaining market share in a flat market of 2016-17 in all regions and product segments which followed a share gain in a growing market of 2015-16 amply demonstrates the structural strength of your Company. The full credit goes to the vibrant organization which had taken proactive measures in the product and market areas and was responding admirably to the changes in the business environment.

As a snapshot of your Company''''s performance last year,

- In the medium and heavy duty segment, a sales volume of 102,313 vehicles was realized in a flat market of 302,529 vehicles registering a growth of 4% and a market share of 33.8%. The truck segment posted an overall share 33.1% which is a record. In the bus segment, due to strategic shift to exit unprofitable segments there is a decline seen in the market share which will be overcome shortly through appropriate countermeasures. The Light Commercial Vehicle (LCV) market grew at 7.4% and with a sale of 31,770 vehicles, your Company retained the share in this segment despite fierce competition and having only one product in the line-up.

- Due to adverse conditions in target markets, our performance in the international markets has been modest. Your Company continues to do well in the defense segment and has won 19 new tenders in the last 12 -18 months. The power solutions business grew 6% along with an increase in market share. The aftermarket revenues which was a key focus area for your Company registered a growth of 31%.

- From a financial perspective, your Company has achieved a standalone revenue of Rs, 21,332 Crores. Profit after tax after exceptional items stood at Rs, 1,223 Crores a growth of 214% over the last year, an all-time high.

The standalone financials include the performance of the amalgamated Hinduja Foundries Limited for the period October 1, 2016 to March 31, 2017.

- Some of the high points of last year are:

1) Six new products including the India''''s first Electric Bus - ''''Circuit series''''.

2) Deming Prize for the Pant Nagar plant - the highest global recognition for quality.

3) Highest score on Dealer Satisfaction for M&HCV range by JD Power.

4) "School Bus of the Year" Award for the Sunshine Bus.

5) Migration to BS IV with an innovative market relevant /EGR solution.

6) Truck plant in Bangladesh.

In the coming years, your Company will continue to provide thrust to the core business of commercial vehicles and build a portfolio of profitable segments.

LCV strategy will get further sharpened and a slew of products is already in the pipeline. In enhancing customer profitability, identifying appropriate transport solutions will rank higher than just positioning products. International business will be a very important lever of growth with new bus plants planned in Africa. The defense business will be an area of great focus in tactical, armored and tracked vehicles. The aftermarket business will target market penetration, service delivery and profitability. The power solutions business will be a pillar for growth expanding on the range through small and high horse power engines.

Looking ahead, your Company anticipates many developments in the economic and business environment, some of which are local phenomena and some triggered by global trends. The Indian Economy is on the threshold of the next phase of growth through government sponsored "Make-In-India" programmes and other investment-led strategies. Concurrently, 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 through the Bharat Mala and Sagar Mala programmes nudging the logistics landscape.

In addition, the forthcoming GST 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. Your Company is well positioned to capture the upsides owing to these developments.

The global commercial vehicles market continues its strong growth trajectory. sales volumes have increased from 20.3 million vehicles in 2011 to 24.4 million vehicles in 2016 growing steadily at a rate of 4% per annum. It is tipped to touch 29 million vehicles by 2020. Trends point to an increasing focus on regulatory standards on emissions and fuel-efficient technologies. While cleaner technologies will potentially result in lower fuel costs for the customers, its impact on OEM profitability is likely to be limited. 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.

For improving efficiencies, commercial vehicle players are pursuing product modularization with an emphasis on accelerating time to market with high degree of customization but lower development costs and improvements through industry 4.0 levers such as preventive maintenance and yield maximization. Furthermore, product led business models are yielding ground to solutions based models anchored on digital platforms and in that process, OEMs are facing unorthodox rivals in the business such as technology start-ups.

I am happy to inform you that your Company has already laid great emphasis on these areas in its quest for excellence and technology leadership. I am confident more than ever before that we are on track to consolidate our market gains in India sustainably and emerge as a beacon of market relevant technologies in the commercial vehicle field.

Your Company, as part of CSR, has undertaken the initiative "Road to School". The primary objective of this initiative now is to improve quality of education in Government Schools in the remote rural areas in and around the facilities located in Hosur, Ennore and Vellivayalchavadi. The journey started in 2015 and today 108 schools are covered with over 15,000 children benefiting from this programme. A further 45 schools with 5000 children will be added this year, accelerating the coverage. The intent is to use education as a ''''social leveler'''' in these communities. The programme is now extended to include health, hygiene and strengthening the infrastructure requirements of the schools.

All things considered, I believe your Company has delivered another year of record operational and financial performance despite the odds. The bar is now set high but I am confident that with the growth strategies and plans in place and ably supported by a determined and passionate team, your Company will continue to excel in the coming years.

I thank you all for the confidence you have reposed in the Company. I would like to acknowledge the valuable support and contribution of our extended family of customers, dealers, suppliers, financial institutions and partners.

Thank you,

Yours sincerely,

Dheeraj G Hinduja


June 21, 2017

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at

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