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Financial Analysis On Ashok Leyland
A
PROJECT REPORT
ON
FINANCIAL ANALYSIS
Training undertaken at ASHOK LEYLAND PVT. LTD.
Submitted in the partial fulfillment of the award of the

degree of Bachelor of Business Administration
LORDS INTERNATIONAL COLLEGE

(SESSION 2012-2013)
Submitted To: - Submitted By:-

Dr. Meenakshi Bindal Ashar Hashmi
(HOD) BBA BBA PART 3RD
Enroll. No.
Roll No.
1
PREFACE
This project report has been prepared as per the requirement of the
syllabus of BBA course structure under which the students are the
required to undertake industrial internship. I undertook my training at
Ashok Leyland Pvt. Ltd. at its manufacture unit at Alwar.
My job during the training was to get an overview of the TRAINING

KNOWLEDGE in FINANCIAL ANALYSIS of ASHOK LEYLAND
PVT. LTD. . . . It was a firsthand experience for me as it was the first
time that I was exposed to the professional set-up and was learning
the FINANCE, which was really a great experience.
In addition technological changes were witnessing power shift from

old hectic and weird ways of doing business. These technological
developments have brought revolutionary changes in the market and
also in the mindset of the people which might be positive and
encouraging for a section of society and adverse for the others.
2
ACKNOWLEDGEMENT
No work can be accomplished alone in this world. My project was no
exception. It has been possible only through the guidance & help
from many people around me. I have been fortunate to get constant
guidance & encouragement from many, which helped me a lot to be
successful in my efforts. This formal acknowledgement will hardly be
sufficient to express my sincere thanks to all those for their help and
guidance.
I am highly obliged to the Management of ASHOK LEYLAND LTD. for

allowing me to undergo training in an esteemed organization like this.
I would like to express my gratitude & heartiest thanks to Mr.

Mahendra K Harit (Finance Manager) for providing me the golden
opportunity to undertake the project in this organization.
I also take the opportunity to acknowledge the consent support and

encouragement of Dr. Meenakshi Bindal (HOD BBA DEPTT.). Their
pinpoint guidance, help & active co-operation has sub stained the
efforts that has lead to the successful completion of this on job
training.
Finally I would like to thank my parents and friends for their moral
support without which it would have been difficult to pursue my
course & successfully complete my project work
3
Executive summary
R J Shahaney, Chairman
Board of Directors
R J Shahaney, Chairman
D G Hinduja, Vice Chairman (Alternate:Y M Kale)
D J Balaji Rao A K Das (Alternate: P Banerjee)
P N Ghatalia S R Krishnaswamy
S Raha F Sahami
S Shroff A Spare
R Seshasayee, Managing Director
Chief Operating Officer
V K Dasari
Chief Financial Officer
K Sridharan
Executive Directors
J N Amrolia S Balasubramanian
N Basavanahalli A Bhat
A R Chandrasekharan A K Jain
R Malhan N Mohanakrishnan
S Nagarajan M Natraj
B M Udayashankar
Executive Director and Company Secretary

N Sundararajan
Auditors
M S Krishanaswami & Rajan Haskins &Sells
4
Cover Page
Certificate
Preface
Acknowledgement
Executive Summary
Table Of Content
Serial Topic Page

No. No.
1 Company Profile
a) History of company
b) Executive Summary
c) Dimensions of growth
d) Technology Development
e) Ashok Leyland at Alwar
f) Awards and Certificates
Company Profile
a) Policies of the company
2 b) Mission Gemba
c) 5-S Housing project
d) Products of company
e) Corporate Philosophy, Governance, social
responsibility
Financial Analysis
a) Meaning of financial analysis
b) Aspect to be assessed in financial analysis
c) Methods Of Financial Analysis
3 d) Theoretical challenges faced by Financial ratios
Objective of the project report
Research methodology
a) Research area
5
b) Research design
4 c) Data collection
d) Sampling
5 S.W.O.T Analysis
a) Strength
b) Weakness
c) Opportunity
d) Threat
Project analysis
6 a) Ratio analysis
b) Cost analysis
c) Variance cost analysis
d) Inventory analysis
e) Production and sales analysis
f) Environmental safety analysis
Facts and Findings
7 a) Findings
b) Limitations
c) Conclusions
d) Suggestions
Bibliography
10
6
Chapter -1 The Company Profile
1.1 Company History:

The origin of Ashok Leyland can be traced to the urge for self-
reliance, felt by independent India. Pandit Jawaharlal Nehru, India's
first Prime Minister persuaded Mr. Raghunandan Saran, an
industrialist, to enter automotive manufacture. In 1948, Ashok Motors
was set up in what was then Madras, for the assembly of Austin Cars.
The Company's destiny and name changed soon with equity
participation by British Leyland and Ashok Leyland commenced
manufacture of commercial vehicles in 1955.
Equity participation by British Leyland and Ashok
Leyland commenced manufacture of commercial vehicles in 1955.
Early products included the Leyland Comet bus chassis, which sold in
large numbers to many operators, including Hyderabad Road
Transport, Ahmedabad Municipality, Travancore State Transport,
Bombay State Transport and Delhi Road Transport Authority. By 1963
the Comet was operated by every State Transport undertaking in
India, and over 8,000 were in service. The Comet was soon joined in
production by a version of the Leyland Tiger.
In 1968 production of the Leyland Titan ceased in Britain, but was

restarted by Ashok Leyland in India. The Titan PD3 chassis was
modified, and a five speed heavy duty constant-mesh gearbox
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utilized, together with the Ashok Leyland version of the O.680 engine.
The Ashok Leyland Titan was very successful, and continued in
production for many years.
Ashok Leyland vehicles have built a reputation for reliability and

ruggedness. The 500,000 vehicles being put on the roads have
considerably eased the additional pressure placed on road
transportation in independent India.
In the populous Indian metros, four out of the five State Transport
Undertaking (STU) buses come from Ashok Leyland. Some of them
like the double-decker and vestibule buses are unique models from
Ashok Leyland, tailor-made for high-density routes.
In 1987, the overseas holding by Land Rover Leyland International

Holdings Limited (LRLIH) was taken over by a joint venture between
the Hinduja Group, the Non-Resident Indian transnational group and
IVECO Fiat SpA, part of the Fiat Group and Europe's leading truck
manufacturer.
In the journey towards global standards of quality, Ashok Leyland

reached a major milestone in 1993 when it became the first in India's
automobile history to win the ISO 9002 certification. The more
comprehensive ISO 9001 certification came in 1994, QS 9000 in
1998 and ISO 14001 certification for all vehicle manufacturing units in
2002. In 2006. Ashok Leyland became the first auto company in India
to receive the TS16949 Corporate Certification.
Ashok Leyland is a technology leader in the commercial vehicles

sector of India. Its annual turnover exceeds USD 1 billion. Selling
8
close to around 83,000 medium and heavy vehicles each year, Ashok
Leyland is India's largest exporter of medium and heavy duty trucks
out of India.
It is also one of the largest Private Sector Employers in India - with

about 12,000 employees working in 6 factories and offices spread
over the length and breadth of India.
The company recently acquired Czech-based Avia's Truck Business

Unit, since renamed Avia Ashok Leyland Motors s.r.o. This gives
Ashok Leyland a foothold in the highly competitive European Truck
market.
The Hinduja Group also recently bought out IVECO's indirect stake in
Ashok Leyland for an undisclosed amount. Thus Ashok Leyland is
now purely a Hinduja Group Company.
Ashok Leyland is currently headed by Mr R. Seshasayee. Under his

leadership, the company has expanded from a purely India-centric
company to a company with global focus.
Mr. Seshasayee was also the President of CII (Confederation of

Indian Industry), the apex body representing Indian Industry for
Since then Ashok Leyland has been a major presence in India's

commercial vehicle industry with a tradition of technological
leadership, achieved through tie-ups with international technology
leaders and through vigorous in-house R&D.
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Access to international technology enabled the Company to set a
tradition to be first with technology. Be it full air brakes, power
steering or rear engine busses, Ashok Leyland pioneered all these
concepts. Responding to the operating conditions and practices in the
country, the Company made its vehicles strong, over-engineering
them with extra metallic muscles. "Designing durable products that
make economic sense to the consumer, using appropriate
technology", became the design philosophy of the Company, which in
turn has moulded consumer attitudes and the brand personality.
Ashok Leyland vehicles have built a reputation for reliability and

ruggedness. The 5,00,000 vehicles they have put on the roads have
considerably eased the additional pressure placed on road
transportation in independent India.
In the populous Indian metros, four out of the five State Transport
Undertaking (STU) buses come from Ashok Leyland.. Some of them
like the double-decker and vestibule buses are unique models from
Ashok Leyland, tailor-made for high-density routes.
In 1987, the overseas holding by Land Rover Leyland International
Holdings Limited (LRLIH) was taken over by a joint venture between
the Hinduja Group, the Non-Resident Indian transnational group and
IVECO. (Since July 2006, the Hinduja Group is 100% holder of
LRLIH).
The blueprint prepared for the future reflected the global ambitions of
the company, captured in four words: Global Standards, Global
Markets. This was at a time when liberalisation and globalisation
10
were not yet in the air. Ashok Leyland embarked on a major product
and process upgradation to match world-class standards of
technology.
1.2 Three Dimensions Of Growth
1. CAPACITY EXPANSION 2. GLOBALIZATION
3. DIVERSIFICATION
CAPACITY EXPANSION :-
From under 30,000 vehicles in 2001-02, to over 83,000 vehicles in

2006-07, Ashok Leyland's operations have gained in size, supported
by phased capacity expansion. One significant feature of this
expansion phase has been that capacities have been added with
incremental investments coupled with de-bottle necking and
improved productivity and efficiencies.
Looking beyond the current slowdown and confident of growing with
the industry , the company is on course to enhance production capacity from
the present 84,000 vehicles : 50,000 vehicle \ capacity will be created in
existing units this fiscal , with another 50,000 by
2010 at the green field Uttarakhand facility.
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This expansion programme has been drawn up in line with the
company's vision to consolidate presence in the domestic market.
It also reflects the vision of the Hinduja Group for the Company and
the Group's total, unstinted support to actualize it.
GLOBALIZATION :-
Globalization breaks the traditional barriers of national boundaries and
allows the most competitive value addition , thus rewarding and
enhancing efficiencies . The first major step in that direction was the
acquisition of the Truck Business Unit of AVIA , since renamed AVIA
Ashok Leyland Motors (AALM). At the Ras Ai Khaimah bus assembly
Unit , activities are scheduled to commence by the current financial
year.
The strengths of the Company in terms of its close and longstanding

business relationship with India's auto component sector have been
channelized into the Component Business Group, for sourcing out of
India, to Europe, the Middle East and the North American after market
sector.
Even as we pursue global markets , the Company has been
Benefiting through global sourcing . To gain from the significant cost
Benefits in sourcing components and materials from China, an office
has been set up in Shanghai.
DIVERSIFICATION :-
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Ashok Leyland and its associate companies and businesses, collectively,
Are seeking to broaden the scope of operations in their traditional
Domains , increasingly occupying adjacent domains. The high potential
of the automotive sector and opportunities from globalization converge
to offer tremendous opportunities as never before.
1.3 Technology development
Nissan Ashok Leyland Technologies Pvt. Ltd., the

technology development :
The company has recently announced a joint venture with Japanese
auto giant Nissan (Renault Nissan Group) which will share a
common manufacturing facility in Chennai, India. The shareholding
structures of the three joint ventures are as under:
Ashok Leyland Nissan Vehicles Pvt. Ltd., the vehicle

manufacturing company will be owned 51% by Ashok Leyland
and 49% by Nissan
Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain

manufacturing company will be owned 51% by Nissan and 49%
by Ashok Leyland
Nissan Ashok Leyland Technologies Pvt. Ltd., the technology

development company will be owned 50:50 by the two partners .
R&D
World-class Technology
To offer world-class technology that is relevant and affordable to the
Indian customer is the philosophy that drives R&D at Ashok Leyland.
Over the years, this philosophy has been translated time and again
into products that seamlessly integrate international technology with
local needs. "The role of R&D is central in fulfilling the company-wide
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commitment to total customer satisfaction" states Mr. R. Seshasayee,
Managing Director, and adds that the increased infrastructural and
financial support expresses the company's determination to become
self-reliant in R&D.
Value to the Customer
The immediate R&D priorities are to pro-actively address safety and

environmental issues, harness and adopt technologies that provide
value to the customer in an atmosphere enabling creativity and
innovation. Powering those who "engineer tomorrows" with an
enabling infrastructure has been top priority for the company.
Test Tracks
But their R&D is not confined within walls. It extends to the test tracks
as well. Rigorous tests are carried out under stringent simulated
conditions that replicate the most treacherous landscapes.
Vehicle ruggedness and longevity are a prime customer concern, as
they directly impact earnings. Ever conscious of this, Ashok Leyland
makes extensive use of a modern CAD set-up, a comprehensive test
track facility (where cobble-stones are calibrated and reset
periodically), accelerated fatigue testing rigs and rigorous durability
testing facilities. Together they ensure that there is a constant
improvement in the life and on-road performance of every make of
Ashok Leyland vehicle to hit the roads. Safety, durability, through their
R&D efforts.
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Innovations
Ashok Leyland product development successes have come from a keen sense of
anticipation and attentiveness. The company initiated research into alternative
fuels well before legislative debate had even begun in the country. The result was
the implementation of CNG technology ahead of the rest promising a breath of
fresh air for polluted cities
1.4 ASHOK LEYLAND ALWAR
Alwar is a strategic town in Rajasthan midway between Delhi and

Jaipur is located with national capital region. As a part of expansion
programme alwar unit was added to the family of ASHOK LEYLAND
& started its operation in 1982 & has completed its 25 years
successfully. It is basically an assembly plant where the chassis is
assembled.
Ashok Leyland, Alwar is worlds largest CNG Vehicle producing
plant; CNG is used as an alternate fuel to diesel and is very less
polluting. The pollution of CNG vehicle is less than ever Euro-4
vehicle which is known for its lesser pollution vehicle.
The total covered area of Alwar plant is 352 acres and the fencing
is done in around 161 acres of area. The plant comprises of 8 shops
called shop-1, shop-2 & shop-5. the plant has three gates one is main
gate, one for entering the goods carrier, third for the products going
out of the plant for sale.
There is an administrative office one P & A department block, a
medical centre, a canteen, a newspaper reading room library, a
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training centre & system department, regional sale office yard &
construction is going on for new stores.
1.5 Certification and Awards obtained
ISO 9002: 1987 1993 Ennore & Hosur unit

-1
ISO 9001: 1994 1994 Ennore, Hosur unit-
1 & 2, Bhandara,
Alwar & Corporate
function
QS 9000: 1998 1998 Ennore, Hosur unit-

1& 2/CPPS,
Bhandara, Alwar &
Corporate function
ISO 9001: 2000 2003 Ennore, Hosur unit-

1& 2, Bhandara,
Alwar & Corporate
function
ISO 14001: 1996 2001 Ennore
ISO 14001: 1996 2002 Ennore , Hosur unit-

1 & 2 & CPPS
ISO 14001: 1996 2003 Ennore , Hosur unit
-1 & 2 & CPPS ,
Alwar & Bhandara
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BS 7799-2: 2002 2005 Information security
management
system for Ennore
data center
ISO/ TS- 16949-2002 2006 Ennore, Hosur unit-1
& 2/ CPPS,
Bhandara, Alwar &
Corporate function
Chapter-2 Company Profile (contain)
2.1 Policies Of The Company
Quality policy
Ashok Leyland is committed to achieve customer satisfaction by
anticipating and delivering superior value to the customer in relation
to their own business through the products and services offered by
the company and to comply with statutory requirement. Towards this
the quality policy of Ashok Leyland is to make continuous
improvements in the processes that constitute the quality
management system to make them more robust ant to enhance their
effectiveness and efficiency in achieving stated objective leading to:-
Superior products manufactured by the company as also
services offered by the company.
Maximum use of employees potential to contribute to quality
and environment, by progressive up gradation of their
knowledge and skills as appropriate to their functions.
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Seamless involvement from vendors and dealers in the
mission of the company to address customer changing
needs and protection of the environment.
It is mandatory on the part of every employee of Ashok
Leyland to understand, implement and maintain the quality

policy of the company and to implement the procedures
incorporated in this manual and other associated quality
system documents issued by the manufacturing units and
corporate functional divisions on the basis of guidelines in
this manual.
Environmental policy
Any type of activity that is performed or any type of product that is
manufactured had an effect on the surrounding or environment.
At Ashok Leyland are committed to preserving the environmental
through a comprehensive environmental policy and productive
approach in planning and executing our manufacturing and service
activities.
We are concerned about the earth our children will inherit thats why
we make sure our vehicles consume less fuel and pollute less. This
concern is reflected in the manufacturing systems, the various
processes energy conservation measure and conscious greening
indicate of the company.
A system is employed to control or minimize the adverse impact
on the environment is environmental management system (EMS).
Objective of Ashok Leyland Environmental policy are:-
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To adhere to all applicable environment legislation and
regulations
To adopt pollution preventive techniques in design and
manufacturing of our products.
To conserve all such resources such as power, water, oil, gas,
compressed air etc. & optimizes their usage through scientific
methods.
To provide a clean working environment to our employees,
contractors and neighbors.
Commit to comply with all relevant legal and other
requirements.
Continuously strive to minimize waste generation by all possible
ways and to reuse and recycle the same through a time bound
action plan
Things done to protect the environment and achieve the goal of
the policy:-
Conserving natural resources like wood , coal , petroleum
products
Avoiding wastage water at plant area
Switching off the idle engine, motors, pump & lights
Avoiding spilling oil , grease, paints on the floor
Do not through oil into drain
By planting many trees inside the company area
Recently planting plants on 5 June 2008(world environment
day)
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Safety and Health Policy
Intension & commitment of the top management
Ashok Leyland affirms that all its employees irrespective of the rank
need to be safe guarded against any person injuries or damage to the
properties during working period. That the management recognises
the principle that accident prevention contributes in the long run
progress and development of the organisation.
Ashok Leyland is committed to:-
Implementing all practical safety measures like safe working
and environmental condition.
Carrying out a systematic critical appraisal of all potential
hazards involving personal, plant services and operating
methods.
Following strictly safety rules and regulations incorporated in
the factories act and rules.
Maintaining safe and healthy working environment at all
working places conductive to the success of the management
safety programs in the long run.
Implementing safe and health education programmes for
employee with specific emphasis on creating safety and health
awareness.
Welcoming useful and constructive suggestions and ideas in
regard to safety and health.
VISION
20
The vision of Ashok Leyland is to be among the top Indian

corporation acknowledged nationally and internationally for:-
Excellence in quality of its product
Excellence in customer focus and service.
MISSION
Be a leader in the business of commercial vehicles excelling in
technology quality value to customer fully supported by customer
service of the highest order & meeting nationally and international
environment and safety standards.
EMPLOYEES
We consider our employees as our most valuable assets and are

committed to provide full encouragement and support to them to
enhance their potential and contribution to the company businesses.
2.2 MISSION GEMBA
ENHANCING EMPLOYEES FOR WORLD CLASS GLOBALISED

PERFORMANCE VISION:-
Achieving leadership in the domestic commercial vehicle markets and
a significant presence in the world markets and a significant presence
in the world market by 2014 through transport solutions by enhancing
the employ for their excellent work to promote them to do their best
for the goal of organization.
21
Its a playful part of the company. It is totally based on the potential of
the employee how can they do more, higher productivity can be
generated and how efficiently their jobs do. If any employee renders
his service for a new invention or a way by which the production,
quality standards or any other standards can grow rapidly. Then the
employee is awarded by senior officers or respective head of mission
gemba.
The main emphasis is on the increase of the potential of the
employee. Motivate them through learnings; self respect, honesty,
hard work, etc... Have to become the essential part of an employee
working in the organization
It creates a positive psychological effect in the mind of employee. If
he perform just different job, respective with a aspect of development
of the company, he is being awarded and the same employee works
with a difference in the company with more advantageous style.
It gives a friendly and competitive environment which helps employee
and the organization to achieve their ambitions.
GEMBA is a Japanese word which means SHOP FLOOR. It
provides quality assurance, fastest delivery and least cost to
customers by
Offering appropriate products and services.
Adopting lean manufacturing systems & practices through
employee empowerment and participation.
Bench marking products, process and people against best in
the industry
22
In processing of this plan everyday all permanent workers, engineers,
managers amount up on the GEMBA floor and discuss their problems
and solutions with each other.
Every day for their improvement suggestion every guy is awarded
marks according to the performance and after a period the highest
scorer is awarded the GEMBA mission award.
2.3 5-S HOUSE KEEPING

SORT (SEIRI)- Get rid of clutter
SET IN ORDER (SEITON)- Organize the work area (Arrange
necessary items in good order so that they can be easily picked
for use.)A place for everything & everything in its place.
SHINE (SEISO)- Clean the work area
STANDARDIZE (SEIKETSU)- Use standard methods to keep

Sort, Set In Order, and Shine to a condition .(Maintain high
standards of housekeeping and workplace organization at all
times.)
SUSTAIN (SHITSUKE)- Maintain through empowerment,

commitment, and discipline.(Train people to always follow good
housekeeping disciplines.)
2.4 Products
1. Bus
2. Trucks
3. Engines
23
4. Defence & special vehicles
Bus:
I bus
Viking BS I -city bus
Viking BS II -city bus
Viking BS III -city bus
Cheetah BS-I
Cheetah BS-II
Panther
12 M
Stag Mini
Stag CNG
222 CNG
Lynx
Double Decker
Vestibule
Airport Tarmac Coach
Olympian
Engines:
1. Engines ranging from 15KVA to 250KVA
2. Engines with power rating from 40PS to 200PS.
3. Engines with power rating from 58PS to 193PS
4. Diesel and Natural Gas gensets trom 15KVA - 250KVA
24
LUXSMALL_ BUS
LIGHT 4*4 HIPTHUMB

Trucks:
1. 4X2 Haulage Model
2. 4X2 & Multi Axle tippers
3. Multi Axle Vehicles
4. Tractors
5. Ecomet.
Defence & Special Vehicles: Largest provider of logistic

vehicles to the Indian army.
Achievements
Eight out of ten metro state transport buses in India are from
Ashok Leyland. At60 million passengers a day, Ashok Leyland
buses carry more people than the entire Indian rail network.
25
Ashok Leyland has a near 98.5% market share in the Marine
Diesel Engines Markets in India.
In 2002, all the vehicle-manufacturing units of Ashok Leyland

were ISO 14001 certified with Environmental Management
System.
The company has six manufacturing locations in India:

o Ennore, Chennai
o Hosur, Tamilnadu (3 plants)
o Alwar, Rajasthan
o Bhandara, Maharastra
The total covered space at these six plants exceeds

450,000 sq m and together employs over 11,500 personnel.
Last Financial year (2006-2007) the company sold a record

83,101 vehicles which is an all time high considering the past
sales history of Ashok Leyland.
It is one of the leading Brands in India and most easily

recognizable one.
The company is setting up a new Plant in the North Indian state

of Uttarakhand at Pant Nagar at an investment outlay of Rs.
1200 crores. This plant is expected to go on stream in the year
2008. The Plant will have a capacity to produce around 40,000
commercial vehicles and is expected to cater mainly to the
North Indian market taking advantage of the excise duty and
other tax concessions.
The company has signed an agreement with Ras Al Khaimah

Investment Authority (RAKIA) in UAE for setting up a new
manufacturing base in the Middle East.
The company also announced that it may set up a manufacturing base in
South Africa.
2.5 Corporate philosophy, governance,

social responsibility
26
Corporate philosophy
They believe that their impressive strides in the marketplace stem in

equal parts from their proactive approach and their customers'
unstinting support, earned the only way they know: by giving their
customers the most appropriate transport solutions for each of their
applications, and by backing them up with consultancy, finance, driver
training and a responsive after-market network. They are conscious
of the fact that vehicles are more than just a means of transporting
people and goods; they understand that they have a deep and far-
reaching impact on society, the national economy and the
environment.
They have, therefore, always endeavoured to engineer products and

systems that promote progress on all these fronts. They firmly believe
that this honest approach will make the Ashok Leyland marquee the
symbol of the very best in transportation, today and tomorrow.
The five AL values are:
International
Speedy
Value creator
Innovative
Ethical
Corporate Governance:
27
The Board of Directors and the Management of Ashok Leyland are
committed to the enhancement of shareholder value.
through sound business decisions, prudent financial

management and high standards of ethics throughout the
organization
by ensuring transparency and professionalism in all decisions
and transactions and
achieving excellence in Corporate Governance by conforming
to, and exceeding wherever possible, the prevalent mandatory
guidelines on Corporate Governance and by regularly
reviewing the Board processes and the Management systems
for further improvement
The company has adopted a Code of Conduct for the members of the
Board and senior management, who have all affirmed in writing their
adherence to this Code.
Ombudsman
Another significant step has been the appointment of an Ombudsman
to deal with any references, complaints or grievances about the
Company, its employees or its dealings.
If the suppliers, employees or customers have any suggestions on

governance issues or grievances or complaints on Ashok Leyland's
practices - inclusive of its executives in various functions - which they
feel ought to be raised with the Ombudsman and not with the usual
channels of business, they may do so.
It is advised that the regular business dealings should be through the

usual business functional channels. The Ombudsman will not deal
with them under normal circumstances.
The Ombudsman is Mr.T. AnanthaNarayanan, a former Executive

Director of the Company, with an excellent understanding of Ashok
Leyland as an organization and its functioning, having been with the
company for nearly 30 years.
Corporate social responsibility
28
Ashok Leyland believes in providing every employee an opportunity
to stretch beyond the call of routine work and to realise the spirit of its
corporate mantra: They can because they care. Employees are
given an opportunity to volunteer for any one of its social initiatives.
Their volunteers believe that amazing things can happen when
people come together for a cause. They drive their outreach
programmes and most of their CSR initiatives. As part of their CSR
efforts, the Company also initiated payroll contribution to a worthy
cause to help the marginalised and the vulnerable. Under this
programme an employee contributes an amount of his/her salary to
one of the five social organisations identified by the Company.
Their partners
In all their CSR efforts, they also partner with government agencies,
local communities, NGOs and academic institutions to enhance their
strengths and help us leverage their expertise, reach and resources.
Community outreach
The Company is involved in the construction and renovation of
community halls, government/private schools, drilling public
bore wells, erecting bus shelters and putting up streetlights
around its manufacturing units. These development initiatives
are undertaken by a Community Development Scheme
supported and managed by representatives from the
Management and the Union.
29
Their manufacturing units have conducted over hundred
medical, blood donation and HIV awareness camps to benefit
people residing in the neighbouring areas.
Career guidance for high school students, skill development for

unemployed youth and vocational training for women of self
help groups around their manufacturing units have been
organised with the help of specialists in the respective fields..
Ashok Leyland imparts computer training to economically

deprived students in Hosur at the Companys Management
Development Centre. The selected students are put through a
carefully designed 4-module session and certified on successful
completion of the course. A batch of 25 students is selected
every month and the programme aims to cover 300 students
every year.
Ashok Leyland operates Fun Bus - offering a days free outing

for the economically and socially deprived children including
children who are differently-abled, children from orphanages,
corporation primary schools and other underprivileged groups
based in Chennai.
The Company helps the spouses of employees who show

interest in forming self-help groups. It trains them in microcredit
and a carefully selected micro-enterprise that can leverage the
needs of the local markets.
30
Chapter -3
Financial analysis
3.1 Meaning of financial analysis

3.2 Aspect to be assessed in
financial analysis
3.3 Methods Of Financial Analysis
3.4 Theoretical challenges faced by
financial ratios
31
3.1 Meaning of Financial analysis :
It refers to an assessment of the viability, stability and profitability of a

business, sub-business or project. It is performed by professionals
who prepare reports using ratios that make use of information taken
from financial statements and other reports. These reports are usually
presented to top management as one of their bases in making
business decisions. Based on these reports, management may:
Continue or discontinue its main operation or part of its

business;
Make or purchase certain materials in the manufacture of its
product;
Acquire or rent/lease certain machineries and equipments in
the production of its goods;
Issue stocks or negotiate for a bank loan to increase its working
capital.
Make decisions regarding investing or lending capital
other decisions that allow management to make an informed
selection on various alternatives in the conduct of its business.
32
3.2 Aspect to be assesed in financial

analysis
1. Profitability-
Its ability to earn income and sustain growth in both short-term and
long-term. A company's degree of profitability is usually based on the
income statement, which reports on the company's results of
operations;
2. Solvency-
Its ability to pay its obligation to creditors and other third parties in
the long-term;
3. Liquidity-
Its ability to maintain positive cash flow, while satisfying immediate

obligations;.
4. Stability-
The firm's ability to remain in business in the long run, without having
to sustain significant losses in the conduct of its business. Assessing
a company's stability requires the use of both the income statement
33
and the balance sheet, as well as other financial and non-financial
indicators.
3.3 Methods Of Financial Analysis
Financial analysts often compare financial ratios (of solvency,

profitability, growth...):
Past Performance: Across historical time periods for the same

firm (the last 5 years for example),
Future Performance: Using historical figures and certain
mathematical and statistical techniques, including present and
future values, This extrapolation method is the main source of
errors in financial analysis as past statistics can be poor
predictors of future prospects.
Comparative Performance: Comparison between similar
firms.
3.4 Theoretical challenges faced by Financial

ratios:
34
They say little about the firm's prospects in an absolute sense.
Their insights about relative performance require a reference
point from other time periods or similar firms.
One ratio holds little meaning. As indicators, ratios can be
logically interpreted in at least two ways. One can partially
overcome this problem by combining several related ratios to
paint a more comprehensive picture of the firm's performance.
Seasonal factors may prevent year-end values from being
representative. A ratio's values may be distorted as account
balances change from the beginning to the end of an
accounting period. Use average values for such accounts
whenever possible.
Financial ratios are no more objective than the accounting
methods employed. Changes in accounting policies or choices
can yield drastically different ratio values.
They fail to account for exogenous factors like investor behavior
that are not based upon economic fundamentals of the firm or
the general economy (fundamental analysis) [1].
35
Chapter -4
Objective of project report
36
Objectives of my study are:
1. To know about Ashok Leyland and its product range.

2. To do the financial analysis of Ashok Leyland.
3. To do the cost analysis of Ashok Leyland
4. To do production and sales analysis of Ashok Leyland.
5. To know about the Corporate Governance and social
responsibility.
6. To know about the practices followed by Ashok Leyland in
respect to environment and safety.
37
Chapter -5
Research Methodology
5.1 Research area

5.2 Research design
5.3 Type of Research
5.4 Data collection
5.5 Sampling
38
Research Methodology
Research Methodology is a way to systematically solve the research
problem. It may be understood as a science of studying how research
is done scientifically. When we talk of research methodology we not
only talk of research methods but also consider the logic behind the
methods we use in the context of the research study and why we are
not using other methods so that research results are capable of being
evaluated either by the researcher himself or by others.
5.1 Research Area :

Research area of my study is ASHOK LEYLAND LTD. More
specifically my research area is to do financial analysis of this
company. It includes sales, production, cost, profit, liquidity and
solvency analysis of this company. To study its Corporate Social
Responsibility and its concern towards environment and safety also
formed a part of my research area.
5.2 Research Design :

Research design is an arrangement of conditions for collection and
analysis of data in a manner that aims to combine relevance to the
purpose with economy in procedure. In fact, the research design is
the conceptual structure within which research is conducted; it
39
constitutes the blueprint for the collection, measurement and analysis
of data. Once the research project is identified and defined clearly the
next stage is to design the research. The research design provides a
complete guideline for analysis the data. Decision regarding what,
where, when, how much, by what means concerning an inquiry or a
research study constitute a research design.
Researtch design is needed because the smooth sailing of the

various research operations thereby making research as efficient as
possible yielding maximal information with minimal expenditure of
efforts, time and money.
5.3 Types of research :-
There are several types of researches, but very few are popular .
Those among the popular are :-
Descriptive research
Experimental research
Exploratory research
My research is to be conducted mainly on exploratory study only. In

exploratory research, the focus is on the discovery of ideas. An
exploratory study is generally based on the secondary data that are
readily available. Exploratory research has the goal of formulating
problems more precisely, clarifying concepts, gathering
explanations,gaining insights and eliminating impractical ideas.
40
It does not have a formal and rigid design as the researcher may
have to change his focus or direction, depending on the availability of
news ideas and relationships among variables.
5.4 Data Collection :

While deciding about the method of data collection to be used for the
study, the researcher should keep in mind two types of data viz.,
Primary and Secondary.
The primary data are those which are collected afresh and for the first
time, and thus happen to be original in character. It can be collected
through Observation, Interview, Questionnaires, consumer panels,
etc.
The secondary data, on the other hand, are those which have already
been collected by someone else and which have already been
passed through the statistical process. In this case, nature of data
collection work is merely that of compilation.
Data used for analysis in this project has been collected from
secondary sources like:
Internet: Data has been obtained from Web sites, Search

Engines.
Journals, magazines, books and annual report.
Periodic brochures, and reviews of Ashok Leyland ltd.
Organization
5.5 Sampling :
41
Sampling is selection of source parts of an aggregate on the basis
of which a judgement about the aggregate is made. In other
words,it is the process of obtaining information about an entire
population by examining only a part of it. A Sample design is a
definite plan for obtaining a sample from a given population. It
refers to the technique or the procedure the researcher would
adopt in selecting items for the sample.
42
Chapter 6
SWOT ANALYSIS
6.1 Strength
6.2 Weakness
6.3 Opportunity
6.4 Threat
43
STRENGTHS:-
Brand Reliability.
It is capable of producing 1.6 million
units annually.
Quality services and customer care.
Ability resources, weakness of the
competition, or the opposing sources.
Best technology.
Best quality products.
Best value for people.
WEAKNESS:-
Failures defeats, loses, and inability to
match up with the dynamic situation of
growth the change.
Market fluctuation and the continuous
changes
Failure of some BIG names in the
market
Not having so much of awareness of
schemes
OPPORTUNITIES:-
Coverage of rural areas.
44
Given good services & good benefit
scheme to the customer.
Possibilities of what can be done and
where effectiveness is possible.
THREATS:-
Changes in business environment
PEST forces: political, economic,
social, technological.
Through cut competition in the
market.
Different demands of the customers.
Costly product of company.
45
Chapter 7
Project Analysis
7.1 Ratio analysis

7.2 Cost analysis
7.3 Variance cost analysis
7.4 Inventory analysis
7.5 Production and sales analysis
7.6 Environmental safety analysis
46
7.1 RATIO ANALYSIS
7.1.1 Current ratio

Particular Formula 2007 2008
Current ratio Current Assets/Current Liabilities 1.56 1.26
Meaning :-
The ratio reveals the relationship between current assets and current
liabilities .This ratio also reveals that how efficiently the working
capital of the firm is used.
Interpretation :-
Generally the standard ratio for the concern is 2:1 i.e. current assets
should be twice of the current liabilities .If the ratio is 2 it means that
the concern has the ability to meet its current obligations and the
ratio above 2 shows the managerial deficiency of the concern to
profitably manage the current assets but if the ratio is less than 2 , it
indicates that the concern has difficulty in meeting its current
obligations.
In year 2007, this ratio was 1.56 which is less than the standard and
in 2008, it is 1.26 that is it further reduced by .30 . From the creditor
point of view this ratio is not satisfactory because if sufficient cash is
47
not there, their amount cannot be paid in time .This ratio is also
unsatisfactory from the point of view of banks and other financial
institutes who has provided the firm with short term loans . The
reason for decrease in this ratio is that, though there has been
increase in the investment in working capital from 2006-07 to 2007-08
but current assets investment has rise in less than proportion to the
current liabilities.
Net Current Assets (excluding cash / bank balances) as on March 31,

2008 stood at Rs 1,519 mn. compared to the previous year level of
Rs 5,069 mn. mainly due to reduction in trade debtor levels.
Inventories have gone up to Rs 12,239
mn. as on March 31, 2008 compared to Rs 10,703 mn. As at March
31, 2007. The increase is mainly due to increased activity levels and
higher level of finished vehicles and engines. Focussed effort on
collections reduced the sundry debtors level to Rs 3,758 mn. from Rs
5,229 mn.
7.1.2 QUICK RATIO

Quick Ratio Quick Assets/ Current 0.93 0.73
Liabilities
Meaning :-
The ratio reveals the relationship between quick assets (current
assets inventories ) and current liabilities. This ratio also reveals the
ability of the firm to convert its current assets quickly into cash in
order to meet its current liabilities . Current ratio fail to reveal the any
48
information regarding the composition of the current assets of the firm
. A rupee of cash is considered equivalent to a rupee of inventory or
receivable. But it is not so . A rupee of cash is more readily available (
i.e. more liquid ) to meet current obligation than a rupee of, say,
inventory. But this drawback of current ratio is overcome through the
use of quick ratio.
Interpretation :-
Generally the standard ratio for the concern is 1:1 i.e. quick assets
should be equal of the current liabilities .If the ratio is 1 it means that
the concern has the ability to meet its very short term obligations. In
year 2007, this ratio was 0.93 which is approximately equal to the
standard and in 2008, it is 0.73, that is it reduced by .20. this shows
that firm will not able to satisfy its short tern obligations quickly which
is not good from creditors, financial institutes and banks point of view
. This ratio has fallen due to decrease in debtor and increase in
current liabilities both . The company debtors are slightly reduced and
stock has increased , this is because of slight decrease in the trend
of demand.
7.1.3 DEBT EQUITY RATIO

Debt Equity Ratio LONG TERM DEBT/ 0.35 0.42
SHAREHOLDER FUNDS
Meaning :-
The relation between borrowed funds and owners fund is measured
under this ratio. This ratio reflects the relative claim of creditors and
49
shareholders against the assets of the firm. Or in other words, it
shows the proportion of debt and equity in financing the assets of the
company.
Interpretation :-
A ideal ratio in this industry is 0.50. In 2007 , debt equity ratio of the
firm was .35 and in 2008 , it was.42 i.e. it has slightly increased.
Higher the ratio better it is form the shareholders point of view
because the earning available to the would increase more than
proportionate the increase in the operating profit of the firm. Where as
lower the ratio better it is for the creditors , because for every 42
paise of the creditors , the firm has one rupees of owners capital .
the ratio currently is satisfactory from both point of view . Also Fitch
has awarded ratings at AA (IND) / stable for the Companys long
term borrowings. ICRA has assigned the rating LAA (L double A) for
long-term loans and also assigned special rating of A1+ (A one plus)
for short-term loans. CRISIL has given the ratings for long-term
borrowings at AA / negative. On Commercial Paper programme
(short term borrowing), CRISIL maintained the earlier rating of P1+.
The Company believes that it has sufficient liquidity to meet its
working capital requirements and other anticipated cash outflows.
As the shareholders are heavily involved financially , they will strain

every nerve to make the enterprise a success and the risk to long
term creditors fund is less .
7.1.4 LONG TERM FUNDS TO FIXED ASSETS RATIO

Praticular Formula 2007 2008
50
Fixed assets Long Term Funds / 1.55 1.23
ratio Fixed assets
Meaning :-
This ratio shows the relationship between long term funds (i.e. both
shareholders funds and long term debts ) and fixed assets .
Interpretations :-
This ratios tells that whether the fixed assets are purchased out of the
long term funds or liability or not . It is always advisable for the firm to
not to purchase the fixed asset out of working capital. The ideal
ratio is more than one . In 2007, this ratio was1.55 and in 2008 it was
1.23 which is satisfactory from point of view of company future. The
ratio has slightly decreased due to increase in the issue of long term
funds is less than proportion to increase in the purchase of fixed
assets. Earlier a significant amount of long term fund was also used
in working capital , but now that fund investment is shifted from
working capital to fixed assets, and in for working capital purpose
short term loan has been arranged that is why there was less
requirement of issue of long term fund than the amount of purchase
of fixed assets .Thus the ratio decreased..
7.1.5 RESERVE TO SHARE CAPITAL RATIO

Reserve to Reserves and surplus / 13.33 15.15
Share capital share capital
Meaning :-
51
This ratio indicates the relationship between reserves and capital . It
show the financial soundness of the firm because reserves will help
the company to meet future losses out of these reserves .
Interpretation:-
Higher the ratio better it is for the future of the firm . In 2007 this
ratio was13.33 that is very good and in 2008 this ratio rise by 1.82
and reached to 15.15 . by looking at these figures we can say that
company has good financial soundness.
7.1.6 PROPRIETORY RATIO :-

Proprietory ratio Shareholders funds / 42.22% 38.64%

Total assets
Meaning :-
This ratio indicates a relationship between networth and total assets .
the main objective is to measure the use of capital invested in a firm.
The creditors come to know about the share of proprietory fund in the
total assets and satisfy how far there loan is secured .
Interpretation :-
Higher the ratio the more satisfy will be the creditors. 50% is
considered as the ideal or the standard ratio from the point of view of
creditors which means at least shareholders funds should be half of
the assets .In 2007 , this ratio was 42.22% which is some what
satisfactory for creditors . but this ratio has fallen to 38.64% in
2008.the reason for such a fall in the ratio is that during 2007-08 firm
raised new unsecured loans for the purchase of new fixed assets.
52
Thus , in the ratio denominator (total assets ) increased but
numerator (shareholders fund ) remained same , leading to fall in the
ratio .
Since the ratio has fallen , there has been decrease in the margin of
safety for the creditors which is not satisfactory, they are now
exposed to greater risk. On the other hand this decrease in the ratio
is favorable for the shareholders as they can better exploit to make
available to them the benefit of trading on equity .
7.1.7 GEARING RATIO

Gearing ratio Equity share capital / Pref. S Cap 2.96 2.42
+Debentures + Long Term Loans
Meaning :-
This ratio analyse the capital structure of the firm and shows the
relationship between equity share capital (variable cost bearing
capital ) and fixed cost bearing capital ( debentures, preference share
capital and long term loans) .
Interpretation :-
This ratio is useful when the objective is to show the effect of the use
of fixed-interest / dividend source of funds on the earnings available
to the equity shareholder. The firm is said to be more geared if equity
share capital is less than debentures , preference shares and loans.
That means a ratio of less than one is said to be good from equity
shareholders point of view , and a ratio of more than one is said to be
favorable for creditors of the company as they can have a better
margin of safety in case of long term solvency of the firm . In case of
53
concerned firm the gearing ratio in 2007 was 2.96 which is not
satisfactory from the shareholders point of view, but in 2008 , the
position improved a little , the ratio reduced to 2.42 .As more of
capital was raised through loan by the firm in 2008.The firm can
become more geared if shareholders consent is there, through use of
more of fixed cost bearing capital and in a better way can trade on
equity . However, given the low gearing at present, the Company
believes it would be able to raise the required funds at competitive
rates. The Company manages liquidity risk
through tie-up of short term facilities from banks which could be used
in case of requirement
7.1.8 Total assets turnover ratio

Total Assets Net Sales / 1.8 1.61
Total Assets
Turnover Ratio
Meaning :-
This ratio indicates that how efficiently and profitably the assets of the
firm are used . We can find out that the assets are properly utilized or
not by having the view on the production and cost . If cost is reduced
and the production has increased that means assets are properly
utilized .
Interpretation :-
Higher the ratio better it is because more the ratio more will be the
production of goods in the business which increases profits. Lower
the ratio is unfavorable for the business. Much higher ratio indicates
over trading of the business. In the concerned case in 2007 the ratio
54
was 1.8 which further fall to 1.61 in 2008.this shows that the
efficiency of the management of the firm is average and much
satisfactory in utilizing the assets .The company should try to use
assets more efficiently and effectively for increasing the production
and reducing the cost .
7.1.9 INVENTORY TURNOVER RATIO

Inventory Cost of Goods Sold/ 8.59 7.79
turnover ratio Average stock
Meaning :-
This ratio indicates that the stock has been utilized efficiently or not .
Also it is used to check up that the required minimum stock has been
invested or not . Only proper inventory turnover enables the business
to earn a reasonable margin of profit.
Interpretation.:-
Higher ratio is good from view point of liquidity. Lower ratio is not
desirable because it signify that the inventory does not sell fast and
stay in the shelf or the warehouse for a long period .Higher ratio tell
that more sales are being produced by a unit investment in stock . In
2007 the firm had a inventory turnover of 8.59 which is satisfactory
but this reduced to 7.79 which should not happen .. Sales of the firm
has not increased much this year as a result of which finished goods
in the warehouse and shelf of the firm increased , resulting in high
average stock and approximately the same sales as of last year .This
55
has lead to fall in the inventory turnover ratio showing decrease in
the managerial efficiency in the firm . Inventories have gone up to
Rs 12,239 mn. as on March 31, 2008 compared to Rs 10,703 mn. As
at March 31, 2007. The increase is mainly due to increased activity
levels and higher level of finished vehicles and engines .
7.1.10 DEBTOR TURNOVER RATIO

Debtor turnover ratio Net Credit Sales / 18.48 18.90
Average Debtors
Meaning :-
Debtor turnover ratio is calculated to measure the collect ability of
accounts receivable and tell about how the credit policy of the
company is enforced.
Interpretation :-
The ratio measures how rapidly receivables are collected . Higher
the ratio better it is because it indicates short time-lag between the
credit sales and cash collection .A low ratio shows that debt are not
being collected rapidly . In 2007 , the ratio was18.48 times and in
2008 , it was 18.90 times , showing the good performance of
management in regard to collection of debt . This ratio tells that there
are less chances of bad debts . Focussed effort on collections
reduced the sundry debtors level to Rs 3,758 mn. from Rs 5,229 mn.
56
7.1.11 GROSS PROFIT

GROSS GROSS PROFIT/ 28.14% 29.36%
PROFIT NET SALES
Ratio
Meaning :-
Gross margin ratio tells the earning capacity or the gross margin on
trading .
Interpretation :-
A high ratio is a sign of good management as it implies that the cost
of production is relatively low and vice-versa .The gross profit ratio of
the company was 28.14% in 2007 and it rise to 29.36% in 2008 .
Though the ratio is increasing which is good , but still the ratio is less
than standard because of high cost of material . Material itself is 60-
65% of the sales , which shows that firm kept a low margin between
its cost and price.
Steel, the major input material, witnessed a steep increase during the
year (62% increase on point to point basis compared to March 2007).
The other major input, rubber also witnessed an increase of 10% in
commodity prices. However, the Company mostly neutralized these
increases through continued efforts in value engineering 51
initiatives and better product mix.
7.1.12 NET PROFIT RATIO

57
NET PROFIT NET PROFIT/ NET SALES 7.48% 7.29%
Meaning:-
The net profit margin is indicative of managements ability to operate
the business with sufficient success not only to recover from
revenues of the period , the cost of merchandise , the expenses of
operating the business , and the cost of borrowed funds , but also to
leave a margin of reasonable compensation to the owner for
providing their capital at risk . The net profit (after interest and tax ) to
sales expresses the cost price effectiveness of the operations .
Interpretation :-
In year 2007 , the ratio was 7.48% , and in 2008 it slightly fall to
7.29%. The reason behind increase in the gross profit ratio and
simultaneously fall in the net profit ratio shows that there has been
increase in the operating cost more than proportionate to the increase
in the sales. Operating cost which has affected this ratio basically
consists of financial expenses ( interest expenses and cost of issue
and others ) and employees remuneration and benefits . The
increase is mainly due to full year impact of salary revision made in
the previous year and incremental manpower for ongoing activities at
Uttarakhand and Product Development initiatives . Interest cost has
gone up due to borrowings to meet the capital expenditure and
working capital requirements.
58
7.2 COST ANALYSIS
7.2.1 Manpower cost per chassis analysis of last

3 yr.
MANPOWER COST
Rs.(,000)
BUDGET
PARTICULARS YEARS ED
2008-09 2009-10 2010-11 2011-12
WAGES 7008 8625 7502 10435
WELFARE EXPENSE 2004 2014 2247 2605
TOTAL 9012 10639 9749 13040
Table no. 1
59
Chart No. 1
Ways to reduce Man Power cost:-

Proper planning of engaging temporary workmen at minimal
level at minimum cost via
flexibility in engaging v/s availability
Make available on very short notice through various agencies.
Electricity consumption
Awareness among employees
Centralizing the activities.
Provision of on/off switches on various locations
Avoiding wasteful activities
60
7.2.2 Production cost per chassis analysis of last

3 yr.
PRODUCTION RELATED
RS. (,000) PER CHASSIS
BUDGETE
PARTICULARS YEARS D
2008-09 2009-10 2010-11 2011-12
POWER 3522 3117 2925 3700
OVERHEADS 648 1698 570 600
TOTAL 4170 4815 3495 4300
Table No. 2
61
Chart No. 2
Ways to reduce Production cost:-
Use of available tools, to the extent possible, then

refurnishing, overhauling, etc.
Proper handling of available tools & to keep in
proper place.
Proper accounting of consumption of tool and

history of its usage
Training for use to all employees
Providing fixture etc. for proper upkeeping.
Repairs
Gardening , housekeeping , maintenance

expenses
62
Increasing the output through providing necessary
equipments, which will help in reducing manpower
e.g. providing pipes, springler, grass cutting m/c ,
tractor for cutting grass to horticulture contractor.
7.2.3 Administration cost per chassis analysis of

last 3 yr. ( in 000 )
ADMIINISTRATION EXPENSES
RS. (,000)
BUDGETE
YEARS D
PARTICULARS
2008- 2009- 2010-
09 10 11 2011-12
REPAIRS 2760 2924 1706 2000
INSURANCE 467 876 984 800
LEASE RENT 2682 2483 2497 2700
TRAVEL 842 950 1231 825
TELEPHONE EXPENSE 543 623 425 250
PRINTING & STATIONARY 368 442 354 350
TRANSPORTATION 312 355 198 100
SECURITY 1113 1211 1201 1200
OTHERS 897 924 834 693
TOTAL 4170 4815 3495 4300
63
Ways to reduce Administration cost:-
Centralizing at one place and ensuring that only one

courier is send at one location.
FAX:- night transmission
Encouraging using more e-mails.
Very minimum budget is given to the depts.
Awareness among employees to use more of e-mail for

communication
64
Monthly budgets will be given and the consumption
report will be given on fortnightly basis.
To lodge the claims, wherever possible, for the

breakdown of machinery, losses due to storm , etc.
An analysis for premium is being done for 5 years in

case of breakdown insurance for plant & machinery and
discontinues the insurance coverage, if possible.
Ensure no additional guards are deployed in factory.
A CFT is working, for the proper procurement to

ultimate required gas to marketing.
Avoiding re-painting
Cotton clothes, hand gloves, soap solutions, etc.
Proper accounting and issue as per requirement and

production.
7.3 VARIANCE ANALYSIS OF

OPERATING COST PER CHASSIS OF
LAST THREE YEARS (IN RS 000)
65
OPERATING COST ANALYSIS ACTUAL v/s BUDGETED
YEARS YEARS YEARS
PARTICULARS 2009-10 2009-10 2010-11 2010-11 2011-12 2011-12
ACTUAL BUDGETED ACTUAL BUDGETED ACTUAL BUDGETED
MANPOWER COST 9012 9059 10639 9994 9749 11185
PRODUCTION 4170 5400 4815 4880 3495 4540
ADMINISTRATION 9984 11862 10788 12636 9430 10840
TOTAL 23166 26321 26242 27510 22674 26565
It has been observed that companys operating cost per chassis

is declining due to increase in production volume.
Operating cost mainly fixed nature, details given further. If
production will high, our OP cost per chassis will be low.
7.4 Inventory Analysis
Inventories in Ashok Leyland are valued at lower of cost and net

realizable value, cost being ascertained on the following basis:
Stores, spares, consumable tools, raw materials and
components: on monthly moving weighted average basis. In
respect of works-made components, cost includes applicable
production overheads.
Work-in-progress, finished/trading goods: under absorption
costing method.
Cost includes taxes and duties and is net of credits under
Cenvat / Vat Scheme.
Cost of patterns and dies is amortized equally over five years .
66
Surplus / obsolete / slow moving inventories are adequately
provided for.
Major value items in inventory

1) Engine
2) Gear Box
3) Rear Axel
4) Front Axel
5) Battery
6) Catelic Converter
7) Stearing Assembly
8) Front Structure
9) Tyres
10) Frame
7.5 Production and Sales analysis

PRODUCTION AND SALES
OF LAST DECADE
67
YEARS 2007-08 2008-09 2009-10 2010-11 2011-12
Production 49148 54519 65085 83558 84006
Sales Domestic 44872 47928 56776 77069 76022
Sales Exports 3782 6812 4879 6025 7285
Indian medium and heavy commercial vehicle industry

shrunk marginally during 2007-08 compared to 2006-07.The
Company sold 76,045 vehicles in the Indian market during the fiscal
2007-08. The Company registered significant market share
improvement in the bus segment but lost market share in the truck
segment mainly due to production constraints arising out of supply
chain bottlenecks. These have been addressed satisfactorily and the
Company is on course to recover lost ground. The New Gen cabin,
68
expected to be bulk produced in 2008-09, will further aid this
exercise.
Oversea market
The Company sold 7,285 vehicles in the overseas markets during
2007-08 representing an increase of approximately 21% over the
previous year. The Companys foreign exchange exposure has
increased manifold, through contracting External
CommercialBorrowings of US$
315 mn. over the years.
The Company fully utilized its production capacity of 84,000 vehicles

across the five existing manufacturing units. The development
activities for the new facility at Uttarakhand have been progressing as
scheduled. This unit, designed for an annual capacity of 50,000
vehicles, is expected to be functional before June 2010 .
7.6 Environment and Safety

Beyond the socio-economic impact of their products, they are
conscious of the environmental impact of their operations. As a
responsible corporate citizen, they act on the belief that environment
protection and enrichment are not just preferred responses but their
basic responsibility and the right way to do business. Ashok Leylands
commitment is reflected in various initiatives at all stages, right from
technology selection, design requirements and location identification
69
leading up to the end use of their products. This objective has been
continuously achieved through progressive benchmarking, prudent
target setting and ongoing review. Environmental performance is
measured across the six manufacturing units on a number of
parameters:
SO2 levels , NOx levels , SPM levels , TSS levels
BOD values , COD values
Water conservation , Energy conservation ,Wood conservation
Hazardous & non-hazardous waste disposal
SLUDGE DISPOSAL : A natural by-product of the painting process,
sludge disposal has always been a problem faced by the auto
industry. At Ashok Leyland, various actions have been initiated over
the years towards safe storage of sludge, ultimately leading to the
construction of secured landfills within the campus. Not resting with
landfill as the alternative, Ashok Leyland engineers pursued other
means of disposal too. Since paint had a high calorific value, its use
as a fuel was explored. The effort yielded positive results. The
Cement Division of Grasim Industries tried this as a supplement to
coal for their cement kiln. Over a period of 18 months, with clearance
from TNPCB, 193 tonnes of sludge was disposed.
70
Chapter -8
Fact And Finding
a) Findings
b) Limitations
c) Conclusions
d) Suggestions
71
8.1 FINDINGS
The Company has set itself the task of consolidating and enhancing
its position in Indian commercial vehicle market,both in terms of
volumes as well as customer satisfaction, in the medium term. The
company is executing various initiatives in terms of process and
product improvement to achieve this goal.
Results of operation :
The Company generated profit from operations after tax of Rs 6,956
mn. After meeting working capital requirements and extraordinary
item of payments for Voluntary Retirement Scheme of Rs 48 mn., the
Company earned net cash inflow of Rs 10,657 mn. from its
operations. Cash flow from financing activities significantly improved
mainly due to payment of dividend for 2006-07 in March-07 itself.
This enabled the Company utilise internal generation for meeting
capital expenditure (including capital advance) requirements and
minimise the borrowings during 2007-08. Profit before tax and extra-
ordinary items improved by 4.5% to Rs 6,508 mn. During the year,
the Company charged Rs 127 mn. towards amortisation of VRS
expenses. After providing for taxes at Rs 1,688 mn. (including
deferred tax and fringe benefit tax), profit after tax for the current year
improved by 6.3 % to Rs.4,693 mn.
Revenues:
72
The Company was able to earn revenue through the following
streams of business activities:
i) Vehicles: Income from vehicles was Rs 68,819 mn. 4.1% over the
previous year level of Rs 66,092 mn.
ii) Engines: Income from Engines increased to Rs 1,921 mn., 59%
growth over the previous year level of Rs 1,210 mn. During the year
the Company offered factory built genset engines, which accounted
for 17% of total engine volume .
iii) Spare Parts and others: Income from Spare parts including sale
of kits to Vehicle Factory, Jabalpur increased to Rs 6,551 mn., a jump
of 50% over the previous year level of Rs 4,380 mn.
Other income registered an increase by Rs. 32 mn. Mainly due to
better realization on sale of investments during the current year.
Liquidity
As at March 31, 2008, net debt (net of cash & bank balances) to
equity ratio was 0.2. During the year the Company had tied up
External Commercial Borrowings (ECB) for USD 270 mn. Against
these facilities, the Company drew USD 90 mn. to fund imported
capital expenditure/ investments. The balance of USD 180 mn. would
be drawn during the ensuing year. FCCNs issued during April 2004
has been converted except for USD 1 mn., representing 1% of the
total issue size of USD 100 mn. Assuming conversion of this balance
portion, the equity of the Company will increase to Rs 1331.8 mn.
The Company manages its liquidity through rigorous weekly
monitoring of cash flows and surplus funds are invested, mainly in
units of mutual funds and in bank deposits.
The Companys principal sources of liquidity are:
73
a) Existing cash and cash equivalents
b) Cash generated by operations
c) Unutilised limits with banks
d) Unutilised limits out of term funding limits tied up with financial
institutions and Banks.
Fitch has awarded ratings at AA (IND) / stable for the Companys
long term borrowings. ICRA has assigned the rating LAA (L double A)
for long-term loans and also assigned special rating of A1+ (A one
plus) for short-term loans. CRISIL has given the ratings for long-term
borrowings at AA / negative. On Commercial Paper programme
(short term borrowing), CRISIL maintained the earlier rating of P1+.
The Company believes that it has sufficient liquidity to meet its
working capital requirements and other anticipated cash outflows.
Capital expenditure and Investments

During the year, the Company incurred Rs 6,959 mn. Towards capital
expenditure. This expenditure covers investments related to capacity
expansion in the existing plants and in the new plant at Uttarakhand
and R & D programmes. The Company also started making
investments in Ashley Alteams India Private Limited (Joint Venture
Company with Alteams O.Y. Finland) and Automotive Infotronics
Private Limited (Joint Venture with Continental AG). These two
companies will focus on supplies to meet specific component
requirements for fitment in Commercial Vehicles. In addition the
Company made investments in a vehicle manufacturing / assembly
plant at Ras Al Khaimah, Design Engineering services business viz.,
Defiance Testing and Engineering Services Inc. USA and Albonair
74
GmbH, Germany which is engaged in the development of fuel
emission treatment / control systems.
Capital employed
Total capital employed by the Company increased by 21% from Rs
27,075 mn. to Rs 32,680 mn., mainly due to investments in facility
creation. Total Shareholders funds as at March 31, 2008 aggregated
Rs 21,267 mn. of which equity capital was Rs 1,330 mn. comprising
of 1,330 mn. shares of Re 1 each. Out of the above, 6,468,000
shares were issued during the year by way of conversion of Foreign
Currency Convertible Notes Financial expenses Interest cost has
gone up due to borrowings to meet the capital expenditure and
working capital requirements. The Company is regulating its
borrowing in line with capital expenditure requirements. Centralised
Treasury Department is active in the money market to manage day-
to-day investment of surplus funds and raise short-term funds as
required and bring down cost by such borrowings.
Staff costs:
The increase is mainly due to full year impact of salary revision made
in the previous year and incremental manpower for ongoing activities
at Uttarakhand and Product Development initiatives.
Material Cost:
Steel, the major input material, witnessed a steep increase during
the year (62% increase on point to point basis compared to March
2007). The other major input, rubber also witnessed an increase of
10% in commodity prices. However, the Company mostly neutralized
75
these increases through continued efforts in value engineering 51
initiatives and better product mix. The Company also managed to
secure from global sources (including from
China where it has recently set up an office) components at lower
costs to offset the commodity price induced input cost increases. The
Company was also able to get the full year benefit of VAT, introduced
by Tamil Nadu Government in January 2007. Average pricing action
of about 4.5% effected
by the Company in a phased manner helped to protect the margins.
76
8.2 Limitations
This project is limited to one plant of Ashok Leyland alwar, which
is based in Alwar (Rajasthan).
Some data was confidential and not disclosed as per the
companys policy.
Time limitation was the major factor for the study.
There was less interaction during the training period with the higher
staff or executives due to their work load
8.3 Conclusion
The Companys initiative to nurture future leaders is showing
promising results. A number of initiatives put forward by the cross
functional team of Young Executives (YEs) as part of their annual
business plan are on their way to implementation.
After robust growth over the past few years, Indian economy
witnessed a slowdown during 2007-08. GDP growth for 2007-08
as projected by the Government at 8.7% shows a deceleration from
the high growth of 9.4%
and 9.6% , respectively , in the previous two years . With the
economy modernizing , globalizing and growing rapidly , some
degree of cyclical fluctuation is to be expected.
77
Since then Ashok Leyland has been a major presence in India's
commercial vehicle industry with a tradition of technological
leadership, achieved through tie-ups with international technology
leaders and through vigorous in-house R&D.
In all their CSR efforts, they also partner with government agencies,
local communities, NGOs and academic institutions to enhance their
strengths and help us leverage their expertise, reach and resources.
Ashok Leylands Corporate Social Responsibility (CSR) initiatives

revolve around the welfare of their employees and their families, the
driver community and those residing around their manufacturing units
in Ennore (Tamil Nadu), Hosur (Tamil Nadu), Bhandara (Maharashtra)
and Alwar (Rajasthan).
8.4 Suggestions
In order to compensate for the cyclical nature of the domestic
commercial vehicle industry,the company should focus on
increasing in allied businesses like non-autoengine,
Defence,Exports,and Parts so as to achieve a significant
portion of its revenues from non cyclical businesses.
One way to reduce man power cost is to complete one job in

one stretch, e.g.- piping , welding , painting , to complete in one
step , etc.
78
Travelling expenses can be reduced as:-:-
Local transportation: combining the activities of different

deptt. at one place.
Outside travel :- proper justification
Employee, who are going on travelling , will intimate to all
employees for collecting the work on same station via. Notice
board
79
Chapter 9 Annexure
9.1 CENVAT
Deal with organizing, directing and controlling the activities related to

the excise functionality of Ashok Leyland.
The main objective of this module is to generate invoices. Post
Challans, Cenvat Credit Availment Details, Debit Entry Details & Daily
Stock A/C. Generate statutory reports for items covered under the
purview of Excise Act.
TAX:-
Tax is nothing but money that people have to pay the Govt., which is
used to provide public services.
OBJECTIVES OF TAX COLLECTIONS:-
Though the collection of tax is to augment as much revenue as
possible to the Govt. to provide public services, over the years it has
been used as an instrument of fiscal policy to stimulate economic
growth. Thus it is one of the Socio-Economic objectives.
TYPES OF TAXES:-
There are some taxes are direct and others are indirect. Under our
constitution, while the Central Govt. is vested with the powers of levy
and collection of certain taxes, the State Govt. are empowered to levy
and collect certain other type of taxes.
DIRECT TAXES:-
If the tax payers bears its incidence & is not able to pass on the
80
burden such tax is Direct Tax. Example:- Income Tax, Wealth Tax, Gift
Tax etc.
INDIRECT TAXES:-
If the tax payers is just a conduit & every stage the tax-incidence is
passed on till it finally reaches the consumers who really bear the
burnt of it, such tax is Indirect Tax. Example:- Excise Duty, Custom
Duty, Sales Tax etc.
EXCISE DUTY:-
Excise Duty is an indirect tax levied & collected on the goods
manufactured in India.
Generally , manufacturer of goods is responsible to pay duty to the

government . this indirect taxation is administered through an
enactment of the central government viz , the the Central Excise
Act,1944 and connected rules which provide for levy , collection and
connected procedures. The rates at which the excise duty is to be
collected are stipulated in the central Excise Tariff Act ,1985 .
Mandatory to pay duty on all goods manufactured unless
exempted :
It is mandatory to pay duty on all goods manufactured unless
exempted . For example , duty is not payable on the goods exported
out of India . similarly exemption from payment of duty is available ,
based on conditions such as kind of raw-materials used . value of
turnover (clearance) in a financial year , type of process employed
etc.
81
Chapter 10
Bibliography
I got all the information regarding the study of Financial Analysis of
Ashok Leyland with written proofs from the following references.
Manuals:
Annual Reports 2007-08 ,2006-07
Ashley News
Gemba Times
Ashok Patrika
Websites:
www.ashokleyland.com
www.ashley.com
www.iris.com
google search engines
Books:
KHAN & JAIN, FINANCIAL MANAGEMENT
PRASSAN CHANDRA , FINANCIAL MANAGEMENT
I M PANDEY , FINANCIAL MANAGEMENT
82
L.M. Bhole, Financial institutions and Markets, Tata
McGraw Hill, New Delhi.
B.Lev Financial Statement Analysis: A New Approach,
Prentice Hall Inc., 1982.
E.F.Fama and M.H Miller, The theory of finance, Holt,
Rinehart and Winston, 1972
Bailey, Kenneth D., Methods of Social Research,New
York, 1978.
Baker,R.P., and Howell, A.C., The Preparation of
Reports, New York: Ronald Press,1938
Gatner,Elliot S.M.,and Cordasco, Francesco, Research
and Report Writing, New York: Barnes and Noble,
Inc.,1956
Whitney,F.L., The Elements of Research, 3rd ed., New
York: Printce Hall,1950.Emery, D.R.and John D
Finnrtty, Corporate Financial Management, Prentice
Hall, New Jersey.1997.
Khan, M Y, Financial Services, Tata McGraw Hili, New
Deihi2001.
Khan, M Y, Indian Financial System, Tata McGraw
HillPublishing Co., New Delhi,2003.
83

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Financial Analysis On Ashok Leyland

Training undertaken at ASHOK LEYLAND PVT. LTD.

Submitted in the partial fulfillment of the award of the

LORDS INTERNATIONAL COLLEGE

Submitted To: - Submitted By:-

My job during the training was to get an overview of the TRAINING

In addition technological changes were witnessing power shift from

I am highly obliged to the Management of ASHOK LEYLAND LTD. for

I would like to express my gratitude & heartiest thanks to Mr.

I also take the opportunity to acknowledge the consent support and

Executive Director and Company Secretary

Serial Topic Page

Objective of the project report

Chapter -1 The Company Profile

1.1 Company History:

In 1968 production of the Leyland Titan ceased in Britain, but was

Ashok Leyland vehicles have built a reputation for reliability and

In 1987, the overseas holding by Land Rover Leyland International

In the journey towards global standards of quality, Ashok Leyland

Ashok Leyland is a technology leader in the commercial vehicles

It is also one of the largest Private Sector Employers in India - with

The company recently acquired Czech-based Avia's Truck Business

Ashok Leyland is currently headed by Mr R. Seshasayee. Under his

Mr. Seshasayee was also the President of CII (Confederation of

Since then Ashok Leyland has been a major presence in India's

Ashok Leyland vehicles have built a reputation for reliability and

1.2 Three Dimensions Of Growth

1. CAPACITY EXPANSION 2. GLOBALIZATION

From under 30,000 vehicles in 2001-02, to over 83,000 vehicles in

The strengths of the Company in terms of its close and longstanding

1.3 Technology development

Nissan Ashok Leyland Technologies Pvt. Ltd., the

Ashok Leyland Nissan Vehicles Pvt. Ltd., the vehicle

Nissan Ashok Leyland Powertrain Pvt. Ltd., the powertrain

Nissan Ashok Leyland Technologies Pvt. Ltd., the technology

Value to the Customer

The immediate R&D priorities are to pro-actively address safety and

1.4 ASHOK LEYLAND ALWAR

Alwar is a strategic town in Rajasthan midway between Delhi and

1.5 Certification and Awards obtained

ISO 9002: 1987 1993 Ennore & Hosur unit

QS 9000: 1998 1998 Ennore, Hosur unit-

ISO 9001: 2000 2003 Ennore, Hosur unit-

ISO 14001: 1996 2002 Ennore , Hosur unit-

Chapter-2 Company Profile (contain)

2.1 Policies Of The Company

Leyland to understand, implement and maintain the quality

Objective of Ashok Leyland Environmental policy are:-

The vision of Ashok Leyland is to be among the top Indian

We consider our employees as our most valuable assets and are

2.2 MISSION GEMBA

ENHANCING EMPLOYEES FOR WORLD CLASS GLOBALISED

2.3 5-S HOUSE KEEPING

SHINE (SEISO)- Clean the work area

STANDARDIZE (SEIKETSU)- Use standard methods to keep

SUSTAIN (SHITSUKE)- Maintain through empowerment,

LIGHT 4*4 HIPTHUMB

Defence & Special Vehicles: Largest provider of logistic

In 2002, all the vehicle-manufacturing units of Ashok Leyland

The company has six manufacturing locations in India:

The total covered space at these six plants exceeds

Last Financial year (2006-2007) the company sold a record

It is one of the leading Brands in India and most easily