After Trailing behind its Bigger rival Tata Motors in The M&HCV Segment, The Company is now betting Big on The Lower-Tonnage Vehicles to reach out to New Markets and Consumers.
But Leyland, it seems is bracing up to the challenge. The company will, in the second half of this year, launch its LCV. In fact, it has already started road-testing its LCV in Chennai. The vehicle does not bear Nissan logos. Apparently, Leyland has dubbed its new baby Dost (though it could not be officially confirmed). “Ashok Leyland will have to work hard to create its own space in the LCV category as players like Tata Motors and M&M are already very strong in this segment,” says Shamsher Dewan, Senior Analyst, ICRA. However, a report from Angel Broking is very bullish on Ashok Leyland and mentions that As Leyland has a small presence in the LCV space, the partnership with Nissan would be positive for it in the long run.
Both Leyland and Nissan will focus on manufacturing LCVs with capacity of 5-7.5 tonne. But the agreement, which states that there will be no cross-distribution of products, also stipulates the Japanese manufacturer will cater to the high-end of the LCV market while Leyland will focus on the volumes market. Company sources claim that the presence of Vinod Dasari, COO, Ashok Leyland ( Ex-JMD of Cummins India), who came on board almost five years ago, has infused a lot of excitement and brought in fresh talent for the company. In the meantime, veteran MD, R. Seshasayee, continues to offer his invaluable experience and steady guidance to the CV maker. A lot seems to be riding on Leyland’s LCV foray. If the LCV gambit pays off, the company will be able to improve its top line from Rs.74 billion at the end of FY 2010 to Rs.113 billion by the end of FY 2012 (based on analyst estimates). Similarly, PAT is expected to move from Rs. 38.3 billion at the end of FY 2010 to Rs. 63.4 billion by FY 2012. Meanwhile, RoE of the company is expected to move up to 16.1% by FY 2012 from a level of 11.9% at the end of FY 2010. Clearly, Leyland’s play in the LCV market will have an important bearing in driving its top line in the months ahead. Moreover, its partnership with Nissan will also help Leyland bone up on the latest technology and expand its international footprint as it will be able to use Nissan’s dealership for exporting LCVs to certain markets.
But before Leyland starts counting on its LCV payoffs, it will have to expand its distribution network aggressively beyond south India. Only then will it succeed in breaking into other geographies and engaging with consumers in markets beyond south India. Because as of right now, for whatever it’s worth, irrespective of pricing and positioning advantages, distribution does matter in India.
Both Leyland and Nissan will focus on manufacturing LCVs with capacity of 5-7.5 tonne. But the agreement, which states that there will be no cross-distribution of products, also stipulates the Japanese manufacturer will cater to the high-end of the LCV market while Leyland will focus on the volumes market. Company sources claim that the presence of Vinod Dasari, COO, Ashok Leyland ( Ex-JMD of Cummins India), who came on board almost five years ago, has infused a lot of excitement and brought in fresh talent for the company. In the meantime, veteran MD, R. Seshasayee, continues to offer his invaluable experience and steady guidance to the CV maker. A lot seems to be riding on Leyland’s LCV foray. If the LCV gambit pays off, the company will be able to improve its top line from Rs.74 billion at the end of FY 2010 to Rs.113 billion by the end of FY 2012 (based on analyst estimates). Similarly, PAT is expected to move from Rs. 38.3 billion at the end of FY 2010 to Rs. 63.4 billion by FY 2012. Meanwhile, RoE of the company is expected to move up to 16.1% by FY 2012 from a level of 11.9% at the end of FY 2010. Clearly, Leyland’s play in the LCV market will have an important bearing in driving its top line in the months ahead. Moreover, its partnership with Nissan will also help Leyland bone up on the latest technology and expand its international footprint as it will be able to use Nissan’s dealership for exporting LCVs to certain markets.
But before Leyland starts counting on its LCV payoffs, it will have to expand its distribution network aggressively beyond south India. Only then will it succeed in breaking into other geographies and engaging with consumers in markets beyond south India. Because as of right now, for whatever it’s worth, irrespective of pricing and positioning advantages, distribution does matter in India.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
