Asok Leylan-06-07

Engineering
is the way we think
Engineering
is our passion
We put this passion to good purpose, to create engineering solutions that improve efficiency, ergonomics and life.
We are Engineering Your Tomorrows.
Our passion for engineering
We direct our passion for engineering to the task of offering products with the best value-to-cost equation to our customers. It means listening to the customer to understand his business and needs, to engineer product configurations that best answer his needs. It means empowering employees to add value along the supply chain.
Ashok Leyland Annual Report 07
Commercial Vehicle operations since
Employees:
1955
12,125
(as on March 31, 2007)
Annual Capacity:
Revenue:
84,000
Vehicles (as on March 31, 2007)
Rs. 83 bn
(2006-07)
PAT:
Rs.4.4 bn
(2006-07)
Market capitalisation:
Rs.50.8 bn
(as on March 31, 2007)
From function to strategy

Team: Team across: Team from:
Initiation:
March 17, 2006
26
young executives
9
locations
8
departments
Overview
When a team of young employees was empowered to extend beyond their functional roles and formulate a business plan for 2007-08 for Ashok Leyland, it wasnt just a simple case of role stretch; it represented a dramatic shift in the organisations mindset.
Team meetings among
Time invested per member involved
Acceptance:
18
departments
300-350 hrs
brainstorming
March 3, 2007
This is what made the decision unique from the corporate perspective: For decades, strategic decision making and goal-setting has been a top-down process in large organisations; this direction was now being reversed The average age of the youngsters was less than 30 years and organisational experience 5-10 years. While the executives had functional expertise, they were not exposed to Company-level strategic decision-making
group to look for alternatives, based on domestic and international benchmarks Periodic meetings with senior executives ensured timely course correction when required
Result
On 11 November, 2006, the Corporate Business Plan was presented in a four-hour meeting with the Management Committee. The plan was much more aggressive than originally proposed
The members were drawn from diverse functions and scattered locations, working together for the first time
by top management It covered an in-depth analysis on capacity; volume
Approach
After a 3-day insight into the existing plan and assumptions, this team of 26 members embarked on a bottom-up approach: The team was segregated into 14 key functions; each was delegated the responsibility of doing an in-depth evaluation of the current business plan of their assigned function and preparing the assumptions for the next years plan, within three months Information was mined from all functions and locations. Strategies were bounced off the department heads All paradigms were questioned. All assumptions were validated against economic and market scenarios This insight enabled identification of roadblocks in the systems and processes of each department; it allowed the
projections and market share plans The plan proposed a series of viable creative options for removing possible bottlenecks in capacities, supply chain and marketing Successful implementation of the plan proposed by the youngsters promises significant improvement in Company performance. This team is now busy drafting another 75 youngsters to get involved in the implementation of the plan. For the Company, this HR exercise has prepared the ground for a new generation of thought leaders; for the team members, this opportunity has resulted in a fresh macro perspective, enhanced management trust and greater career fulfilment.
Engineering a solution around regulatory compliance
In the current phase of accelerated emission regulations, migration of vehicles to the subsequent and more stringent norms has been a challenge for the Product Development teams. In 2005, Bharat Stage (BS) II norms became applicable for the entire country, except 11 cities earmarked for BS III norms. The ready and standard solution was to retard the engine and, to improve the combustion, use a rotary mechanical fuel injection pump, which has 30% higher injection pressure compared to an in-line pump. But customers clearly favoured in-line pump simpler, easy to maintain and repair as also less expensive. The Ashok Leyland engineers took up the challenge.
Central to the re-engineering challenge was balancing combustion to reduce particulate levels from 0.36 g/Kw-hr (BS I limit) to 0.15 g / Kw-hr (BS II limit) and yet maintain acceptable fuel efficiency with the 600 bar pressure of the in-line pump. The task resided in cutting-edge technology not just in India but across the world. Few companies possessed this insight; fewer still could commercialise it within a compressed time frame. The engineers at Ashok Leyland responded to this forbidding
challenge by re-looking at the core of engine combustion and the trade-offs. They made changes in injection timing and carried out innovative and unique re-design of the combustion system to reach their goal. The result is an engine on the popular H platform, meeting the BS II norms with an in-line pump. Considerably less expensive, it is highly fuel-efficient, less sensitive to fuel quality and costing less to maintain. A good bundle of customer benefits in the wake of regulatory compliance!
Engineering a cost-effective product innovation

It all begun during a visit of a team of engineers from BEST (Brihanmumbai Electricity Supply and Transport), to Ashok Leylands Hosur Units. During the discussions on commuter needs and emerging trends, the BEST team identified lowfloor buses as a value-add in future. That was cue enough for Ashok Leyland engineers. A specially assigned team closely studied BESTs bus operations, drew up the design objectives and a prototype of an indigenously developed commuter-friendly bus was ready. Soon, BEST was working with the World Bank on the Mumbai Urban Transport Programme for the induction of commuter-friendly buses. World Bank experts travelled by Mumbais buses and recommended a semi-low floor bus keeping in mind both boarding comfort and seasonal flooding.
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3,100
What Ashok Leyland engineers had designed, inspired by commuter experience, fitted the World Bank prescription every way. The world over, lowfloor buses have rear-mounted engines. But that adds to both capital and operating costs and did not meet BESTs requirement. The challenge was to retain the engine in front and yet lower the floor height. The ingenious design met this challenge, with a floor height of 860mm with one step less to climb. The buses were designed for improved ventilation in the drivers cabin, storage space for crutches and route indicator at the rear. Indigenously developed BS III engines would power them. The simple electronic management system offers better fuel efficiency and faster response to speed and load.
buses.
An estimated five million commuters travel by BEST buses - over 98% of them made by Ashok Leyland.
Ashok Leyland bagged the largest ever order in the country for fully-built buses. All the 644 such buses have since joined the fleet of BEST. An estimated five million commuters travel by BESTs 3,100 buses, over 98% of them made by Ashok Leyland. Says Uttam Khobragade, GM-BEST, "The combination of semi-low floor and front engine is unique and rather difficult to achieve, which Ashok Leyland engineers have done successfully. It is an inexpensive, ingenious solution that has boosted both customer comfort and operational efficiency. Increased acceleration and speed has resulted in better turnaround-time. Drivers are able to save 10-15 minutes in a round trip".
The combination of semi-low floor and front engine is unique and rather difficult to achieve, which Ashok Leyland engineers have done successfully. It is an inexpensive solution that has boosted both customer comfort and operational efficiency. Uttam Khobragade, GM-BEST.
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SCOTs in action
From bottleneck to surplus

When demand for trucks strengthened in 2006-07, Ashok Leyland encountered an unexpected shortage of fuel tanks from its suppliers, threatening vehicle roll out. The implication: non- availability of a fuel tank worth less than Rs 3,000 jeopardising the marketing of a truck!
Soon, a SCOT was at the shopfloor of Anupama Fabricators, one of the Companys major fuel tank suppliers. This team was assigned to study the vendors plant layout, operations flow, systems and processes. They applied the Mission Gemba process, already in use on Ashok Leylands shop floors. A capex programme was the straight answer but that would have taken a number of months for completion. Instead, the team came up with a clutch of incremental improvements that would liberate the overall plant capacity. The team suggested improvements in the vendors critical seam welding operation, generally vulnerable to breakdowns and high downtime. The team observed considerable asset idling during the start of the days production schedule, recommended in-process alterations. Suresh Narayan, Director and CEO of Anupama Fabricators changed the remuneration system, linking it with productivity. Results were quick.
Machine downtime was down from two days per month in 2005-06 to 0.5 day per month in 200607 a reduction of 75%. Maintenance cost per unit of production was down by 25% Per person productivity grew by 40% over the 2005-06 benchmark All this without investing Rs 500,000 in additional machinery and just by adding six men to the strength of 18. Production doubled to 65 tanks per day, allowing Ashok Leyland to step up its vehicle roll-out by 45%. "I liked the feeling of Ashok Leyland, my customer, wanting me to do well. The Mission Gemba intervention was voluntary from their side. It inspired me to go the whole hog. Ashok Leyland made me believe that I can move from 35 fuel tanks to 70 a day," sums up Suresh Narayan. Today his employees are also happy by earning more due to productivity increase.
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The capabilities and capacity of the vendor base can determine a Company's ultimate operational capabilities. Faced with sudden rise in market demand and supply constraints at vendor units, Supply Chain Ownership Teams (SCOTs) got into the act.
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Engineering ergonomics at the shop floor
Efficiency improvements and technology upgradation have been central to the rejuvenation of the Ennore unit the mother plant of Ashok Leyland. Of equal significance has been the heightened employee involvement. A project that reflects the new Ennore is Operation Joy Team, which integrates associates into active day-to-day shopfloor improvements, in the true spirit of the Companywide Mission Gemba that aims at world-class performance through empowered employees. To start with, the conveyorised Frame Assembly and Rear Axle Assembly sections were selected for launch. The idea was simple: re-engineering the synergy of man, material and machines so that the work is ergonomic and enjoyable.
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12,000
EEI units
(Effort and Ergonomy Index measure) could be reduced by implementing 10 out of 72 employee ideas in four months.
The Company evolved a methodology to evaluate the work content in the form of Effort & Ergonomy Index (EEI). A standardised EEI calculator (navigator) for usage at the shop floor was successfully developed in-house and deployed. The Company resolved to reduce EEI units from 276,000 to 191,000 in Frame Assembly and that of Rear Axle Assembly from 247,000 to 175,000. In Frame Assembly, 15 of the 85 suggestions from associates were implemented in the first three months. These involved operational automation, streamlining material and information flow and operational rationalisation. The result was an immediate reduction in the EEI by about 25,000 units: an associate who was required to walk a distance of about two kms between work stations in an eight-hour shift performs the
same operations walking a total of only 0.7 km. In Rear Axle assembly, 10 out of 72 ideas submitted were implemented in the first four months: these comprised work place rearrangement, optimising material movement, quality improvements and simple material handling devices for reduction of physical strain all resulting in an EEI reduction of 12,000 units as also a floor-space saving of 39 sq. m. Lowcost material handling devices eliminated the physical strain associated with handling very heavy objects. The thought is simple: a happy AL-ite creates a happier unit a happier unit creates a more successful organisation.
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Locating solution where problem exists

Air leakages in the PDI (Product Delivery Inspection) at Ashok Leylands Hosur II plant was proving costly in more ways than one. The problem was with the modular hose a cluster of air hoses assembled together in a common sleeve with a defined layout to connect all pneumatic points in the chassis. Leakage in any of the 50 to 80 joints meant taking out the entire hose, sending it back to the supplier and then re-routing and inspecting it followed by the airleak test. A loss of four productive hours totalling the loss of seven vehicle rollouts a day. Ironically, the market was asking for more vehicles. The Google Quality Circle went into problem analysis mode with the Why-Why technique of persistently looking for reasons to drill through a problem, to unearth the root cause. Using the QC tools and their collective brainpower, the team arrived at the conclusive remedy: re-designing the fixture of the modular hose. And a breakthrough thought: instead of taking the problem hose to the vehicle testing shop or getting a new machine installed at PDI, can a mobile hose pressing fixture be developed? This was easier said than done for a number of reasons: the fixture needed to be compatible with modular hoses; it needed to be customised for three hose types (6 mm, 9 mm and 12 mm); it needed to be conveniently light. Following a three-stage development, the prototype was ready in 15 days. Google called it the tiny hose pressing fixture. It is tiny, therefore, it is mobile and saves a staggering 1,739.5 minutes per shift as well as a recurring cost of Rs 304,000 per year.
Parameter Production loss Rework time Clamping on vehicle Variety Weight Space
Before project 7 vehicles per shift 504 minutes Not possible Different fixtures for the varied sizes 54 kg - three fixtures 36 sq. metre
After project Nil 7 minutes Easily done Single fixture for all the sizes 6.94 kg 0.025 sq. metre
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Since its inception in 1998, the Company-wide team project contest, Improve, has grown into a mass movement contributing to the Company balance sheet through innovation in the team format. Improve 2005, with 946 projects in the fray, netted a total benefit of Rs. 32.9 million. Improve 2006 saw a doubling of implemented projects to over 1,800 and the participation of over 5,500 employees out of a total 12,125.
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The three papers presented at Chicago were on varied subjects: using telematics for vehicle testing, optical strain measurement and seat suspension based on variable absorber system. The unanimous feedback from the experts present was that these were timely subjects that the international scientific community was currently engaged in.
Nurturing passion for engineering

The Advanced Engineering Group (AEG), an extended arm of the Companys R&D division, focuses on futuristic products and technologies, nurturing faith in change is constant and encouraging youngsters to dare the unexplored. One of the high points in this regard was when three young and empowered AL-ites fresh in their first corporate job made significant breakthroughs and were subsequently invited to present papers at the Society for Automotive Engineers (SAE) International Congress at Chicago in November 2006. With experienced technocrats and academicians drawn from the world over as audience. This achievement was not accidental; it is the result of the 3F approach that motivated the young engineers to stretch beyond the ordinary in the area of innovative global technologies. I never expected the Company to send me to present the paper at Chicago since I had not even been two years with it. In other organisations such presentations would have been done only by the seniors. It was my first experience in an aircraft and first trip abroad. Ashok Leyland fulfiled a dream!
Faith: As a first step, research is presented to the

Indian Forum before it is taken to the international level. "Our department head continuously pushed us to take our work one step higher," said a young AL-ite. "When I made my first presentation at the International Forum in Chennai, I was congratulated and the very next statement wasso, when do we see this at the SAE International Congress (a larger platform for global auto giants)?"
Facilities: The organisation supports research with

resources infrastructure, training, manpower, references and time to create something special.
Freedom: The research executives are given the

freedom to take up any project of their choice. "There is no binding on us," said an excited AL-ite. "We go to the units, we assess the operations and we decide what project we would like to undertake, a distinctive bottomup approach."
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Boosting customer profitability

Cement plants select to locate near their raw material source for an important reason. Outward freight accounts for a third of the variable cost and a fifth of the total cost of cement manufacture. Take the instance of MyHome Industries, a leading Andhra Pradesh-based cement manufacturer. This 3.03-million TPA company serviced its 2,000-node pan-Indian dealer network with a fleet of 350 Ashok Leyland trucks. These workhorses ran a long haul: a monthly distance of 6,000 km covering 125 to 550 kms per trip. Over the last few years, with spiralling fuel costs denting margins, the company did an analysis. It showed that fuel cost as a percentage of logistic cost was mounting for the truck fleet, compared with that of the railways. This was the trigger for an Ashok Leyland team to get into action. 12.2% decline in fuel consumption, with every 100 basis points translating into an annual savings of Rs. 2.4 million. Enhanced knowledge in vehicle management, shared across vehicle owners and drivers. Says Mr. Rameswara Rao, MD, "The role played by Ashok Leyland in building up efficiencies in fleet running and maintenance leading to overall fuel savings of 12.2% is commendable. I am impressed." conducted test drives across 5 km. The team demonstrated the accuracy of their analysis by a pilot exercise on the selected vehicles for two days, implementing periodic check-ups and preventive maintenance, ensuring scientific driving techniques. The results vindicated the 196 person-hour effort:
Vehicle maintenance: The team studied each

vehicle across 25 parameters, compared with standard fuel efficiency parameters.
Driving skills: The team chose 15 drivers and
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Events of 2006-07
(Left to right) Anders Spare, CEO, LRLIH; R Seshasayee, MD, Ashok Leyland; Dheeraj G Hinduja, Vice Chairman, Ashok Leyland and V Venkatesan, COO, AVIA Ashok Leyland Motors
Ashok Leyland at Prague

Ashok Leyland acquired the Truck Business Unit of Prague-based AVIA a.s. in October 2006 and the newly acquired company has been renamed AVIA Ashok Leyland Motors s.r.o. The AVIA product range of 6T to 9T GVW D Line trucks has been strengthened with the induction of D120 and D100 the 12T and 10T models powered by the all-new 4.5 L Cummins ISB Euro IV engine with Selective Catalytic Reduction (SCR) technology. Having developed delivery capability at enhanced production levels, the dealer network is being consolidated in traditional markets.
The D 120 at the Auto Show at Birmingham
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Bus assembly unit in UAE
Cab assembly at AALM
In October 2006, Ashok Leyland signed an agreement with the Ras Al Khaimah Investment Authority (RAKIA) for setting up a bus assembly unit in Ras Al Khaimah. The agreement being signed by R Seshasayee, MD, Ashok Leyland (extreme right) and Dr Khater Massaad, CEO of RAKIA in the presence of His Highness Sheikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah.
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6-poster
The first ever such full vehicle test facility in India for multi-axle vehicles. Used for accelerated test of the complete vehicle for structural fatigue, it can simulate road surfaces recorded anywhere in the world and reduce product development cycle time.
152 kw Common Rail engine

First Indian one litre per cylinder, 6-cylinder Common Rail Engine for Commercial Vehicles. Flat torque for good drivability. Meets BS III norms. BS IV capable with minimal changes.
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The R&D complex near Chennai now has this new design office which can seat 400 design engineers
ISO/TS 16949-2002 Corporate Certification an industry first

In June 2006, Ashok Leyland became the first Indian auto company to receive the coveted ISO/TS 16949 Corporate Certification - the latest international quality standard, specific to the auto industry.
From left to right: S Nagarajan, ED-Components Business; K Madhok, MD-IRQS; R Seshasayee, MD; A K Srivastava, Principal Surveyor-IRQS and Vinod K Dasari, COO at the presentation ceremony.
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Environment and safety

Beyond the socio-economic impact of our products, we are conscious of the environmental impact of our operations. As a responsible corporate citizen, we act on the belief that environment protection and enrichment are not just preferred responses but our 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 leading up to the end use of our 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 The engagement of an ongoing dialogue on the subject of TSS levels BOD values COD values Water conservation Energy conservation Wood conservation Hazardous & non-hazardous waste disposal environment with employees, neighbouring community and society. Participating in environment related competitions While these are the organisational goals and objectives, the Units by themselves embark on various projects - all towards the common goal of environmental protection and enrichment. Environmental compliance through a framework of targets and objectives. Periodic Review / Audits of compliance with local and national requirements. All the production Units are certified to EMS 14001/2004. All the production Units are gearing up for the OHSAS 18001/1999 Certification. Creation of an organisation awareness on environment management reinforced through periodic training / supplier management. Need-based training and communication at all levels of the organisation. An organisational structure for effective and efficient implementation of these policies. Ashok Leyland has dovetailed statutory benchmarks and developed a methodology to meet these challenges through various structured initiatives. The creation of a formal EMS / OHSAS policy
SO2 Emissions
NOx Emissions
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SPM Levels
TSS Levels
BOD Values
COD Values
Water Consumption Trend
Power Consumption Trend
Accident Statistics
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Secured landfill facility

Some of the industrial waste is identified as Hazardous wastes. These non-biodegradable hazardous wastes cause land contamination and are a threat to aquatic organisms, flora and fauna. Some of Ashok Leylands Units generate chemical sludge from Effluent Treatment Plants and phosphate sludge. The technically accepted, global scientific practice of secured landfill was what Ashok Leyland decided for itself. Accordingly, post various technical feasibility studies, a suitable area was located within the Hosur II Unit of Ashok Leyland. Once TNPCB cleared the compatibility report, construction work was commenced. Capacity for handling 1700 cubic meters waste Lined with impervious clay material and HDPE lining. Towards monitoring of leachate quality, Peizo wells are sunk This investment for the future came at Rs 3.5 million.
Time to paint a batch (four side members) declined 33% Annual output grew from 75,000 side members to 100,000 side members (two-shift) Painting quality improved significantly Also resulting in a saving of approximately 5 to 10% of paint after stabilisation and consequent load reduction in effluent treatment plant.
Water conservation
Ashok Leylands manufacturing units have been pursuing a host of initiatives for water conservation In one of the Units, a check dam which can hold upto 30,000 KL of water was constructed. In another Unit, desilting of existing ponds to enhance the storage capacity from 30,000 KL to 40,000 KL/season was done Converted an existing culvert into storage pond of over 50,000 KL capacity. Blocking storm water drains to collect water during rains
Automated painting
The painting of the side members of a heavy commercial vehicle is critical. Its quality influences the life of the chassis. Each 10-12 metre side member is placed in a vertical formation above each other in the painting booth. But the continuous upward and downward movement is generally back-breaking, testing quality and accuracy. Ashok Leyland recognised the dangers of this conventional approach. The Company invested in enhanced worker comfort and convenience through the automation of its painting system with an investment of about Rs 50 million, translating into the following benefits: Diverting storm water drains into unused pits Recycling of cabin leak test spray water Adopting sprinklers for watering the garden Using new generation chemicals to extend Chemical Bath life, so that discards and new requirements are drastically reduced. These have borne desired results in the form of rise in water table despite higher consumption, in line with expansion in operations.
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Corporate Social Responsibility

Since its inception over five decades ago, Ashok Leyland has emerged as a frontrunner in manufacturing vehicles, benchmarked against global standards in quality, reliability and product innovation. But our concerns reach out beyond the business of making vehicles, to the society at large to which we owe our growth. Our initiatives for social engineering comprise the manufacturing of eco-friendly vehicles, imparting comprehensive training to drivers and addressing their health concerns, pioneering the research and development of alternative fuels and enriching the communitys social health in several ways, which have far-reaching benefits for the Companys stakeholders. Ashok Leylands Corporate Social Responsibility (CSR) initiatives revolve around the welfare of our employees and their families, the driver community and those residing around our manufacturing units in Ennore (Tamil Nadu), Hosur (Tamil Nadu), Bhandara (Maharashtra) and Alwar (Rajasthan). Our 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 our 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.
Our outreach initiatives 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.
Beyond the call of work

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: We can because we care. Employees are given an opportunity to volunteer for any one of its social initiatives. Our volunteers believe that amazing things can happen when people come together for a cause. They drive our outreach programmes and most of our CSR initiatives. As part of our 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.
Driver outreach Our partners

In all our CSR efforts, we also partner with government agencies, local communities, NGOs and academic institutions to enhance our strengths and help us leverage their expertise, reach and resources. To address the wide-ranging needs of the driver community, Ashok Leylands driver training schools at Namakkal (in Tamil Nadus Salem district) and Burari (in New Delhi) provide comprehensive training for drivers both on- and off-the-road situations.
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In 2006, space was provided for the Alcoholics Anonymous group to conduct alcohol rehabilitation programme for truck drivers and their families in Namakkal. A continuous awareness programme on HIV prevention and management is being conducted for convoy drivers at the manufacturing units. Our CSR initiatives in Namakkal and Burari comprise the following:
Road safety outreach

According to a recent survey, road accidents kill more people than heart or kidney ailments. Ironically, most of the road accidents are easily preventable. Thus, one of Ashok Leylands CSR focus is on road safety creating awareness, educating people and implementing road safety measures along with the police department. The following initiatives were undertaken by the Company to mitigate road accidents:
Namakkal
Nearly 200,000 drivers have been trained till now Apart from covering every detail of safe and efficient driving, the other modules taught comprise HIV/AIDS awareness and management, stress management, yoga and first aid Road safety awareness and first aid training for school children, teachers and the general public; and HIV/AIDS awareness programmes for the general public are conducted regularly Over 26,000 heavy vehicle drivers from the unorganized sector were provided comprehensive free training on road safety issues; they were also given cash incentive and an insurance policy of Rs. 1 lakh each
Setting up a core group of Ashok Leyland volunteers on road safety:

About 50 volunteers from each Unit are trained to address issues of road safety create awareness, educate people and partner with the police to implement safety measures on the road. This core group would, in turn, train other employees in their respective units so that eventually, all employees are aware of simple road safety measures and would practise and propagate them widely.
Study and assess safety on the highway around our Units:

Our volunteers from each Unit help us study a 10-km highway stretch from our Units and assess the reasons for accidents and the ways to address them. A detailed plan is then worked out to address each one of them systematically on a priority basis.
Burari
Over 12,000 drivers were trained during 2006-07 on road safety issues, defensive driving techniques and fuel saving methods Trained 60 youth from the slums of Delhi to drive heavy vehicles safely (in association with World Vision India); also provided assistance to obtain driving license Educated all trainees on HIV/AIDS prevention and management; distributed free condoms to all trainees Provided free training to 3,000 drivers from the unorganised sector on road safety issues. They were all provided with incentive and an insurance policy for Rs. 1 lakh each A Health Outreach programme is expected to be launched shortly for the drivers. To be commissioned in the truck service stations, the programme aims to address the comprehensive healthcare needs of truck drivers generating awareness, testing and referrals. This initiative also aims at prevention and management of HIV/AIDS and other sexually transmitted diseases through referrals. 28
Prepare and propagate road safety material among all road users:
Ashok Leyland, along with the Police Department in Chennai, has identified stretches of highways in the suburbs where the incidence of accidents is high and conducts road shows in the villages along the highways to propagate road safety issues safe road crossing, dangers of using cycle/bullock cart/twowheeler on the wrong side of the highways, advantages of helmet use, dangers of riding on two-wheelers while talking on cell phones and so on.
Disaster and crisis management group

The first of its kind in the corporate world, Ashok Leyland has provided training to over 50 volunteers from its manufacturing units on an internationally validated Disaster and Emergency Management module. What triggered the idea was the 2004 tsunami and the realisation that the government alone cannot be expected to
shoulder the entire burden in times of natural disasters and that corporates have to realise their responsibility and step in. Thus Ashok Leylands CSR took on Disaster and Emergency Management training for its volunteers as one of its focus areas. The training, provided by Red Cross, covered natural disasters like earthquakes and floods; fire hazards; industrial and road accidents; and man-made problems such as pollution and
environmental degradation. The training also included mental and psycho-social care and support, apart from immediate relief and long-term rehabilitation measures. This core group is to train fellow employees in their respective units and also people in the adjoining community. They are now certified and empanelled by the Red Cross to provide help during national emergencies and calamities.
Affirmative action in Ashok Leyland

Ashok Leyland recognises the importance of inclusive growth. Keeping in mind such concerns as making sure that it addresses the problem of correcting an historical imbalance without sacrificing merit and creating an enabling environment for the marginalised sections to access opportunities with dignity, Ashok Leyland has put in place an Affirmative Action Plan. The Company has also voluntarily introduced a code of conduct that would ensure a degree of social diversity in its workplace. However, an analysis of caste/community-wise data of Ashok Leylands employees (caste/community information has never been collected thus far and it is done now to understand the situation and to put in place an Affirmative Action Plan) shows that there already exists social diversity among the workforce. With a focus on inclusive growth, some of the concrete steps for affirmative action that Ashok Leyland plans to pursue are: Partnering with the Confederation of Indian Industry, to Community SC ST BC MBC OBC Notified Tribes Total Percentage 18.47 6.44 2.80 2.87 43.35 4.21 78.14
Details of recruitments made in 2006-07:
Employee details in our manufacturing units as on March 31, 2007:

Community SC ST BC MBC OBC Notified Tribes Total Percentage 13.98 2.14 40.48 17.60 8.87 0.90 83.97
identify SC/ST/OBC youth and train them in soft skills Identify SC/ST graduates and diploma holders with the help of NGOs and train them in a finishing school that would equip them with computer, communication and soft skills to make them more employable Take into our Apprenticeship programme in our manufacturing units at least 75 per cent of youth from the SC/ST community and explore opportunity for their placement with automobile dealers
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Ten years at a glance
Vehicle and engine sales

(numbers)
Revenue (Gross sales)

(Rs. in millions)
EBIDTA and Profit after tax

(Rs. in millions)
Shareholders funds and Loan funds

(Rs. in millions)
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Net fixed assets turnover and Net current assets turnover

(times)
Return on capital employed

(%)
Basic earning per share and Dividend per share

(face value Re. 1 each) (Rs.)
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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
Auditors
M S Krishnaswami & Rajan Deloitte Haskins & Sells
Cost Auditors
Geeyes & Co.
Bankers
Bank of America Bank of Baroda Canara Bank Central Bank of India Citibank N.A. HDFC Bank Limited
Chief Operating Officer

V K Dasari
ICICI Bank Limited IDBI Bank Limited Punjab National Bank Standard Chartered Bank State Bank of India
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
The Hongkong and Shanghai Banking Corporation Limited
Registered office
19, Rajaji Salai, Chennai 600 001
Plants
Ennore and Ambattur, Chennai; Hosur, Tamil Nadu; Bhandara, Maharashtra; Alwar, Rajasthan.
Website
www.ashokleyland.com
Executive Director and Company Secretary

N Sundararajan
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Directors Report
Part I - Performance / Operations

The Directors are pleased to present the Annual Report of the Company, together with the audited Accounts, for the year ended March 31, 2007.
Financial results
2006-2007 (Rs. millions) Profit before tax Less: Provision for taxation 6,045.06 1,632.20 4,412.86 Add: Transfer from/(to): Debenture redemption reserve Balance profit from last year General Reserve 135.00 2,303.70 (1,000.00) 5,851.56 Add: Excess provision written back - Dividend ( Including dividend tax) Profit available for appropriation Appropriation: Interim dividend Proposed final Tax on dividend Balance profit carried to Balance sheet Earnings per Share (Face value Re.1/-) - Basic - Diluted 1,985.81 278.51 3,616.86 3.38 3.36 1,597.86 224.10 2,303.70 2.74 2.58 29.62 5,881.18 4,125.66 68.33 1,784.13 (1,000.00) 4,125.66 2005-2006 (Rs. millions) 4,523.00 1,249.80 3,273.20
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Dividend
At the meeting held on March 21, 2007, the Board of Directors had approved an Interim dividend of 150% (Rs.1.50 per equity share of Re.1/-) for the year 2006-07. This Interim dividend was paid on and from March 30, 2007 to all shareholders whose names appeared in the Register of Members as on the Record Date i.e. March 29, 2007. The Board of Directors have not recommended any final dividend for the financial year ended March 31, 2007.
entered the knowledge business space by offering a range of Design and Engineering Services. The Company is building up Ashley Design and Engineering Services (ADES), a division focussed on provision of design and engineering services to the automobile, power engineering and aerospace sectors. This business of knowledge-based service has been identified as an area of future growth potential and will offer a significant niche area for the Company in the global market. The Company is also prospecting for acquiring wellestablished organisations with good brand image in Europe and USA, with possible synergy benefits for the ADES business.
Business operations
Overall, there was high growth in the economy and buoyancy in the commercial vehicles market during the year 2006-07. This was another excellent year when the Companys performance surpassed several past records in terms of turnover and profits and set new records and milestones. The highlights are discussed in detail in the Management Discussion and Analysis Report attached as Annexure-D to this Report.
Wind energy
The Company has been actively pursuing generation of energy from wind power through the establishment of Wind Turbine Generators (WTGs) in various locations primarily in Tamil Nadu. By wheeling the power generated through the Tamil Nadu Electricity Board, the Company and the associate companies have gained/saved significant amounts in energy costs and have also taken advantage of the tax benefit incentives offered by the Government for this activity.
Research and development, technology absorption, energy conservation etc.

Your Company has invested substantial sums in the Companys Technical Centre at Chennai in state-of-the-art equipments and facilities for development and testing. Your Company has also strengthened the product development function significantly through recruitment of a large number of engineers with wide range skills and work experience. The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to Conservation of Energy, Technology Absorption, Foreign Exchange are furnished in Annexure - A to this Report.
Overseas initiatives
Avia Ashok Leyland Motors s.r.o. Czech Republic In October 2006, the Company acquired the Truck Business Unit of AVIA a.s. in Prague, Czech Republic. This is now owned and operated as a separate company, Avia Ashok Leyland Motors s.r.o (AALM). This unit is expected to provide the Company with an entry into the East European and Mediterranean markets and will also offer benefit of synergy with the Companys product development efforts, especially in respect of a modern cabin for the medium vehicles. AALMs performance has already shown improvement during the last few months.
Other knowledge service business

As part of the Corporate Business Plan, your Company has
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Ashok Leyland (UAE) LLC, Ras Al Khaimah, UAE The Company has entered into a joint venture with Ras Al Khaimah Investment Authority (RAKIA) in the U.A.E. to put up a plant for building bus bodies in the U.A.E. The construction of the plant is in progress. This unit will help improve our share in the Middle East markets in the coming years Defiance Testing and Engineering Services, Inc (DTE) The Company has signed a Share Purchase Agreement on April 27/28, 2007 to acquire the entire equity capital of Defiance Testing and Engineering Services, Inc, Michigan, USA. This Company is engaged in the business of providing testing services to automobile OE manufacturers in northern USA. This acquisition is expected to provide significant synergy to the existing business activities of Ashley Design and Engineering Services (ADES) Division of Ashok Leyland. It will also help ADES to provide greater value-added services to various customers in the USA. Foreign Currency Convertible Notes (FCCNs) The Foreign Currency Convertible Notes (FCCNs) for USD 100 million issued in April 2004 are convertible into shares of the Company (Fixed Exchange Rate USD 1 = Rs.44.10). The conversion price was reset in 2005 to Rs.31/- per share of face value Re.1/- each. The market price of the Companys equity shares in the Indian Stock Market has improved considerably in the last few months. Starting from February 2006, 94600 Notes (94.6%) have already been converted into underlying shares, thereby increasing the paid-up capital as of March 31, 2007. Consequent to the declaration of an interim dividend of 150% (Rs.1.50 per share) for the year 2006-07, the conversion price has once again been reset to Rs.30/- per equity share. All the procedures consequent to the conversion are being
completed on time and these shares, which rank pari passu with the earlier shares in all respects, are tradeable on the Indian Stock Exchanges. The enhanced share capital as on March 31, 2007 and the corresponding revised shareholding pattern are shown in the Corporate Governance Report (Annexure-B) to this Report.
Subdivision of shares
Your Companys shares were subdivided (from a face value of Rs.10/- each to a face value of Re.1/- each) with effect from July 7, 2004. Subsequently, there has been a substantial increase in the shareholding base of the Company; the number of shareholders as on March 31, 2007 was 2,00,091 (as compared to about 72,000 before subdivision).
Part II Corporate matters

Corporate Governance
Your Company has consistently adopted high standards of Corporate Governance. The Code of Conduct for the Board and the Senior Management was adopted by the Company in March 2005. Your Company is fully compliant with the latest guidelines, and has even exceeded them in some aspects. All the Directors (and also the members of the Senior Management of the rank of General Managers and above) have confirmed in writing their compliance and adherence with the Code of Conduct. The details are furnished in Annexure-B to this Report. The certification by the Managing Director regarding the Code of Conduct, as required by SEBI guidelines, is also furnished separately. The Statutory Auditors of the Company have examined the Companys compliance, and have certified the same, as required under SEBI guidelines. Such certificate is reproduced as Annexure - C to this Report. The Directors' Responsibility Statement as required under
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Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure - E to this Report. The particulars of employees as prescribed by the Companies (particulars of employees) Rules, 1975 are furnished in Annexure - F to this Report. The CEO / CFO certification as required under the SEBI guidelines is attached - as Annexure - G to this Report.
Secretarial Audit
As directed by Securities and Exchange Board of India (SEBI), Secretarial Audit is being carried out at the specified periodicity by a Practising Company Secretary. The findings of the Secretarial Audit have been very satisfactory.
Auditors
M/s M S Krishnaswami & Rajan and M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Company has received confirmation from both the firms that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their re-appointment. The necessary resolution is being placed before the shareholders for approval.
Directors
Mr S Raha was appointed by the Board as an Additional Director, at the meeting held on January 31, 2007. The Company has received a Notice under Section 257 of the Companies Act relating to his re-appointment at this Annual General Meeting. The necessary resolution for his appointment is being placed before the shareholders for approval. Mr A K Das, Mr F Sahami and Mr A Spare, Directors, retire by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment. The necessary resolutions are being placed before the shareholders for approval. Mr E A Kshirsagar, who had been the Chairman of the Audit Committee, ceased to be a Director on the completion of his term of office at the Annual General Meeting on August 1, 2006. Mr P N Ghatalia has taken over as Chairman of the Audit Committee.
Acknowledgement
The Directors wish to express their appreciation of the continued co-operation of the Central and State Governments, bankers, financial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from major shareholders LRLIH Ltd., the Hinduja Group, and all the shareholders. The Directors also wish to thank all the employees for their contribution, support and continued cooperation through the year. On behalf of the Board of Directors
Cost Auditors
The Government has stipulated Cost Audit of the Company's records in respect of motor vehicles as well as engines. M/s Geeyes & Co., Cost Auditors have carried out these audits. Their findings have been very satisfactory. Chennai May 4, 2007
R J SHAHANEY Chairman
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Annexure A to Directors Report

(A) Conservation of Energy
All manufacturing plants have implemented various initiatives for conservation of energy (around 1.9 million electrical units have been saved during the financial year) (leading also to significant savings in costs) during 2006-07. A few such key initiatives are: Use of metal chip handling system and recycling thousands of litres of cutting oil Elimination of refrigerant type CAC cooling units by using centralised cooling tower water system in engine testing. Energy conservation in paint booths by using optimum power motors. Use of translucent roof sheets in shops for daylight resulting in electrical energy conservation. Disposal of paint sludge to cement industries/kilns as alternate fuel. Usage of renewable energy (Wind power). - Hosur 1 was adjudged as "Energy efficient Unit" by CII one among the 38 organisations across the country. - Hosur 2 was awarded the Leadership & Excellence Award in Safety, Health & Environment by CII fourth time in a row. Capital Revenue (excluding depreciation) Total Total R & D Expenditure as % of total turnover (C) Foreign Exchange Earnings and Outgo Details of earnings and outgo of foreign exchange are given in Schedules 1.5 to 1.8 of Notes to the Accounts. The Company continues to strive to improve its export earnings. 1.9% 1564.02 - A 49 tonne semi articulated tractor trailer powered by Bharat Stage-II engine and fitted with 9 speed synchro gear box is under commercial release. - Pilot batch of Heavy Duty Mining Tippers is being released into the market. 2) Benefits derived as a result of the above R&D - Wider range of vehicles, enhanced value equation and greater customer satisfaction. 3) Future Plan of Action - Continue improvements in processes, skill building and addition of infrastructure. 4) Expenditure on R & D: (Rs. Millions) 778.78 785.24
(B) Technology absorption

Research and Development (R & D): 1) Specific areas in which R&D carried out by the Company. - 'H' series 6 cylinder engine rated at 152 KW at Bharat Stage-II level is now in commercial production.
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Annexure B to Directors Report
Report on Corporate Governance
1) Ashok Leyland Philosophy on Corporate Governance

The Board of Directors and the Management of Ashok Leyland commit themselves to: strive towards enhancement of shareholder value through - Sound business decisions - Prudent financial management, and - High standards of ethics throughout the organisation ensure transparency and professionalism in all decisions and transactions of the Company achieve excellence in Corporate Governance by: - Conforming to, and exceeding wherever possible, the i) Non-executive Directors a) Promoter group
prevalent mandatory guidelines on Corporate Governance - Regularly reviewing the Board processes and the Management systems for further improvement The Company has adopted a Code of Conduct for members of the Board and Senior Management. All Directors have affirmed in writing their adherence to the above Code. The full text of the code is furnished at the end of this Report, and is also displayed at the Companys website www.ashokleyland.com
2) Board of Directors
a) Composition: The Board of Directors of the Company, headed by a non-executive Chairman, consisted of the following Directors, as on March 31, 2007, categorised as indicated:
Mr A K Das (Alternate : Mr P Banerjee) Mr D G Hinduja (Vice Chairman) (Alternate :Mr Y M Kale) Mr F Sahami Mr A Spare
b) Connected with Associate Companies c) Independent
Mr R J Shahaney (Chairman) Mr D J Balaji Rao Mr P N Ghatalia Mr S R Krishnaswamy (representing LIC as shareholder) Mr S Shroff Mr S Raha
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ii) Executive Director Managing Director Mr R Seshasayee
Equity shares held by Directors Name of the Director Mr R J Shahaney Mr R Seshasayee No. of equity shares 11,730 11,236 There are no other shares or convertible instruments held by any other Director(s)
b) Attendance at Board Meetings and last Annual General Meeting (AGM) and details of memberships of Directors in other Boards and Board Committees Board Meetings held during the year 2006-07 Date of meeting April 29, 2006 June 8, 2006 July 30, 2006 October 30, 2006 January 31, 2007 March 3, 2007 March 21, 2007 Board strength 12 12 12 10 11 11 11 No. of Directors present 11 6 10 10 10 7 5
- The time gap between any two meetings did not exceed four months. - The last Annual General Meeting was held on August 1, 2006.
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Name of Director
No. of Board meetings attended
Whether attended last A.G.M. held on August 1, 2006
Membership as on 31/03/2007 Other Boards (excluding Ashok Leyland) (Note 6) Other Board Committees (excluding Ashok Leyland) (Note 7) 1 (1 as Chairman) 8 (4 as Chairman)
Mr R J Shahaney
Yes
3 (3 as Chairman)
Mr D J Balaji Rao
Yes
Mr FJ Colon Martinez (Note 1) Mr A K Das Mr P N Ghatalia
Nil 3 7
No Yes Yes
Nil 7 8
Nil 1 7 (3 as Chairman)
Mr D G Hinduja Mr S R Krishnaswamy Mr E A Kshirsagar (Note 1) Mr F Sahami Mr S Shroff (Note 2) Mr S Raha (Note 3) Mr S V Young (Note 4) Mr A Spare Mr R Seshasayee
4 7 3 4 2 2 1 4 6
Yes Yes Yes Yes No Not applicable No Yes Yes
4 1 Nil 1 6 Nil Nil 2 7 (2 as Chairman)
Nil Nil Nil 1 4 Nil Nil Nil 4
Alternate Directors : Mr P Banerjee (Note 5) Mr Y M Kale 1 1 No No Nil 1 Nil 1 (1 as Chairman) Note 1 - Did not seek re-appointment at the Annual General Meeting held on August 1, 2006 Note 2 - Appointed as a Director, effective August 1, 2006 Note 3 - Appointed as a Director, effective January 31, 2007 Note 4 - Did not seek appointment at the Annual General Meeting held on August 1, 2006 Note 5 - Appointed as an Alternate Director to Mr A K Das, effective October 30, 2006 Note 6 : The above excludes Foreign companies, Private Limited Companies and Alternate Directorships. Note 7 : Only Audit Committee, and Shareholders/Investors Grievance Committee are reckoned for this purpose.
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Secretarial Standards The Institute of Company Secretaries of India (ICSI) has laid down Standards on secretarial practices relating to meetings of the Board and Board Committees, General Meetings, dividends etc. The Secretarial and the operating practices of the Company are in line with the above Secretarial Standards. All the information required under Annexure-I to Clause-49 of the listing agreements with Stock Exchanges are being placed before the Board at every meeting, with the current status duly updated.
Section 292A of the Companies Act, 1956. b) Composition, names of members and Chairman The composition of the Audit Committee: Upto July 30, 2006 Independent Directors Mr E A Kshirsagar (Chairman) From August 1, 2006 Independent Directors Mr P N Ghatalia (Chairman) Mr D J Balaji Rao Mr P N Ghatalia Promoter Director Mr F Sahami Promoter Director Mr F Sahami Mr D J Balaji Rao
3) Audit Committee
a) Constitution The Audit Committee of the Company was constituted in July 1987 with Terms of Reference, which covered most of the aspects stipulated by SEBI in the year 2000. These were comprehensively reviewed once again by the Companys Board in the year 2000, and the Audit Committee has been mandated with the same Terms of Reference as specified in clause 49 of the listing agreements with Stock Exchanges. The Terms of Reference also fully conform to the requirements of
All the members of the Audit Committee have expertise in Finance as well as in general management. Mr E A Kshirsagar, Mr P N Ghatalia and Mr F Sahami had been senior partners in leading firms of chartered accountants. Mr Balaji Rao had been the Deputy Managing Director of the then ICICI Ltd., (now ICICI Bank) and the Managing Director of Infrastructure Development Finance Company Ltd.
c) Meetings and attendance Audit Committee meetings held during the year 2006-07 and attendance details Attendance : Date of meeting April 28, 2006 July 29, 2006 October 30, 2006 January 30, 2007 Committee strength 4 4 3 3 No. of Directors present 4 4 3 3
Mr N Sundararajan, Executive Director and Company Secretary is the Secretary to this Committee. He was also the Head of the Internal Audit function till June, 2006 and has attended all the above meetings of the Committee. Mr N Mohanakrishnan, Executive Director is heading the Internal Audit function from July 2006, and has attended all the meetings of the Committee from July 2006. Mr K Sridharan, Chief Financial Officer, attended all the meetings of the Committee.
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The statutory Auditors of the Company and the Cost Auditors are invited to join the Audit Committee meetings. The Audit Committee discusses with the statutory auditors on the "Limited Review" of the quarterly/half-yearly accounts, the Audit Plan for the year, matters relating to compliance with accounting standards, the Auditors observations arising from the annual audit of the Companys accounts, and other related matters. The Committee also reviews at every meeting the significant observations arising from the reports of the Internal Audit Department and the adequacy of the follow up action taken by the management. The Committee discusses with the Cost Auditor about the annual cost audit reports and their observations.
above determinations are based on the overall performance of the Company and on the Committees assessment of the personal contribution and achievements of the Managing Director. b) The Committee met once during the year on April 29, 2006. All the members were present at this meeting. c) The Remuneration Policy of the Company is summarised as follows: (i) For Managing Director The total remuneration, subject to shareholders approval, consists of: A fixed component consisting of salary, allowances and perquisites; the perquisites and benefits are in line with the Companys Rules for senior managerial personnel. A variable component linked to the performance of the Company as well as of the Managing Director consisting of Commission and Special Allowance, as determined by the Remuneration Committee. No sitting fees is payable. (ii) For Non-executive Directors
4) Remuneration Committee
a) The Remuneration Committee consists entirely of nonexecutive Directors. Mr D J Balaji Rao, independent Director, is the Chairman of the committee. Mr R J Shahaney and Mr F Sahami are the other members. Mr N Sundararajan, Executive Director and Company Secretary is the Secretary to this Committee. The Committee is mandated with the following Terms of Reference: - Determination and approval of the quantum of commission and payment of special allowance to the Managing Director; and - Determination and approval of the annual increments to the Managing Director. Within the overall limits approved by the shareholders, the
Sitting fee is paid as per the Companies Act, 1956, and the Articles of Association of the Company, for attending any meeting of the Board or Committees of the Board. Directors are also reimbursed actual travel costs and incidental expenses incurred for attending such meetings or in connection with the Companys business. There are no pecuniary relationship or transactions between any of the non-executive Directors and the Company.
d) The details of remuneration paid/payable to the Directors for the year 2006-07 are: i) Non-executive Directors - Sitting fees: (excluding reimbursement of travel and other expenses incurred for the Companys business) Rs. Mr R J Shahaney Mr D J Balaji Rao Mr P Banerjee, Alt. Director Mr A K Das Mr P N Ghatalia Mr D G Hinduja Mr S R Krishnaswamy Mr Y M Kale, Alt. Director 520,000 360,000 20,000 80,000 220,000 180,000 140,000 20,000 Mr E A Kshirsagar Mr F J Colon Martinez Mr F Sahami Mr S Shroff Mr S Raha Mr A Spare Mr S V Young Rs. 120,000 Nil 180,000 40,000 40,000 140,000 20,000
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ii) Managing Director Managing Director (Rs.) a) Fixed Component (i) Salary (ii) Perquisites (**) (iii) Special allowance b) Variable component (i) Commission Total 52,00,000 187,28,140 26,00,000 57,28,140
Date of meeting
Committee strength
No. of Directors present 2 2 3 2 2 3 2 3 2 2 2 3 3
April 10, 2006 April 22, 2006 April 29, 2006 June 3, 2006 June 21, 2006
3 3 3 3 3 3 3 3 3 3 3 3 3
52,00,000
July 30, 2006 October 18, 2006 October 30, 2006 November 11, 2006 December 4, 2006
(**) Certain perquisites are valued as per the Income Tax Rules. Does not include contribution to Provident Fund @ 12% and Superannuation Fund @ 15% of the salary. Mr Seshasayee, Managing Director is under contract of employment with the Company. There is also a contract corresponding to his appointment as Managing Director, stipulating 3 months' notice period from either side. There is no severance fees payable to him. The Company has not offered any Employee Stock Options.
January 20, 2007 January 30, 2007 March 3, 2007
c) The Committee reviews the performance of the Companys Registrar and Transfer Agent (R&TA), and their system of dealing with and responding to correspondence from all categories of shareholders. The manner and timeliness of dealing with complaint letters received from Stock Exchanges/ SEBI/ Dept. of Company Affairs etc., and the responses thereto, are reviewed by this Committee. During the year, 1192 complaint letters were received from investors; 2934 letters (including 7 letters from SEBI / Stock Exchanges / DCA) were received on routine matters; all these were dealt with satisfactorily. The very few letters, which occasionally remained pending beyond the normal time limits were cases of inadequate documentation or clarifications being awaited. For the sixth year in succession, the Company conducted an Investor Satisfaction Survey through a questionnaire, which was mailed along with the Notice of AGM 2006. 1662 investors had responded to the survey. A vast majority of them have expressed high degree of satisfaction about various aspects of investor servicing. A few issues raised by some investors were pursued and dealt with satisfactorily.
5) Shareholders/Investors Grievance Committee

a) The Shareholders/Investors Grievance Committee has been functioning since August 2000. Mr R J Shahaney is the Chairman of the Committee; Mr D J Balaji Rao, Independent Director and Mr R Seshasayee, Managing Director are the other members. This Committee presently deals with and approves all share transfers, transmissions and also all other matters relating to investor relations and grievances. From January 31, 2006, the Committee has also been empowered to allot shares upon conversion of the Foreign Currency Convertible Notes issued in April 2004. b) Mr N Sundararajan, Executive Director and Company Secretary is the Secretary to this Committee and is also the Compliance Officer nominated for this purpose. Meetings and attendance Shareholders / Investors Grievance Committee meetings held during the year 2006- 07 and attendance details:
At the October 2006 meeting, the Committee also reviewed the special report analysing the feedback from the Investor
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Satisfaction Surveys, and approved the steps taken for further improvements in investor servicing. d) As on March 31, 2007 there were two share transfers pending; these were completed within the due dates.
6) General Body Meetings

a) Details of location and time of holding the last three AGMs. Year 55th AGM - 2004 Location Narada Gana Sabha, 314 TTK Road, Chennai 600 018 56th AGM - 2005 Narada Gana Sabha, 314 TTK Road, Chennai 600 018 57th AGM - 2006 Kamaraj Memorial Hall, 492 Anna Salai, Teynampet, Chennai 600 006 The Chairman of the Audit Committee was present at all the above AGMs. Details of EGMs held in the last three years: Year 2004 Location Narada Gana Sabha 314, TTK Road, Chennai 600 018 2005 Rani Seethai Hall 603 Anna Salai, Chennai 600 006 b) All the special resolutions placed before the shareholders at the above meetings were approved. There were no resolutions requiring approval through postal ballot. Date and Time February 28, 2004 11.00 a.m. March 5, 2005 10.45 a.m. Date and time July 29, 2004 10.30 a.m. July 26, 2005 10.30 a.m. August 1, 2006 10.00 a.m.
8) Means of communication
a) The half-yearly results are being mailed to all shareholders since October 2001, along with a letter from the Managing Director. b) The quarterly results are being generally published in one leading national (English) business newspaper (normally Business Line/Business Standard) and in one vernacular (Tamil) newspaper (Dinamani/Dinamalar). The quarterly results are also displayed on the Companys website www.ashokleyland.com c) The Companys website also displays official press /news releases, presentations made to institutional investors and analysts, and several other details/information of interest to various stakeholders. d) A Management Discussion and Analysis report is being presented as a part of the Annual Report from the year 1998-99 onwards.
7) Disclosures
There have been no materially significant related party transactions with the Companys promoters, Directors, the management, their subsidiaries or relatives which may have potential conflict with the interests of the Company. The necessary disclosures regarding the transactions with related parties are given in the Notes to the Annual Accounts for the year 2006-07. There have been no instances of non-compliance by the Company on any matters related to the capital markets, nor have any penalty/strictures been imposed on the Company by the Stock Exchanges or SEBI or any other statutory authority on such matters during the last three years. The Company had no subsidiary company as on March 31, 2007.
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9) General shareholder information

a. 58th Annual General Meeting Date and time Venue b. Financial calendar Annual General Meeting Unaudited results for the quarter ending June 30, 2007 Unaudited results for the quarter/half-year ending September 30, 2007 Unaudited results for the quarter ending December 31, 2007 Audited Results for the year ending March 31, 2008 c. d. Book closure date Dividend payment date July 20, 2007 July 20, 2007 Last week of October 2007 Last week of January 2008 Before end of May 2008 July 20 2007 - 10.25 a.m. Narada Gana Sabha, 314, TTK Road, Chennai 600 018
From July 18, 2007 to July 20, 2007(both days inclusive) Interim dividend for the financial year 2006-07 was approved by the Board of Directors on March 21, 2007 and was paid on March 30, 2007.
e.
a) Listing of equity shares
Madras Stock Exchange Ltd., Bombay Stock Exchange Ltd., National Stock Exchange of India Ltd.
b) Listing of Global Depository Receipts (GDRs) c) Listing of Foreign Currency Convertible Notes (FCCNs)
London Stock Exchange London Stock Exchange
The listing fees have been paid uptodate, to all the stock exchanges f. Stock code a) Trading symbol at Madras Stock Exchange Ltd. Bombay Stock Exchange Ltd. (Physical) (Demat) National Stock Exchange of India Ltd b) Demat ISIN numbers in NSDL & CDSL Equity shares 477 500477 ASHOKLEY INE208A01029 ALL
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g. Stock market data Bombay Stock Exchange Share price Month High (Rs.) April 2006 May 2006 June 2006 July 2006 Aug 2006 Sep 2006 Oct 2006 Nov 2006 Dec 2006 Jan 2007 Feb 2007 Mar 2007 52.45 53.95 40.40 38.70 40.60 45.65 51.15 47.25 46.35 48.70 50.80 41.80 Low (Rs.) 40.05 30.30 30.80 30.50 34.45 39.40 43.45 41.10 37.60 43.10 39.10 36.10 12,102.00 12,671.11 10,626.84 10,940.45 11,794.43 12,485.17 13,075.85 13,799.08 14,035.30 14,325.92 14,723.88 13,386.95 11,008.43 9,826.91 8,799.01 9,875.35 10,645.99 11,444.18 12,178.83 12,937.30 12,801.65 13,303.22 12,800.91 12,316.10 Sensex points High Low National Stock Exchange Share price High (Rs.) 52.55 53.00 40.40 38.90 40.60 45.90 51.10 47.25 46.40 48.75 50.70 41.90 Low (Rs.) 40.00 29.10 30.50 30.10 34.50 39.40 43.40 35.00 35.75 43.10 38.60 35.00 3,598.95 3,774.15 3,134.15 3,208.85 3,452.30 3,603.70 3,782.85 3,976.80 4,046.85 4,167.15 4,245.30 3,901.75 3,290.35 2,896.40 2,595.65 2,878.25 3,113.60 3,328.45 3,508.65 3,737.00 3,657.65 3,833.60 3,674.85 3,554.50 S&P CNX Nifty Points High Low
h. Share price performance in comparison to broad based indices BSE Sensex and NSE Nifty Share price movement (BSE) Share price movement (NSE)
See chart on page 51
i. Registrar and Transfer Agents The Company has appointed M/s Integrated Enterprises (India) Ltd., 2nd Floor, Kences Towers, 1 Ramakrishna Street, North Usman Road, T.Nagar, Chennai 600 017 as the Registrar and Transfer Agent (R&TA) of the Company for all aspects of investor servicing relating to shares in both physical and demat form. The few residual matters relating to the fixed deposits are dealt with directly by the Company. j. Share Transfer System The authority relating to transfer of shares and allied work relating to servicing of investors has been delegated by the Board to the shareholders / Investors Grievance Committee which consists of Mr R J Shahaney (Chairman),
Mr D J Balaji Rao and Mr R Seshasayee. In order to further improve and speed up investor servicing, the Board has authorised the Managing Director individually to approve all routine transfers, transmissions, etc. of shares. Such approval is being given by the Managing Director at frequent/regular intervals (31 times during 2006-07). Transfers, transmissions etc., were generally approved within 10 days; requests for dematerialisation were confirmed within 10 days (as against the norm of 15 days). In addition, the Committee met 13 times during the year 2006-07 for approving specific transfers, transmissions, etc., reviewing investor grievances and to allot shares upon conversion of FCCNs.
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k. (i) Distribution of shareholding as on March 31, 2007 No. of shares Number Upto 50 51-100 101-200 201-500 501-1000 1001-2000 20015000 5001-10000 10001 & above Total 25434 39375 30631 47484 27329 16274 10006 2195 1363 200091 Shareholders % 12.71 19.68 15.31 23.73 13.66 8.13 5.00 1.10 0.68 100.00 No. of shares Number 825764 3806769 5670987 19067811 23511517 25207494 32044627 16291295 1197444053 1323870317 % 0.06 0.29 0.43 1.44 1.78 1.90 2.42 1.23 90.45 100.00
(ii) Pattern of shareholding as on March 31, 2007 Sl.No. 1 Category Promoter - LRLIH Ltd. (Includes 164600070 shares in GDR form) 2 3 Residents (individuals / clearing members) Financial institutions/insurance co. / State Govt./Govt. companies/UTI 4 5 Foreign institutional investors Non-Resident Indians/ OCB / corporate bodies foreign / bank - foreign / foreign nationals 6 7 8 9 10 Corporate bodies Mutual funds Trusts Banks Others - GDR Total 2008 2089 60 24 51 2 200091 24756340 33534545 96455158 517863 2227139 14116500 1323870317 1.87 2.53 7.29 0.04 0.17 1.07 100.00 25 84 173573197 142604925 13.11 10.77 1 195747 678218782 157865868 51.23 11.92 No. of holders No. of shares %
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l. Dematerialisation of shares and liquidity Shares of the Company can be held and traded in electronic form. As stipulated by SEBI, the shares of the Company are accepted in the Stock Exchanges for delivery only in dematerialisation form. Status of Dematerialisation of Shares - as on March 31, 2007 Physical Holders No. of shares LRLIH Limited * Others *** 441166680 23515242 % to paidup capital 33.32 1.78 Demat No. of Shares(**) 237052102 622136293 % to paidup capital 17.91 46.99 No. of shares(**) 678218782 645651535 1323870317 * held in one consolidated share certificate ** including in GDR form *** held by approx.22500 holders Shares of the Company are actively traded in the Bombay and National Stock Exchanges, and hence have good liquidity. Total % to paidup capital 51.23 48.77 100.00
m. Subdivision of shares Each equity share of face value of Rs.10/- was subdivided into 10 equity shares of face value of Re.1/- each, effective from July 7, 2004. Following the subdivision, there has been a significant increase in the number of shareholders; as of March 31, 2007, there were 200,091 shareholders as compared to 71,720 shareholders as on July 6, 2004. n. Outstanding GDR/ warrants and convertible notes, conversion date and likely impact on the equity No GDR is outstanding for conversion as on March 31, 2007 and hence there is no impact on equity. After obtaining the approval of the shareholders at the extraordinary General Meeting held on February 28, 2004, the Company issued Foreign Currency Convertible Notes (FCCNs) for USD100 million in April 2004 to investors in the overseas market. As per the terms of the Issue, these bonds are
convertible into GDSs or convertible into the underlying shares @ 1422.581 shares (of face value Re 1/- each) per Note of USD1000, at a conversion price (reset in 2005) of Rs.31/- per share at the option of the investors. Consequent to the declaration of an interim dividend of 150% (Rs.1.50 per share) for the year 2006-07, the conversion price has once again been reset to Rs.30/- per equity share. From February 2006 the Company has been receiving requests from the holders of FCCNs seeking to convert the Notes held by them into underlying shares. Upto 31/03/2007, 94600 (94.6%) FCCNs have been converted into 134576117 shares. All the statutory / contractual obligations relating to such conversions have been fulfilled in time, and such additional shares (upon conversion) have been admitted for trading at all the listed Stock Exchanges. As of March 31, 2007 only 5400 FCCNs remained outstanding for conversion.
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o. Plant locations Ennore Post Box No.3 Ennore Chennai 600 057, Tamil Nadu Hosur Unit IIA Cab Panel Press Shop SIPCOT Industrial Complex Mornapalli Village Hosur 635 109, Tamil Nadu Ambattur, Chennai 3A/A&2 North Phase Sidco Industrial Estate Ambattur Chennai 600 098, Tamil Nadu p. Address for correspondence To contact R&TA for all matters relating to shares, dividends, Annual Reports M/s Integrated Enterprises (India) Limited 2nd Floor, Kences Towers 1, Ramakrishna Street North Usman Road T. Nagar, Chennai 600 017 For fixed deposits Mr R Venugopalan Dy. General Manager - Finance Ashok Leyland Limited Ennore, Chennai 600 057 For any other general matters or in case of any difficulties/ grievances Secretarial Department Ashok Leyland Limited Khivraj Complex II, 5th Floor 477-482 Anna Salai Nandanam, Chennai 600 035 Website address Email ID of Investor Grievances Section Name of the Compliance Officer N Sundararajan Executive Director & Company Secretary www.ashokleyland.com [email protected] Tel. : 91-44-2433 1120 / 2433 1128 / 2433 1129 Fax : 91-44-2433 5633 e-mail :[email protected] Tel : 91-44-2575 1001/ 2575 0233 Fax : 91-44-2575 1798 e-mail : [email protected] Tel : 91-44 2814 0801 / 03 Fax : 91-44 2814 2479 e-mail : [email protected] Hosur Unit I 175 Hosur Indl. Complex Hosur 635 126 Tamil Nadu Bhandara Plot No.1 MIDC Industrial Area Village Gadegaon, Sakoli Taluk, Bhandara 441 904 Maharashtra Technical centre Vellivayal Chavadi Via Manali New Town Chennai 600 103 Tamil Nadu Hosur Unit II 77 Electronic Complex Perandapalli Village Hosur 635 109, Tamil Nadu Alwar Plot No.SPL 298 Matsya Indl. Area Alwar 301 030 Rajasthan
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Non mandatory requirements

1. Non executive Chairman The Company maintains the office of the Non Executive Chairman and reimburses expenses incurred in the performance of his duties. 2. Remuneration Committee The Company has constituted a Remuneration Committee; full details are furnished under Item 4 of this Report. 3. Shareholder rights The statements of quarterly and half yearly results are being published in the press. The Company has been mailing halfyearly reports to shareholders from October 2001, along with a letter from the Managing Director highlighting significant events. 4. Postal ballot The Company adheres to the Companies Act, 1956 requirements regarding postal ballot. The Company has had no occasion so far to use the postal ballot. 5. Whistle blower policy The Company does not have a whistle blower policy.
associated simultaneously with competing organisations either as a Director or in any managerial or advisory capacity, without the prior approval of the Board. d) Always adhere and conform to the various statutory and mandatory regulations/guidelines applicable to the operations of the Company avoiding violations or non-conformities. e) Not derive personal benefit or undue advantages (financial or otherwise) by virtue of their position or relationship with the Company, and for this purpose: i) Shall adopt total transparency in their dealings with the Company ii) Shall disclose full details of any direct or indirect personal interests in dealings/transactions with the Company. iii) Shall not be party to transactions or decisions involving conflict between their personal interest and the Companys interest. f) Conduct themselves and their activities outside the Company in such manner as not to adversely affect the image or reputation of the Company. g) Inform the Company immediately if there is any personal development (relating to his/her business/professional activities) which could be incompatible with the level and stature of his position and responsibility with the Company. h) Bring to the attention of the Board, Chairman or the Managing Director as appropriate, any information or development either within the Company (relating to its employees or other stakeholders) or external, which could impact the Companys operations, and which in the normal course may not have come to the knowledge of the Board/Chairman or Managing Director. i) Always abide by the above Code of Conduct, and shall be accountable to the Board for their actions/violations/defaults.
Revised SEBI guidelines on Corporate Governance

The Company is fully compliant with the revised SEBI Guidelines.
Code of Conduct
Members of the Board and the Senior Management, shall a) Always act in the best interests of the Company and its stakeholders. b) Adopt the highest standards of personal ethics, integrity, confidentiality and discipline in dealing with all matters relating to the Company. c) Apply themselves diligently and objectively in discharging their responsibilities and contribute to the conduct of the business and the progress of the Company, and not be
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Share price movement
Shareholding pattern as on March 31, 2007
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Annexure C to Directors Report
Auditors Certificate on Compliance with the Conditions of Corporate Governance under Clause 49 of the Listing Agreements
To the Members of Ashok Leyland Limited
1. We have examined the compliance with the conditions of Corporate Governance by Ashok Leyland Limited (the Company) for the year ended March 31, 2007 as stipulated in clause 49 of the listing agreement of the said Company with the Stock Exchanges in India, with the relevant records and documents maintained by the Company and furnished to us and the Report on Corporate Governance as approved by the Board of Directors. 2. The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination has been limited to procedures and implementation thereof, adopted by the Company for ensuring the said compliance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 3. Based on the aforesaid examination and according to the information and explanations given to us, we certify that the Company has complied with the said conditions of Corporate Governance as stipulated in the above mentioned listing agreement. 4. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
For M.S. Krishnaswami & Rajan Chartered Accountants
For Deloitte Haskins & Sells Chartered Accountants
M. K. Rajan Partner Membership No.4059 May 4, 2007 Chennai
R Raghavan Partner Membership No.9483
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Annexure D to Directors Report
Management Discussion and Analysis Report

A. Economy and market trends
Indias economy recorded a significant growth during the Tenth Plan period GDP grew 8.5% CAGR against a target of 8% due to booming manufacturing and service sectors and a reasonable growth in the agricultural sector. This GDP growth triggered an increase in the countrys per capita income, while low interest rates fuelled increased demand. A combination of economic growth and the Governments initiatives in the area of road infrastructure not only translated into significant growth in Indias Commercial Vehicle (CV) industry but also inspired structural changes in the transportation sector. Indias CV industry grew by 26% from 2001-02 to 2006-07. During 2006-07, the year under review, industry grew by 33% to a record market size of 470,000 vehicles. This appreciable increase was partly attributed to the Supreme Courts ruling on vehicle overloading practices besides growth in the countrys manufacturing and construction sectors. The development of Indias road infrastructure and the advent of next-generation operators in Indias transportation sector are rapidly re-shaping Indias transportation model in line with trends seen in developed economies. In 2006-07, much of the growth came from the lower and higher end of the CV spectrum in line with the trend observed in the previous six years.
A combination of economic growth and the Governments initiatives in the area of road infrastructure not only translated into significant growth in Indias Commercial Vehicle (CV) industry but also inspired structural changes in the transportation sector.
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A part of the industrys growth was also derived from out of India: export of CVs grew 22% in 2006-07 and Light Commercial Vehicles (LCVs) contributed about two-thirds of the sale. There was a product evolution in the countrys city bus segment as well. New customer requirements in the form of low entry height, single step (stepless) entry, air suspension and pneumatic doors emphasised safety, comfort and a faster turnaround time, graduating the buses to the next level of modernity.
a plant with an annual installed capacity of 50,000 vehicles. The plant is expected to be operational by 2008-09. During the year under review, Ashok Leyland acquired Avia Truck Business Unit (TBU) in Czech Republic, formerly owned by the Daewoo Group and later by Odien Capital Partners, a private investment firm. Rechristened AVIA Ashok Leyland Motors s.r.o.(AALM), this associate company marks the first significant instance of establishing an overseas presence through the acquisition route. AALM is a strategic beachhead and will drive the Companys growth wide and deep into Eastern Europe, Western Europe and other second hemisphere markets. The Company, along with its associate companies, has been concurrently pursuing global opportunities in the auto sector, broadening this scope of operations in automotive engineering and component sectors. Ashley Design and Engineering Services Division (ADES) is already engaged in providing design, development, prototyping and testing services to the automobile industry. A share purchase agreement has been signed for acquiring Defiance Testing and Engineering Services, Inc (DTE) based near Detroit, Michigan, USA, which provides independent testing services for leading Auto OEMs and their Tier 1 and Tier 2 suppliers. This acquisition offers significant synergies, creating additional growth potential for both the operations. In 2006-07, the Companys operations continued to be smooth due to an emphasis on planned deliverables. The Six Sigma programme is gaining momentum and benefits are being realised in various areas, especially engineering and manufacturing. Inspired by its impact, the exercise is now being extended to all functional areas. Besides, the Company was certified as per TS 16949, a first in the Indian automobile industry, which will further strengthen the quality focus.
B. The year in brief

During 2006-07, the Company achieved sales of 77,069 vehicles within India; there were also significant market share gains in the populous rigid segments catalysed by the launch of new two-axle and three-axle truck models. The Company yielded share in the tractor segment due to production constraints for factory-fitted cabins but is poised to regain market share with new generation cabins expected to be produced from October 2007. In 2006-07, the Companys exports grew by 23% with the sale of 6,025 vehicles. This improvement was derived from a robust demand in the export markets and the launch of new products. The Companys newly upgraded Falcon bus was very well accepted in the Middle East. To cater to growing demand from this market, the Company is setting up a bus assembly plant at Ras Al Khaimah, UAE, which will go on stream by March 2008. To cater to the increased demand, the Company enhanced its production capacity to 84,000 vehicles and is poised to achieve a target of over 100,000 vehicles in 2007-08. The Company has acquired land in Uttarakhand with the objective of setting up
Domestic sales
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New application-specific products with a view to delivering enhanced value to the customers are under development. Domain Expert Groups are taking a deep dive to enhance their insight into the critical business drivers for each application. The spare parts business reported sales of Rs. 5,468 million, including KD kit supply to Vehicle Factory Jabalpur, belonging to Ministry of Defence. The Company expanded its industrial and marine engine businesses through a growth of 22%, selling 8,904 engines. Strategies to expand market presence through increased product offerings are under way. Purposeful investments have built a state-of-the-art R&D infrastructure with facilities such as the 6 poster, the first ever such full vehicle test facility in India for multi-axle vehicles. The Companys continuing focus on product development and improvements has yielded significant customer benefits. The BS III compliant engine with a Common Rail System, a pioneering initiative in the Indian heavy commercial vehicles industry, is undergoing field trials. The Company nurtures the talents of its engineers by encouraging them to publish research articles in international research journals. The Company is active in Industry-institute interaction, which is mutually beneficial and enables induction of new technologies that enhance customer value. The Company joined hands with Bosch and the Indian Institute of Technology Madras (IITM) to set up the Ashok Leyland and Bosch Centre of Excellence in Engineering Design at the IITM campus, offering a Dual Degree Programme in Engineering Design - a B.Tech in Engineering Design and M.Tech with specialisation in Automotive Engineering. With a strong thrust on the modern practices of design, this programme is the first of its kind in the country and is aimed at meeting the dire need for design engineers with practical orientation. In 2006-07, the Company implemented a major initiative to develop its young executives with the objective of equipping them for business challenges as well as facilitating succession planning. Ashok Leyland reinforced its presence on the cutting-edge of IT through the implementation of the latest information security system.
need to be carefully evaluated, managed and mitigated. In order to effectively manage the cyclical nature of demand, the Management has adopted an internal risk management protocol. Risk management covers the entire process of business including, inter-alia, capital investment, technology development and customer acquisition / retention. Continuance of the reform process and emphasis on infrastructure and agriculture augur well for the road transport sector. However, given the cyclical nature of demand in the CV industry, capacity build-up plans are periodically re-assessed, taking into account market conditions and demand forecast. The Company has plans to increase its annual capacity to 180,000 vehicles (Medium and Heavy Duty Vehicles), over next four / five years. Management will ensure that capital expenditure on expansion is aligned to the given market situation. The Company is pursuing plans to increase the share of non-cyclical business including exports, non-auto engines and sale to Defence sector to mitigate the impact of cyclicality. Competition in the domestic CV market has increased significantly with many multi-national companies setting up manufacturing base. Consequent to the policy of opening up the market, customs duty, as a trade barrier, is likely to lose its influence. The Company is preparing to face these challenges through focused R&D efforts in designing / developing vehicles that offer appropriate transport solutions and meet the changing preferences of customers. Uncertainty over fuel prices in the international market, coupled with competitive pressures to contain freight rates, could lead to erosion in vehicle operators margin, thereby leading to lower demand. However, increased use of heavy tonnage vehicles for moving large freight loads has reduced the tonne / km cost. This has helped improve the operational viability for the vehicle operators. There are continuing concerns on input cost increases due to commodity price movements, together with cost increases due to improvements in product designs and upgradation to meet emission norms. In a competitive market, the Company may not be able to pass on the cost increases through pricing. Hence, margins may come under pressure. The Company is taking steps to competitively procure components through global sourcing. The Companys foreign exchange exposure has reduced
C. Risk management
The CV business has a specific set of risk characteristics, which
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substantially with 94% of US$100 million bonds issued in April 2004 getting converted to equity. Current strengthening of the Rupee, if it continues, can adversely affect realisations from exports. However, the Company has an active, centralised treasury department, assisted by technical experts, to mitigate such impact.
Compliance with applicable statutes, policies, listing requirements and management policies and procedures Effective use of resources and safeguarding of assets IT systems with in-built controls to facilitate all the above The internal control system provides for well-documented policies / guidelines, authorisations and approval procedures. The Company, through its own Corporate Internal Audit Department, carries out periodic audits at all locations and of all functions and brings out any deviation to internal control procedures. The observations arising out of audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations is submitted to Audit Committee of the Board of Directors. The status of implementation of the recommendations is reviewed by the Committee on a regular basis and concerns, if any, are reported to the Board.
D. Internal control systems and their adequacy

Based on the nature of business and size of operations, the Company's internal control system has been designed to provide for: Accurate recording of transactions with internal checks and prompt reporting Adherence to applicable Accounting standards and policies Review of capital investments and long term business plans Periodic review meetings to guide optimum utilisation of resources
(Rs. Millions) 2006-07 Income Sales (Net of Excise Duty) Other Income Total Expenditure Manufacturing Expenses Employee Expenses Other Expenses Depreciation Financial Expenses Total Profit Before Extraordinary item Extraordinary item Income / (Charge) Profit Before Tax Tax Provision - Current - Deferred - Fringe benefit tax Profit After Tax Basic Earnings Per Share (in Rs.) Diluted Earnings Per Share (in Rs.) Cash Earnings Per Share (in Rs.) 53,391 4,807 6,456 1,506 54 66,214 6,176 (131) 6,045 1,351 230 51 4,413 3.38 3.36 4.72 37,690 4,038 5,347 1,260 165 48,500 4,306 217 4,523 1,131 72 47 3,273 2.74 2.58 3.86 41.7 19.0 20.7 19.5 (67.6) 36.5 43.4 260.4 33.7 19.5 218.4 8.5 34.8 23.4 30.2 22.3 71,682 708 72,390 52,477 329 52,806 36.6 114.7 37.1 2005-06 Inc / (Dec) %
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E. Financial review:
The Companys performance during 2006-07 reflects the improved business environment. The Companys revenues and profits recorded impressive growth. The Company has performed well with over 24% Return on Average Capital employed and a Return on Net Worth of 24%. Management is focused on improving the operational performance through various initiatives to achieve savings in both direct and indirect costs.
there were cost increases on account of compliance with statutory regulations, which has not been fully passed on to the customers. The margin also suffered due to full impact of previous years input cost increases. However the introduction of VAT in Tamil Nadu effective January07 will improve future margins. Through concerted efforts of "Mission Gemba", a programme for total involvement of employees at the shop floor level, the Company improved productivity in all the plants. This enabled the Company to reduce operating cost and mitigate the erosion in margins by 200 bps. The overall manpower cost has increased by 19% mainly due to compensation revision for the executive staff effective November 06. Other expenses have increased by 21%, mainly due to activity related increases. Thrust on Research and Development (R & D) is continuing and total R&D spend, including capital expenditure for the current year, accounts for Rs. 1,564 million, an increase of 50% over previous year. Depreciation for the year has increased to Rs.1, 506 million compared to Rs. 1,260 million in the previous year mainly due to additions to facilities. Financial expenses decreased during the current year mainly due to lower levels of working capital, income earned on the deployment of temporary surplus funds and thanks to cost effective funding through borrowings in foreign currency.
Revenues
Net sales for the year, at Rs 71,682 million, has increased by 37% as compared to previous year, contributed mainly by volume increases in vehicles by 35% and engines (including traded) by 23%. The reduction in spare parts revenue by 30% is mainly due to lower offtake by Vehicle Factory, Jabalpur, compared to the previous year. The increase in other income is mainly on account of higher income from investments by Rs.114 million, profit on sale of investments by Rs 173 million and profit on disposal of fixed assets by Rs 47 million.
Costs
The current year witnessed increase in commodity prices and consequent price increase claims by suppliers. In addition,
Rs.Millions 2006-07 Sources of Funds Shareholders' Funds Loan Funds Deferred Tax Liability-Net Total Application of Funds Fixed Assets Investments Net current Assets Total 15,445 2,211 9,419 27,075 10,847 3,682 8,239 22,768 1.6 (2.0) (1.0) 0.1 18,702 6,404 1,969 27,075 14,052 6,919 1,797 22,768 0.1 3.1 (3.4) 2005-06 Inc / (Dec) %
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Resources
During the year, the Company incurred capital expenditure of Rs.6,135 million. This expenditure covers investments in capacity expansion / upgradation and R&D. During the year, the capacity increased from 77,200 vehicles to 84,000 vehicles.
The Companys principal sources of liquidity are: a) Existing cash and cash equivalents b) Cash generated by operations c) Unutilised limits with banks
Net Current Assets (excluding cash / bank balances) as on 31st March 2007 stood at Rs. 5,069 million as against the previous d) Unutilised limits of approved borrowings Rs. Millions 2006-07 Profit from operations (Inc.) / Dec.in Net Working Capital Net Cash Flow from operating activities (before extraordinary item) Payments under Voluntary Retirement Scheme Net cash flow from operating activities Payment for Assets acquisition - net Proceeds from sale of undertaking Other Investments - net Cash flow from Financing activities Net Cash inflow / (Outflow) (793) (2,894) (5,391) 4,958 372 5,330 (330) 5,000 (6,704) 2005-06 4,521 (1,291) 3,230 (10) 3,220 (2,593) 620 637 (2,576) (692)
year level of Rs.2,210 million. FCCN funds parked in deposits in previous year were utilised for capital expenditure in the current year. Inventories have gone up to Rs.10,703 million as on 31st March 2007 compared to Rs.9,026 million as on 31st March 2006. The increase is due to increased activity levels. Debtor level increased to Rs.5,229 million from Rs.4,243 million due to higher level of fully built vehicles supplied to Defence.
CRISIL has given "AA / Stable" rating for the Companys longterm borrowings. Fitch has given the Company ratings at " AA (IND) / stable ". 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.
Liquidity
Net debt (net of cash & bank balances) to equity ratio was 0.1 as on 31st March, 2007. As at year-end, Rs.235 million was lying as FCCN, representing 5.4% of the total issue size of USD 100 million. On conversion of this balance portion (if and when the option is exercised by the bondholders), the equity will increase to Rs.1,331.8 million. The Company manages its liquidity through rigorous monitoring of cash flows; surplus funds are invested mainly in units of Mutual Funds and in bank deposits.
Results of operation
The Company registered Rs. 4,958 million cash inflow from operations. After meeting working capital requirements and extraordinary item of payments for Voluntary Retirement Scheme of Rs.330 million, the Company earned net cash inflow of Rs. 5,000 million. Profit before tax and extraordinary expenses improved by 44% to Rs. 6,176 million. During the year, the Company charged Rs.131 million towards amortisation of VRS expenses. Profit
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after charging the VRS expenses increased by 34%, to Rs. 6,045 million. After providing for taxes at Rs.1,632 million (including deferred tax and fringe benefit tax), profit after tax for the current year improved by 35% to Rs.4,413 million.
Following the withdrawal of IVECO as an equity partner in the holding company, Ashok Leyland is pursuing a policy of selfreliance. The Company has initiated extensive technical developments in the areas of vehicle, engine, transmission and cabin, among others. A Future Vehicle Development Programme for modular vehicle development has been launched. After upgrading its H-series engine platform (with the help of a European engine consultancy organisation) to meet the Bharat Stage (BS) III regulation, the Company is now upgrading the platform to meet Euro 4 (BS IV) emission requirements. It has also commenced the independent development of a new engine platform to meet future requirements. The Company is in the process of employing advanced simulation techniques in product development to adapt rapidly to changing market requirements. It also expects to treble its existing base of 450 engineers in its technical centre over the next three to four years. The Company is also gearing up to offer cost-effective passenger transport solutions in the rapidly changing mass passenger transportation market. Concurrent to these initiatives, the Company is reinforcing its existing allied businesses with a view to de-risking its dependence on the CV business in the unexpected event of a demand downturn in the latter. It is also evaluating new business segments and opportunities.
F. CV industry outlook Indian market

The growing requirements of next-generation customers and stricter emission legislations will necessitate the introduction of sophisticated vehicular products with India-specific solutions. In the developed economies, a demand growth in this segment is mainly influenced by replacement rather than fresh demand. As a result, major multinationals are more likely to concentrate on the growth coming out of the developing economies. Competition is likely to intensify in the coming year. The demand outlook for 2007-08 is mixed. While an increase in interest rates could stunt demand, increased infrastructure investments by the Government could encourage growth. In view of this, Indias CV industry is likely to report moderate growth during the current year.
Export market
Since Indian CV manufacturers have set ambitious export targets, they are likely to enter hitherto unexplored territories beyond the traditional SAARC, Middle East and African markets over the next few years.
Goals, strategies and future plans

Ashok Leyland has drawn up aggressive plans to increase annual capacity and sales to over 180,000 vehicles (medium and heavy duty vehicles) in four / five years, as mentioned earlier. The Company is optimistic of a wider export presence through organic and inorganic growth; it is developing new models to address growing customer requirements in the existing market and new territories. With the Indian transportation model maturing towards developed market practices hub and spoke transport model the up-to-3.5-tonne GVW segment grew at a 55% CAGR between 2001-02 and 2006-07. In line with this, the Company is exploring options to enter the LCV segment.
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Annexure E to Directors Report
Directors' responsibility statement as per section 217(2AA) of the Companies Act, 1956
Responsibility in relation to financial statements

The financial statements have been prepared in conformity, in all material respects, with the generally accepted accounting principles in India and the Accounting Standards prescribed by the Institute of Chartered Accountants of India in a consistent manner and supported by reasonable and prudent judgements and estimates. The Directors believe that the financial statements reflect true and fair view of the financial position as on 31.3.2007 and of the results of operations for the year ended 31.3.2007. The financial statements have been audited by M/s M.S. Krishnaswami & Rajan and M/s Deloitte Haskins & Sells in accordance with generally accepted auditing standards, which include an assessment of the systems of internal controls and tests of transactions to the extent considered necessary by them to support their opinion.
maintenance of adequate accounting records as required by various statutes. Directors have overall responsibility for the Companys internal control system, which is designed to provide a reasonable assurance for safeguarding of assets, reliability of financial records and for preventing and detecting fraud and other irregularities. The system of internal control is monitored by the internal audit function, which encompasses the examination and evaluation of the adequacy and effectiveness of the system of internal control and quality of performance in carrying out assigned responsibilities. Internal audit department interacts with all levels of management and the Statutory Auditors, and reports significant issues to the Audit Committee of the Board. Audit Committee supervises the financial reporting process through review of accounting and reporting practices, financial and accounting controls and financial statements. Audit Committee also periodically interacts with internal and statutory auditors to ensure quality and veracity of Companys accounts. Internal Auditors, Audit Committee and Statutory Auditors have full and free access to all the information and records as considered necessary to carry out their responsibilities. All the issues raised by them have been suitably acted upon and followed up.
Going concern
In the opinion of the Directors, the Company will be in a position to carry on its existing commercial vehicles / engines business and accordingly it is considered appropriate to prepare the financial statements on the basis of going concern.
Maintenance of accounting records and internal controls

The Company has taken proper and sufficient care for the
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Annexure G to Directors Report Certification by Managing Director and Chief Financial Officer to the Board
We, R.Seshasayee, Managing Director and K.Sridharan, Chief Financial Officer of Ashok Leyland Limited, certify that: 1. We have reviewed the financial statements for the year and that to the best of our knowledge and belief: a) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b) These statements give a true and fair view of the state of affairs of the company and of the results of operations and cash flows. The financial statements have been prepared in conformity, in all material respects, with the existing generally accepted accounting principles including Accounting Standards, applicable laws and regulations. 2. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Companys code of conduct. 3. We accept overall responsibility for the Companys internal control system for financial reporting. This is monitored by the Internal Audit function, which encompasses the examination and evaluation of the adequacy and effectiveness. Internal Audit works with all levels of management and statutory auditors, and reports significant issues to the Audit Committee of the Board. The auditors and Audit Committee are appraised of any corrective action taken with regard to significant deficiencies and material weaknesses. 4. We indicate to the auditors and to the Audit Committee: a) Significant changes in internal control over financial reporting during the year; b) Significant changes in accounting policies during the year; c) Instances of significant fraud of which we have become aware of and which involve management or other employees who have significant role in the Companys internal control system over financial reporting. During the year the Company has reckoned employee benefits in accordance with the revised Accounting Standard 15, though not yet mandatory in nature. During the year apart from this there were no other changes or such instances.
R.Seshasayee Managing Director May 4, 2007 Chennai
K.Sridharan Chief Financial Officer
Code of Conduct for the senior management

This is to confirm that for the financial year ended March 31, 2007 all members of the Senior Management have affirmed in writing their adherence to the Code of Conduct adopted by the Company.
R Seshasayee Managing Director May 4, 2007 Chennai
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Auditors Report
To the Members of ASHOK LEYLAND LIMITED 1. We have audited the attached Balance Sheet of ASHOK LEYLAND LIMITED as at March 31, 2007, the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto, signed by us under reference to this report. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with auditing and assurance standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We report that: (iii) the Company has not disposed off substantial part of its fixed assets during the year. 4.2 (i) inventories have been physically verified during the year by the management at reasonable intervals. (ii) the procedures of physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. (i) in the case of the Balance Sheet, of the state of the affairs of the company as at March 31, 2007; in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(ii)
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 4. As required by the Companies (Auditors Report) Order, 2003 issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we further report that: the Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable, and no material discrepancies have been noticed on such verification.
2.
4.1 (i)
(ii)
3.
3.1 we have obtained all the information and explanations, which, to the best of our knowledge and belief, were necessary for the purposes of our audit. 3.2 in our opinion, proper books of account, as required by law, have been maintained by the Company so far as appears from our examination of those books. 3.3 the financial statements dealt with by this report are in agreement with the books of account. 3.4 in our opinion, the aforesaid financial statements comply in all material respects with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India referred to in section 211(3C) of the Companies Act, 1956 (the Act). 3.5 on the basis of written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualified as on March 31, 2007 from being appointed as a director in terms of section 274 (1) (g) of the Act. 3.6 in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read with the Statement on Significant Accounting Policies and Notes to the Accounts, give the information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India: 62
(iii) the Company is maintaining proper records of its inventories and no material discrepancies were noticed on physical verification. 4.3 the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under section 301 of the Act. 4.4 there is an adequate internal control procedure commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. Further, on the basis of our examination of the books and records of the Company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control procedure. 4.5 to the best of our knowledge there are no contracts or arrangements referred to in section 301 of the Act which
need to be entered in the register maintained under the said section. 4.6 the Company has complied with the provisions of section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 with regard to deposits accepted from public. 4.7 the Company has an internal audit system commensurate with its size and nature of its business. 4.8 we have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of commercial vehicles, diesel engines and auto components pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Act and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records. 4.9 (i) the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities during the year. there are no dues of income tax / wealth-tax, service tax, customs duty, which have not been deposited on account of any dispute. Details of dues towards sales tax, excise duty and cess that have not been deposited on account of dispute are as stated below: (Rs. Millions) Amount stayed not included in dues 122.57
4.12 the Company has maintained adequate documents and records where it has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 4.13 the provisions of any special statute applicable to a chit fund, nidhi, mutual benefit fund / societies are not applicable to the Company. 4.14 the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditors report) Order 2003 are not applicable to the Company. 4.15 the terms and conditions of guarantees given during the year by the Company, for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the Company. 4.16 the term loans availed by the Company were prima facie, applied for the purpose for which they were obtained. The loan funds pending application was temporarily deployed as deposits with banks. 4.17 on an overall examination of the financial statements of the Company, funds raised on short-term basis have, prima facie, not been used during the year for long-term investment. 4.18 the Company has not made any preferential allotment of shares during the year to any party. 4.19 the Company has created securities / charges in respect of debentures issued and outstanding. 4.20 the Company has not raised any money by public issues during the year. 4.21 considering the size and nature of the Company's operations, no fraud of material significance on or by the Company has been noticed or reported during the year.
(ii)
Nature of dues Sales Tax
Dues
25.04
Excise Duty and cess
0.89
Forum where the dispute is pending Appellate Deputy/ Additional Commissioner Tribunal Commissioner of Central Excise (Appeals)
14.83
For M.S. Krishnaswami & Rajan Chartered Accountants
For Deloitte Haskins & Sells Chartered Accountants
4.10 the Company does not have any accumulated losses as at March 31, 2007 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year. 4.11 the Company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.
M. K. Rajan Partner Membership No.4059 May 04, 2007 Chennai
R. Raghavan Partner Membership No.9483
63
Balance Sheet
as at March 31, 2007
Schedule SOURCES OF FUNDS Shareholders' funds Capital Reserves and surplus Loan funds Secured loans Unsecured loans Deferred tax liability - net Total APPLICATION OF FUNDS Fixed assets Gross block Less Depreciation Net block Capital work-in-progress Investments Current assets, loans and advances Inventories Sundry debtors Cash and bank balances Loans and advances
2007
(Rs. Millions) 2006
1.1 1.2
1,323.87 17,621.81 18,945.68
1,221.59 12,902.94 14,124.53 1,846.91 5,072.37 6,919.28 1,796.89 22,840.70
1.3 1.4
3,602.16 2,801.82 6,403.98 1,969.29 27,318.95
1.5 26,201.97 13,131.64 13,070.33 2,374.91 1.6 1.7 1.8 1.9 1.10 10,703.21 5,228.75 4,349.39 6,695.79 26,977.14 15,445.24 2,210.94 21,384.99 11,952.28 9,432.71 1,414.17 10,846.88 3,681.78 9,025.61 4,243.37 6,028.76 3,026.39 22,324.13
Less Current liabilities and provisions Liabilities Provisions Net current assets Miscellaneous expenditure (to the extent not written off or adjusted) Total
1.11 16,516.25 1,042.30 17,558.55 1.12 9,418.59 244.18 27,318.95 11,468.95 2,616.21 14,085.16 8,238.97 73.07 22,840.70
Statement on significant accounting policies, Schedules 1.1 to 1.12 and Notes to the Accounts form part of this Balance Sheet. For and on behalf of the Board K. Sridharan Chief Financial Officer N. Sundararajan Executive Director & Company Secretary R. Seshasayee Managing Director R. J. Shahaney Chairman
This is the Balance Sheet referred to in our report of even date. For M. S. Krishnaswami & Rajan Chartered Accountants M.K. Rajan Partner Membership No. 4059 May 04, 2007 Chennai For Deloitte Haskins & Sells Chartered Accountants R. Raghavan Partner Membership No. 9483
64
Profit and Loss Account
for the year ended March 31, 2007
Schedule INCOME Sales Less Excise duty Other income EXPENDITURE Manufacturing and other expenses Depreciation, amortisation and impairment Financial expenses Profit before extraordinary items Extraordinary items Voluntary retirement scheme compensation amortised Profit on sale of undertaking Profit before tax Provision for taxation Current tax Deferred tax Fringe benefit tax Profit after tax Excess provision written back dividend dividend tax Balance profit from last year Transfer from / (to) Debenture redemption reserve General reserve Dividend Interim Proposed final Tax on dividend Balance profit carried to Balance Sheet Earnings per Share (Face value Re.1) Basic (in Rs.) Diluted (in Rs.) Statement on significant accounting policies, Schedules 2.1 to 2.5 and Notes to the Accounts form part of this Profit and Loss Account. 2.3 2.4 2.5 64,654.91 1,505.74 53.32 2.2 2.1 83,047.17 11,365.41
2007
(Rs. Millions) 2006 60,531.08 8,054.51
71,681.76 708.03 72,389.79
52,476.57 329.74 52,806.31 47,075.87 1,260.06 164.53
66,213.97 6,175.82 130.76 6,045.06 1,350.50 230.20 51.50 4,412.86 25.98 3.64 2,303.70 135.00 (1,000.00) 5,881.18 1,985.81 278.51 3,616.86 3.38 3.36
48,500.46 4,305.85 84.51 (301.66) 4,523.00 1,130.50 72.30 47.00 3,273.20 1,784.13 68.33 (1,000.00) 4,125.66 1,597.86 224.10 2,303.70 2.74 2.58
For and on behalf of the Board K. Sridharan Chief Financial Officer N. Sundararajan Executive Director & Company Secretary R. Seshasayee Managing Director R. J. Shahaney Chairman
This is the Profit and Loss Account referred to in our report of even date. For M. S. Krishnaswami & Rajan Chartered Accountants M.K. Rajan Partner Membership No. 4059 May 04, 2007 Chennai For Deloitte Haskins & Sells Chartered Accountants R. Raghavan Partner Membership No. 9483
65
Cash Flow Statement
2007 Cash flow from operating activities Profit before tax Adjustments for: Depreciation, amortisation and impairment Other amortisations Unrealised foreign exchange gains / (losses) Interest expense net of interest capitalisation Interest income Income from investments (Profit)/Loss on disposal of fixed assets / long term investments Diminution in value of investments written back - net Transfer from General Reserve - Employee benefits Profit on sale of undertaking Operating profit before working capital changes Adjustments for changes in : Inventories Debtors Advances Current liabilities and provisions Cash generated from operations Income tax including Fringe benefit tax paid Net cash flow from operating activities before extraordinary expenditure Compensation under Voluntary retirement scheme Net cash flow from operating activities after extraordinary expenditure Cash flow from investing activities Payments for assets acquisition Proceeds on sale of fixed assets Proceeds on sale of undertaking Purchase of long term and other Investments Sale / redemption of long term investments Income from investments Interest Dividend Changes in advances Net cash flow used in investing activities (6,812.87) 108.49 (50.64) 557.64 44.78 129.39 (1,473.70) (7,496.91) (1,677.60) (1,005.76) (1,047.41) 4,102.54 6,685.88 (1,356.00) 5,329.88 (330.37) 4,999.51 1,505.74 164.76 (65.30) 196.46 (160.94) (98.85) (323.15) (168.13) (781.54) 6,314.11 6,045.06
(Rs. Millions) 2006 4,523.00 1,260.06 132.84 102.05 288.33 (193.87) (87.47) (66.61) (301.66) 5,656.67 (3,477.99) (179.55) 314.73 2,051.52 4,365.38 (1,135.68) 3,229.70 (9.53) 3,220.17 (2,646.86) 54.34 620.00 (138.66) 479.68 48.95 56.93 189.77 (1,335.85)
66
Cash Flow Statement
(Contd.)
2007 Cash flow from financing activities Long term borrowings Raised Repaid Changes in short term borrowings Debenture / Loan raising expenses paid Interest paid net Dividend paid and tax thereon Interim dividend and tax thereon Net cash flow from financing activities Net cash inflow / (outflow) Opening cash and cash equivalents Closing cash and cash equivalents Net increase / (decrease) in cash and cash equivalents Notes to the cash flow statement 1 Components of cash and cash equivalents: Cash and bank balances, cash credit excluding those relating to unclaimed dividend Investments in money market instruments Unrealised foreign exchange gains - net 1,953.31 1,160.05 (1.29) 3,112.07 2,162.35 (829.95) (2.47) (167.02) (1,792.34) (2,264.32) (2,893.75) (5,391.15) 8,503.22 3,112.07 (5,391.15)
(Rs. Millions) 2006 186.69 (1,162.88) (76.79) (166.96) (1,356.10) (2,576.04) (691.72) 9,194.94 8,503.22 (691.72)
6,015.53 2,520.34 (32.65) 8,503.22
2 The conversion of Foreign Currency Convertible Notes into equity shares has not been considered in the above statement. Refer Note 8 to the Accounts. 3 Cash flows from Investing activities includes acquisition of 100% ownership interest in Avia Ashok Leyland Motors s.r.o. (subsidiary) of Rs. 0.38 million and disposal of 60% interest therein of Rs. 0.23 million.
For and on behalf of the Board K. Sridharan Chief Financial Officer N. Sundararajan Executive Director & Company Secretary R. Seshasayee Managing Director R. J. Shahaney Chairman
This is the Cash Flow Statement referred to in our report of even date. For M.S. Krishnaswami & Rajan Chartered Accountants M.K. Rajan Partner Membership No. 4059 May 04, 2007 Chennai For Deloitte Haskins & Sells Chartered Accountants R. Raghavan Partner Membership No. 9483
67
Statement on significant accounting policies
1. 1.1 1.2
Accounting convention Financial statements are prepared in accordance with the generally accepted accounting principles including accounting standards in India under historical cost convention except so far as they relate to revaluation of certain land and buildings. Use of estimates The preparation of the financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities and reported amounts of revenues and expenses for the year. Estimates are based on historical experience, where applicable, and other assumptions that management believes are reasonable under the circumstances. Actual results could vary from these estimates and any such differences are dealt with in the period in which the results are known/ materialise. Fixed assets and depreciation / amortisation Cost of all civil works (including electrification and fittings) is capitalised with the exception of alterations and modifications of a capital nature to existing structures where the cost of such alteration or modification is Rs 100,000 and below. Other fixed assets, including intangible assets and assets given on lease, where the cost exceeds Rs. 10,000 and the estimated useful life is two years or more, is capitalised. Cost of initial spares and tools is capitalised along with the respective assets. Cost of fixed assets is net of credits under Cenvat / VAT scheme. Interest and other related costs, including amortised costs of borrowings attributable only to major projects are capitalised as part of the cost of the respective assets. Assets are depreciated / amortised, as below, on straight line basis: a) Leasehold land, over 40 years or the period of the lease, whichever is less; b) c) Leasehold land and buildings subject to revaluation, is calculated on the respective revalued amounts, over the balance useful life as determined by the valuers in the case of buildings and as per (a) above in the case of land; Buildings, plant and machinery (except assets subject matter of impairment) and other assets, including intangible assets and assets given on lease, over their estimated useful lives or lives derived from the rates specified in Schedule XIV to the Companies Act, 1956, whichever is lower; Assets subject to impairment, on the asset's revised carrying amount, over its remaining useful life.
2. 2.1
2.2
d) 2.3
Depreciation/amortisation is charged for the full year on the additions made during the first half of the year and for six months on the additions made during the second half of the year. No depreciation is provided for in respect of assets disposed off during the year. Investments Long term investments are stated at cost less provision for diminution other than temporary, if any. Current investments are valued at lower of cost and market value. Inventories Inventories are valued at lower of cost and net realisable 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.
3.
4. 4.1
4.2 4.3 4.4 5. 5.1
Cost includes taxes and duties and is net of credits under Cenvat / VAT scheme. Cost of patterns and dies is amortised equally over five years. Surplus / obsolete / slow moving inventories are adequately provided for. Foreign currency transactions Foreign currency transactions (including booking / cancellation of forward contracts) are recorded at the rates prevailing on the date of the transaction. Monetary assets and liabilities (including forward contracts) in foreign currency are translated at year end rates. Exchange differences arising on settlement of transactions and translation of monetary items (including forward contracts) are recognised as income or expense. The premium or discount arising on forward contracts is amortised over the life of the contract. Investments in equity capital of companies registered outside India are carried in the Balance Sheet at the rates prevailing on the date of the transaction. Income / expenditure of overseas branches is recognised at the average rate prevailing during the month in which transaction occurred. Amortisation of deferred expenditure Expenditure incurred on issue of debentures / raising loans is amortised over the period of such borrowings. Premium paid on
5.2 5.3 5.4 6.
68
Statement on significant accounting policies
prepayment of any borrowing is amortised over the unexpired period thereof or sixty months, whichever is less. 7. Revenue recognition Revenue from sale of products is recognised on despatch or appropriation of goods in accordance with the terms of sale and is inclusive of excise duty and export incentives, but net of incentive on sales including commission, rebates and discounts. Revenue arising due to price escalation claim is recognised in the period when such claim is made in accordance with terms of sale. Government grants Grants in the form of capital/investment subsidy are treated as Capital Reserve. Incentives in the nature of subsidies given by the Government are reckoned in revenue in the year of eligibility. Intangible items Expenditure on the design and production of prototypes is charged to revenue as incurred.
8.
9.
10. Employee benefits 10.1 Short term employee benefit obligations are estimated and provided for. 10.2 Post employment benefits and other long term employee benefits Defined contribution plans: Companys contribution to provident fund, superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to revenue. Defined benefit plans and compensated absences: Companys liability towards gratuity, other retirement benefits and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognised in revenue. 10.3 Termination benefits Compensation under voluntary retirement scheme is amortised over thirty six months 11. Product warranties Provision for product warranties is made for contractual obligations in accordance with the policy in force and is estimated for the unexpired period. Deferred tax Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax assets are recognised only to the extent there is a virtual certainty of its realisation.
12.
69
Schedules annexed to and forming part of the Balance Sheet
as at March 31, 2007 (Rs. Millions) 2006
2007 Schedule 1.1 CAPITAL Authorised 1,500,000,000 (2006 : 1,500,000,000) Equity shares of Re.1 (2006 :Re.1) each Issued a) 524,598,695 (2006: 524,598,695) Equity shares of Re 1 (2006: Re.1) each b) 341,742,940 (2006: 341,742,940) Equity shares of Re.1 (2006: Re.1) each issued by way of conversion of debentures c) 323,157,240 (2006: 323,157,240) Equity shares of Re.1 (2006: Re.1) each issued through Global Depository Receipts d) 134,576,117 (2006: 32,292,576) Equity shares of Re.1 (2006: Re.1) each issued by way of conversion of Foreign Currency Convertible Notes (FCCN) Subscribed a) 524,394,020 (2006: 524,394,020) Equity shares of Re 1 (2006: Re.1) each b) 341,742,940 (2006: 341,742,940) Equity shares of Re.1 (2006: Re.1) each issued by way of conversion of debentures c) 323,157,240 (2006: 323,157,240) Equity shares of Re.1 (2006: Re.1) each issued through Global Depository Receipts d) 134,576,117 (2006: 32,292,576) Equity shares of Re.1 (2006: Re.1) each issued by way of conversion of Foreign Currency Convertible Notes (FCCN) Add Forfeited shares (Rs.3,800) (2006: Rs.3,800) 1,323.87 1,500.00 524.60 341.74 323.16
1,500.00 524.60 341.74 323.16
134.57 1,324.07 524.40 341.74 323.16
32.29 1,221.79 524.40 341.74 323.16
134.57 1,323.87
32.29 1,221.59 1,221.59
Of the above, 1. 14,788,880 (2006: 14,788,880) Equity shares were allotted under an agreement without payment being received in cash. 2. 62,308,110 (2006: 62,308,110) Equity shares were allotted as fully paid up by way of bonus shares by capitalisation out of General Reserve and from Securities Premium Account. 3. LRLIH Limited, the erstwhile holding company, has become the holding company effective June 21, 2006 consequent to exercising the option to convert their FCCN holding into equity shares and as at end of the year holds 513,618,712 (2006:441,166,680) equity shares of Re.1 (2006: Re.1) each and 5,486,669 Global Depository Receipts equivalent to 164,600,070 (2006: 164,600,070) Equity shares of Re. 1 (2006: Re.1) each. 4. Refer Note 8 to the Accounts for option on unissued shares.
70

2007 Schedule 1.2 RESERVES AND SURPLUS Capital reserve As per last Balance Sheet Revaluation reserve As per last Balance Sheet Less Reduction on reconstruction of building Less Transfer to Profit and Loss Account (Refer Note 3.7 (b) to the Accounts) Securities premium As per last Balance Sheet Add Premium on issue of shares upon conversion of FCCN (Refer Note 8 to the Accounts) Debenture redemption reserve As per last Balance Sheet Less Transfer to Profit and Loss Account General reserve As per last Balance Sheet Add Transfer from Profit and Loss Account Less Adjustment towards provision for liability for employee benefits - net of tax (Refer Note 11 (a) to the Accounts) Profit and Loss account - surplus 8.95 239.45 4.12 5.78 5,647.29 3,068.51 347.50 135.00 4,356.05 1,000.00 8,715.80 229.55
8.95 245.89 6.44 4,678.51 968.78 415.83 68.33 3,356.05 1,000.00 5,647.29 239.45
212.50
347.50
517.90
4,838.15 3,616.86 17,621.81
4,356.05 2,303.70 12,902.94 2006 1,390.00 450.00 6.91 1,846.91
2007 Schedule 1.3 SECURED LOANS Debentures Term loans From banks From financial institutions Cash credit 850.00 1,319.40 1,432.76 3,602.16
1. a) Debentures and term loans from banks aggregating Rs.2,169.40 million (2006: Rs. 1,840.00 million) are secured by a first charge created/ to be created on certain immovable properties and movable assets of the Company. b) Term loans from financial institutions aggregating Rs. Nil (2006: Rs. 6.91 million) are secured by a second charge on certain immovable properties and movable assets of the Company. c) Cash credit facility is secured by a first charge on certain movable assets and goods-in-transit and book debts and also by a charge on the immovable properties subordinate to the existing charge created in favour of the lenders. d) Post shipment credit is secured by deposit of bills of exchange accepted by the customers and in certain cases is also guaranteed by the concerned governments and/or customers' bankers. 2. a) The Company has powers to reissue debentures aggregating Rs.200.00 million (2006: Rs.600.00 million). b) Debentures are to be redeemed at par in single / equal instalments, as stated below: Debenture Series AL 1 AL 2 AL 3 AL 4 AL 5 AL 6 AL 9(A) AL 10 AL 11 2007 266.67 33.33 50.00 500.00 850.00 2006 83.33 33.33 16.67 400.00 6.67 50.00 50.00 250.00 500.00 1,390.00 Dates of Redemption 15 June 2006 15 October 2006 19 December 2006 10 January 2007, 2008 and 2009 15 February 2007 15 February 2007, 2008 and 2009 15 October 2007 20 June 2006 17 September 2008, 2009 and 2010
3. Loans include Rs. 1,632.76 million (2006: Rs.546.91 million) due within 12 months. 71
as at March 31, 2007 (Rs. Millions) 2006 1,623.63 3,448.74 5,072.37 308.33
2007 Schedule 1.4 UNSECURED LOANS Loans and advances From banks Deferred sales tax Foreign Currency Convertible Notes (refer Note 8 to the Accounts) Of the above, amount due within 12 months Loans and advances - Deferred sales tax 1,086.75 1,480.33 234.74 2,801.82 155.96
Schedule 1.5 FIXED ASSETS

Description 01.04.2006 Land Freehold Leasehold Buildings Plant and machinery Furniture, fittings and equipment Vehicles and aircraft Assets given on lease Plant and machinery - windmills Intangible assets Computer software Developed Acquired Technical knowhow-acquired Previous year Capital work-in progress 317.88 146.07 2,483.51 16,229.01 960.86 287.34 337.36 Gross block (Cost/Valuation) Additions 0.71 663.35 2,631.75 257.93 1,118.58 224.85 Deductions 23.28 314.76 7.61 11.82 31.03.2007 318.59 146.07 3,123.58 18,546.00 1,211.18 1,394.10 562.21 Depreciation/ Impairment Upto 31.03.2007 53.67 980.87 10,440.68 810.27 276.77 60.74 Net Block 31.03.2007 318.59 92.40 2,142.71 8,105.32 400.91 1,117.33 501.47 31.03.2006 317.88 96.12 1,568.15 6,555.79 256.25 76.14 315.25
247.63 220.49 154.84 21,384.99 20,022.50
0.51 29.93 246.84 5,174.45 1,863.70
357.47 501.21
248.14 250.42 401.68 26,201.97 21,384.99
204.19 165.01 139.44 13,131.64 11,952.28
43.95 85.41 262.24 13,070.33 2,374.91 15,445.24
75.73 94.17 77.23 9,432.71 1,414.17 10,846.88
1. Certain Freehold and Leasehold land and buildings were revalued as at December 31, 1984. 2. A portion of buildings in Bhandara {estimated gross value Rs. 7.20 million (2006: Rs.7.20 million)} is on a land, title for which is yet to be transferred to the Company. 3. Cost / Valuation of Buildings as at March 31, 2007 includes: a) b) Rs.0.34 million (2006: Rs.0.34 million) being cost of shares in Housing Co-operative Society representing ownership rights in residential flats and furniture and fittings there at. Rs.13.24 million (2006: Rs.13.24 million) representing cost of residential flats including undivided interest in land.
4. Depreciation / impairment upto March 31, 2007 includes amortisation of cost / value of leasehold land. 5. Cost of additions and capital work-in-progress includes interest and other costs capitalised for the year Rs. 29.83 million (2006: Rs.Nil).
72

Schedule 1.6 INVESTMENTS I. Current investments - other than trade 1) Mutual Fund Units of Rs.10 each Birla fixed term plan- series A - growth UTI fixed maturity plan - (quarterly / 0306/ 1) dividend plan HSBC fixed term series - 8- growth Kotak FMP series 23- dividend HDFC FMP 3M March 2006 (1) institutional plan - dividend LIC MF FMP series 6-3 months dividend plan Chola FMP series 3 (qtly plan -1) dividend 2) Non convertible redeemable bonds of Rs. 1million each IndusInd Bank Limited ICICI Bank Limited 3) Equity shares of Rs.10 each IndusInd Bank Limited II. Long term investments A) Trade 1) Equity Shares of Rs. 10 each Automotive Coaches and Components Limited Ennore Foundries Limited Irizar - TVS Limited Arkay Energy (Rameswarm) Limited 2) Equity Shares of Rs.100 each Ashley Transport Services Limited Gulf Ashley Motor Limited 3) Equity shares of Srilankan Rs. 10 each Lanka Ashok Leyland Limited 4) 6 % Cumulative Non-Convertible Redeemable Preference shares of Rs. 100 each Ennore Foundries Limited 5) Ownership interest in share capital in Czech Koruna Avia Ashok Leyland Motors s.r.o. - ownership interest 6) Equity shares of UAE Dhirams of 1000 each Ashok Leyland (UAE) LLC B) Other than trade 1) Equity shares of Rs. 10 each Ashley Holdings Limited Ashley Investments Limited Ashok Leyland Project Services Limited Chennai Willingdon Corporate Foundation (Cost Rs. 900) Hinduja HCL Sing Tel Communications Private Limited (Cost Rs. 100) Hinduja TMT Limited ICICI Bank Limited IndusInd Bank Limited 2) Equity shares of Rs. 100 each, partly paid-up Adyar Property Holding Co. Limited (Rs. 65 paid up) 3) 2 % Non-Cumulative Non-Convertible Redeemable Preference shares of Rs. 10 each Ashley Holdings Limited Ashley Investments Limited Less Provision for diminution in value 2007 Nos Rs. Millions
as at March 31, 2007 2006 Nos Rs. Millions
1,140 20
1,140.00 20.05
20,000,000 20,000,000 15,000,000 5,000,000 20,000,000 25,000,000 5,000,000 1,400 20 8,361,803
200.00 200.00 150.00 50.00 200.00 250.00 50.00 1,400.00 20.34 147.38
1,410,664 3,424,449 1,400,000 600,000 300,000 354,000 1,008,332
11.23 143.06 14.00 6.00 30.00 35.40 5.75
1,410,664 3,424,449 1,400,000 600,000 400,000 354,000 1,008,332
11.23 143.06 14.00 6.00 40.00 35.40 5.75
2,500,000 40% 2,450
250.00 0.15 30.26
2,500,000
250.00
750,000 750,000 3,442,400 100 4,058 24,231 29,031,764 400
7.50 7.50 34.42
750,000 750,000 1,442,400 100 10 4,058 24,231 29,070,185 400
7.50 7.50 14.42
0.81 1.05 511.67 0.03
0.81 1.05 512.38 0.03
2,248.88 37.94 2,210.94
8,430,000 8,670,000
84.30 86.70 3,887.85 206.07 3,681.78
73
2007 Schedule 1.6 INVESTMENTS (Contd.) 1. Investments are fully paid-up unless otherwise stated. 2. Quoted Investments Cost Market value Unquoted Investments Cost 1,816.65 2,813.85 432.23
3,325.03 4,698.02 562.82
3. The shares in the following companies can be disposed of/encumbered only with the consent of Banks / Financial Institutions who have given loans to / subscribed to the Debentures of those companies: a) Automotive Coaches and Components Limited b) Ennore Foundries Limited 4. Purchase and sales/redemption of investments during the year are as under: Acquisition Nos. Cost (Rs. Millions) 577,000,230 144,149,602 29,954,756 825,051 1,999,296 257,226,216 79,416,649 163,577,663 41,206,443 145,996,315 625,155,649 972,925,797 605,089,441 326,317,565 49,856,255 37,308,422 80,159,081 4,728,249 44,119,884 7 2,450 2,000,000 100% 5,781.82 1,445.19 300.13 825.22 1,999.80 2,735.25 794.61 1,636.41 412.74 1,785.26 6,863.48 9,729.94 6,050.89 3,340.51 500.18 3,476.25 809.23 4,845.59 3,352.10 Disposals Nos. Cost (Rs. Millions) 597,000,230 149,149,602 29,954,756 825,051 1,999,296 277,226,216 94,416,649 163,577,663 41,206,443 150,996,315 650,155,649 972,925,797 605,089,441 326,317,565 49,856,255 37,308,422 80,159,081 4,728,249 64,119,884 260 100,007 60% 10 8,400,224 8,430,000 8,670,000 5,981.82 1,495.19 300.13 825.22 1,999.80 2,935.25 944.61 1,636.41 412.74 1,835.26 7,113.48 9,729.94 6,050.89 3,340.51 500.18 3,476.25 809.23 4,845.59 3,552.10 260.00 10.00 0.23
Description a) Units in schemes of various funds Birla Sunlife Mutual Fund Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund JM Financial Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Principal Mutual Fund Prudential ICICI Mutual Fund Reliance Mutual Fund SBI Mutual Fund Standard Chartered Mutual Fund Sundaram Mutual Fund Tata Mutual Fund UTI Mutual Fund b) Redeemable bonds IndusInd Bank Limited c) Equity Shares Ashley Transport Services Limited (cost Rs. 315) Ashok Leyland (UAE) LLC Ashok Leyland Project Services Limited Avia Ashok Leyland Motors s.r.o. - ownership interest Hinduja HCL Sing Tel Communications Private Limited (cost Rs. 100) IndusInd Bank Limited d) Preference Shares Ashley Holdings Limited Ashley Investments Limited
30.26 20.00 0.38
148.09 84.30 86.70
74
as at March 31, 2007 (Rs. Millions) 2006 233.26 133.06 2,728.32 1,437.30 4,493.67 9,025.61
2007 Schedule 1.7 INVENTORIES Stores and spares Consumable tools Raw materials and components (including patterns and dies) Work-in-progress Finished/Trading goods 279.17 149.88 3,853.39 1,095.07 5,325.70 10,703.21
Schedule 1.8 SUNDRY DEBTORS Trade Others Less Provision Of the above, 1 Unsecured Considered good Considered doubtful 2 Age analysis of debts Outstanding for more than six months (includes deferred receivables Rs. 1.16 million (2006:Rs.2.38 million)) Other debts 3 Debtors include Bills receivable Schedule 1.9 CASH AND BANK BALANCES Cash and stamps on hand Cheques on hand and remittances in transit Balances with scheduled banks Current account Deposit account Balances with other banks Current account Deposit account Balances with other banks Current account ABSA Bank - South Africa - Denominated in South African Rand Citibank New York - Denominated in US$ HSBC - Egypt Denominated in US $ Indian Oceanic International Bank - Mauritius Denominated in Mauritius Rupees National Bank of Sharjah - Sharjah - Denominated in Dirham National Bank of Sharjah - Sharjah - Denominated in US$ Standard Chartered Bank - Ghana - Denominated in Ghana Cedis Standard Chartered Bank - Ghana - Denominated in US$ State Bank of Bangladesh - Bangladesh Denominated in Taka Deposit account Standard Chartered Bank - Ghana - Denominated in Ghana Cedis Maximum balance at any time during the year Current account ABSA Bank - South Africa - Denominated in South African Rand Citibank New York - Denominated in US$ HSBC - Egypt Denominated in US $ Indian Oceanic International Bank - Denominated in Mauritius Rupees National Bank of Sharjah - Sharjah - Denominated in Dirham National Bank of Sharjah - Sharjah - Denominated in US$ Standard Chartered Bank - Ghana - Denominated in Ghana Cedis Standard Chartered Bank - Ghana - Denominated in US$ State Bank of Bangladesh - Bangladesh Denominated in Taka Deposit account Standard Chartered Bank - Ghana - Denominated in Ghana Cedis
5,194.43 85.22 5,279.65 50.90 5,228.75 5,228.75 50.90 696.04 4,583.61 1,414.49
4,139.65 150.19 4,289.84 46.47 4,243.37 4,243.37 46.47 156.49 4,133.35 455.06
4.05 1.37 867.18 3,450.74 12.86 13.19 4,349.39
2.37 14.06 1,633.44 4,355.60 9.91 13.38 6,028.76
4.16 0.03 0.06 4.65 0.23 2.60 0.39 0.74 13.19
1.35 0.04 7.85 0.42 0.25 13.38
7.60 0.04 0.48 4.65 7.85 6.97 0.40 0.11 2.68 13.38
17.51 0.04 7.85 61.97 0.94 0.01 13.38 75
as at March 31, 2007 (Rs. Millions) 2006 2,310.61 260.78 602.26 3,173.65 147.26 3,026.39 144.00 2,882.39 147.26 0.63 1.95 568.99
2007 Schedule 1.10 LOANS AND ADVANCES Advances recoverable in cash or in kind or for value to be received Balances with customs, port trust, central excise, etc. Other receivables Less Provision Of the above, 1. Secured Considered good 2. Unsecured Considered good Considered doubtful 3. Due from Directors/Officers At the end of the year Maximum amount due at any time during the year 4. Advances for capital items and investments 5,718.07 617.37 507.61 6,843.05 147.26 6,695.79 6,695.79 147.26 0.94 1.30 1,702.13
Schedule 1.11 CURRENT LIABILITIES AND PROVISIONS Liabilities Acceptances Creditors for materials and expenses Small scale industrial undertakings Others Other liabilities Interest accrued but not due on loans Provisions Provision for current income tax - net Provision for fringe benefit tax Proposed dividend Tax on proposed dividend Product warranties Employee benefits 4,199.76 347.79 9,789.33 2,127.30 52.07 16,516.25 124.56 1.30 357.29 559.15 1,042.30 17,558.55 3,539.72 557.80 6,362.01 951.13 58.29 11,468.95 285.69 1,597.86 224.10 273.91 234.65 2,616.21 14,085.16
Of the above, 1. Provision made during the year Product warranties Employee benefits 2. Other liabilities include Unclaimed matured fixed deposit and interest accrued thereon Unclaimed dividends Unclaimed debenture interest 3. Creditors for materials and expenses include Provision for gratuity 4. Provision for employee benefits relates to Compensated absences Other defined benefits plans
83.38 324.50 0.47 963.32 1.53 212.03 482.26 76.89
25.53 54.31 0.82 13.23 4.07 199.64 172.03 62.62
Schedule 1.12 MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted) Debenture issue / loan raising expenses Premium on prepayment of borrowings Compensation under voluntary retirement scheme 2.57 11.85 229.76 244.18 0.37 42.55 30.15 73.07
76
Schedules annexed to and forming part of the Profit and Loss Account
for the year ended March 31, 2007 Unit of Measurement Schedule 2.1 SALES Commercial vehicles Engines Spare parts and others Less Commission, rebate and discounts Nos Nos 83,094 8,202 77,760.03 1,525.77 5,468.41 84,754.21 1,707.04 83,047.17 61,655 7,171 52,508.74 1,357.51 7,837.83 61,704.08 1,173.00 60,531.08 2007 Volume Rs. Millions 2006 Volume Rs. Millions
(Rs. Millions) 2007 Schedule 2.2 OTHER INCOME Income from current investments Dividend Interest Income from long term investments Dividend Trade Others Lease Rent Profit on disposal of fixed assets - net Profit/ (loss) on disposal of investments - net Current Long term Miscellaneous income Of the above, Tax deducted at source from income on: Trade investments Others 65.53 110.34 175.87 96.82 2.03 98.85 36.60 90.33 255.05 (4.41) 250.64 55.74 708.03 54.70 23.40 78.10 47.68 329.74 34.91 52.56 87.47 43.21 39.77 33.51 73.28 2006
0.45 25.70
0.44 7.99
77
for the year ended March 31, 2007 (Rs. Millions) 2007 Schedule 2.3 MANUFACTURING AND OTHER EXPENSES 54,081.14 385.10 53,696.04 1,241.79 4,442.28 534.74 611.47 5,588.49 781.54 454.35 378.88 131.50 416.97 112.56 275.95 60.56 3,250.43 294.85 (168.13) 8.16 5,216.08 D Movement in value of stock of finished/ trading goods and work-in-progress Opening stock Closing stock (Increase)/ Decrease Excise duty in value of finished/ trading goods Increase/ (Decrease) E Less Expenses capitalised 4,806.95 3,088.90 474.23 475.74 4,038.87 414.06 342.28 120.89 332.86 119.40 306.92 65.46 2,452.09 197.35 8.08 4,359.39 4,038.87 40,645.83 301.33 40,344.50 991.72 A Materials Consumption of raw materials and components-net Less Scrap sales Purchase of trading goods B Employees' remuneration and benefits Salaries, wages and bonus Contribution to provident, gratuity and other funds Welfare expenses Less Transfer from General Reserve (Refer Note 11 (a) to the Accounts) C Other expenses Power and fuel Consumption of stores and tools Repairs and maintenance Buildings Machinery Rent Rates and taxes Insurance Selling and administration expenses - net Research and development Provision for diminution in value of investments written back - net Bad and doubtful debts/advances provided/ written-off - Net of recovery/write back 2006
5,930.97 6,420.77 (489.80) 185.10 64,656.16 1.25 64,654.91
2,924.93 5,930.97 (3,006.04) 351.53 47,079.97 4.10 47,075.87
1. Rent includes amortisation of cost/value of leasehold assets as reduced by transfer from Revaluation reserve (Refer Note 3.7(b) to the Accounts) 2. Selling and administration expenses include Directors' sitting fees
3.03 2.08
3.06 1.90
78
for the year ended March 31, 2007 (Rs. Millions) 2007 Schedule 2.4 DEPRECIATION, AMORTISATION AND IMPAIRMENT Buildings Plant and machinery Furniture, fittings and equipment Vehicles and aircraft Assets given on lease Plant and machinery - windmills Intangible assets Computer software Developed Acquired Technical knowhow - Acquired Less Transfer from Revaluation Reserve (Refer Note 3.7(b) to the Accounts) Of the above, Impairment of Plant and machinery 85.28 1,064.83 112.32 76.97 38.63 75.51 930.87 88.74 41.87 22.11 2006
32.29 38.68 61.83 1,510.83 5.09 1,505.74 16.97
39.59 38.46 28.66 1,265.81 5.75 1,260.06 11.73
(Rs. Millions) 2007 Schedule 2.5 FINANCIAL EXPENSES Interest Others Less Premium (net) / Interest earned on bills receivable, deposits and other accounts Cash discounts earned Interest capitalised 226.29 91.91 318.20 160.94 74.11 29.83 264.88 53.32 Of 1. 2. 3. the above, Debenture issue / loan raising expenses amortised Premium on prepayment of borrowings amortised Tax deducted at source from interest earned 0.27 30.70 18.32 216.61 25.34 241.95 164.53 1.44 43.83 26.00 311.07 95.41 406.48 2006
79
Notes to the Accounts
Unit of Measurement 1. Information regarding goods manufactured, imports and foreign currency transactions 1.1 Installed Capacities - Two Shifts (as certified by the Managing director) Commercial vehicles 1.2 Production Commercial vehicles Engines @ @ Engines manufactured against spare capacity of commercial vehicles 1.3 Finished / trading goods and work-in-progress Opening stock Commercial vehicles Engines Parts for sale Bought out finished Works made Work-in-progress Closing stock Commercial vehicles Engines Parts for sale Bought out finished Works made Work-in-progress Capitalised/ transferred for internal and other use Commercial vehicles Engines 1.4 Consumption of raw materials and components Plates, sheets and angles Bars Steel tubes Tyres, tubes and flaps Forgings and castings Finished and other items Of the above Imported items Indigenous items 1.5 Imports (C.I.F.) Raw materials Trading goods and others Spares and tools Capital goods
2007
2006
Nos. Nos. Nos.
84,000 83,549 8,294
77,200 65,085 7,190
Rs. Millions Nos. Nos. 5,652 222 3,752.77 35.31 508.46 197.13 1,437.30 Nos. Nos. 6,076 303 4,415.96 46.31 609.75 253.68 1,095.07 5,652 222 2,393 213
Rs. Millions 1,429.48 30.81 432.58 199.81 832.25 3,752.77 35.31 508.46 197.13 1,437.30
Nos. Nos.
31 11
171 10
Tonnes Tonnes Metres Sets
66,981 386 2,807 755,713
1,930.93 18.51 0.65 5,247.29 5,397.40 41,486.36 54,081.14 1,815.29 3.36% 52,265.85 96.64% 1,370.07 14.03 61.56 2,435.24 3,880.90
35,642 394 2,749 564,228
1,099.67 20.16 1.19 3,261.11 4,749.00 31,514.70 40,645.83 1,057.73 2.60% 39,588.10 97.40% 679.82 7.73 51.20 718.67 1,457.42
80
(Rs. Millions) 2007 1.6 Expenditure remitted in foreign currency Royalty Technical knowhow Interest and commitment charges Commission paid on sales Research and development Travel Other expenses 1.7 Earnings in foreign currency Export - FOB value Interest Others (Freight, insurance, dividend and commission earned) 1.8 Dividend remitted in foreign currency Number of non-resident shareholders Number of shares on which dividend was remitted Dividend remitted during the year relating to previous year 2. Information regarding managerial remuneration 2.1 Remuneration to Managing Director Salary Commission Perquisites Perquisites include amounts evaluated as per Income tax Rules in respect of certain items. 2.2 Computation of net profits under section 198 / 349 of the Companies Act, 1956 Profit before tax Add Depreciation/ impairment as per books Directors' remuneration Amortisation of expenses relating to raising/ repayment of loans Deduct Depreciation as per section 350 of the Act Capital profit on sale of undertaking Capital profit on sale of fixed assets and investments Expenses relating to raising/ repayment of loans Reversal of provision for dimunition in value of investments net Net Profit The total remuneration as stated in 2.1 above is within the maximum permissible limit under the Act. 3. Other Financial Information 3.1 Capital commitments (net of advances) not provided for (including Rs.582.13 million (2006 : Rs 161.78 Million) in respect of Intangible assets) 16.12 257.57 9.14 605.03 107.91 51.03 249.26 1,296.06 6,292.15 63.77 226.62 6,582.54 1 441,166,680 529.40 1 441,166,680 441.17 2006 25.02 80.39 22.89 367.85 84.13 26.65 174.55 781.48 4,513.05 0.12 210.62 4,723.79
7.80 5.20 7.21 20.21
6.48 4.32 3.08 13.88
6,045.06 1,505.74 22.29 30.97 7,604.06 1,490.62 269.65 2.47 168.13 5,673.18
4,523.00 1,260.06 15.78 45.27 5,844.11 1,244.96 125.11 85.78 4,388.26
3,281.57
2,326.89
81
for the year ended March 31, 2007 (Rs. Millions) 2007 2006 114.62 0.01 63.56 6,957.82 132.11 80.83
3.2 Contingent liabilities a) Guarantees b) Partly paid shares c) Claims against the Company not acknowledged as debts - Sales tax - Others d) Bills discounted 3.3 Interest charge on a) Debentures b) Fixed loans 3.4 Auditors' remuneration a) Included under Selling and administration expenses For financial audit For cost audit For taxation matters For company law matters For other matters Expenses reimbursed 3.5 Total Research and development costs charged to the Profit and Loss Account (including amount shown under Schedule 2.3) 3.6 a) Net exchange difference debited / (credited) to Profit and Loss Account b) Of the above, unrealised gains/loss debited/ (credited) to Profit and Loss Account c) Income deferred to be recognised in subsequent accounting periods in respect of forward contracts
66.65 0.01 15.18 125.44 7,806.01 88.81 52.41
2.40 0.12 0.50 0.14 2.87 1.34 791.30 (70.26) (29.97) 2.13
2.40 0.12 0.81 0.07 1.92 0.20 627.79 84.56 35.33 2.37
3.7 a) In respect of the following fixed assets useful lives lower than those derived from the rates specified in Schedule XIV to the Companies Act, 1956 have been reckoned in computing depreciation / amortisation for the year. Useful lives Buildings Revalued buildings are depreciated over the balance useful life as determined by the valuers. Plant and machinery Assets subjected to impairment - revised carrying amount over its remaining useful life Windmills 12 Furniture and fittings and equipment Furniture and fittings 8 Office equipment 8 Data processing system 5 Vehicles Cars and motorcycles 3 Trucks and buses 5 Intangible assets Computer software Developed 5 Acquired 5 Technical knowhow - acquired 5/6 b) Depreciation for the year computed on revalued assets over the balance useful life on straight line method includes a net charge of Rs.5.78 million (2006 : Rs. 6.44 million) [Rs.0.69 million (2006 : Rs. 0.69 million) in Schedule 2.3 and Rs. 5.09 million (2006 : Rs. 5.75 million) in Schedule 2.4] being the excess over the depreciation computed by the method followed by the Company prior to revaluation and the same has been transferred from Revaluation Reserve to the Profit and Loss Account.
82
2007 4. Earnings per share a) Basic earnings per share Profit after taxation as per Profit and Loss account (in Rs. million) Weighted average number of equity shares outstanding Basic earnings per share (Face value Re. 1) (in Rs.) Profit before extraordinary items net of tax (in Rs. million) Basic earnings per share (Face value Re. 1) excluding extraordinary items net of tax (in Rs.) b) Diluted earnings per share Profit after taxation as per Profit and Loss account (in Rs. million) Add Interest and other costs net of tax Adjusted profits (in Rs. million) Weighted average number of potential equity shares on conversion of FCCN Weighted average number of equity shares Diluted earnings per share (Face value Re.1) (in Rs.) Diluted earnings per share (Face value Re. 1) excluding extraordinary items net of tax (in Rs.) 5. Composition of net deferred tax liability Deferred tax liabilities Depreciation/ Research and development expenditure Other timing differences Deferred tax assets Voluntary retirement scheme compensation Unabsorbed capital losses Other timing differences
2006
(A) (B) (A/B) (C) (C/B)
4,412.86 1,303,890,649 3.38 4,499.61 3.45 4,412.86 (5.28) 4,407.58 7,938,000 1,311,828,649 3.36 3.43
3,273.20 1,192,925,337 2.74 3,095.30 2.59 3,273.20 94.73 3,367.93 109,965,484 1,302,890,820 2.58 2.45 (Rs. Millions) 1,858.28 14.71 (31.53) (44.57) 1,796.89
(D) (E) (F = B+E) (D/F)
2,138.48 4.98 (35.13) (139.03) 1,969.29
6. Segment information The company is principally engaged in a single business segment viz., Commercial vehicles and related components and operates in one geographical segment as per Accounting standard 17 on Segment Reporting issued by the Institute of Chartered Accountants of India. 7. Related party disclosure a) List of parties where control exists Holding company (from June 21, 2006) LRLIH Limited, United Kingdom (refer Note in Schedule 1.1) Machen-Iveco Holdings SA (Holding Company of LRLIH Limited) Machen Development Corporation, Panama (Holding Company of Machen-Iveco Holdings SA) Amas Holdings SA (Holding Company of Machen Development Corporation) Fellow subsidiary (from June 21, 2006) Ennore Foundries Limited b) Other related parties with whom transactions have taken place during the year Associates Ashley Holdings Limited Ashley Investments Limited Ashley Transport Services Limited Ashok Leyland Project Services Limited Ashok Leyland (UAE) LLC, Ras Al Khaimah, UAE Automotive Coaches and Components Limited Avia Ashok Leyland Motors s.r.o, Czech Republic Gulf Ashley Motor Limited Irizar TVS Limited Lanka Ashok Leyland Limited, Sri Lanka Key management personnel Mr. R Seshasayee, Managing Director
83
for the year ended March 31, 2007 (Rs. Millions) 2007 2006
(c) Transactions with related parties (i) Purchase of raw materials and components Ennore Foundries Limited Automotive Coaches and Components Limited Irizar TVS Limited Other associate companies (ii) Sales Lanka Ashok Leyland Limited Gulf Ashley Motor Limited (iii) Other expenditure Associate companies Reimbursement of expenses - Associate companies LRLIH Limited (iv) Interest and other income Avia Ashok Leyland Motors s.r.o. Other associate companies (v) Dividend income Ennore Foundries Limited Lanka Ashok Leyland Limited Other associate companies (vi) Dividend LRLIH Limited (vii) Remuneration to key management personnel Refer 2.1 of Notes to the Accounts (viii) Sale of fixed assets Ennore Foundries Limited (ix) Acquisition/ disposal of investments Ennore Foundries Limited Associate companies (Refer Note 4 in Schedule 1.6) (x) Sale of undertaking Ennore Foundries Limited (xi) Outstanding balances (excluding application money for investments) Debtors Ennore Foundries Limited Associate companies Loans and advances Avia Ashok Leyland Motors s.r.o Other associate companies Machen Development Corporation Key management personnel Creditors for materials and expenses Ennore Foundries Limited Other associate companies Key management personnel Financial guarantees Ennore Foundries Limited Automotive Coaches and Components Limited
2,743.15 992.02 477.68 5.41 1,228.49 549.03 73.28 (2.01) 0.92 39.78 14.77 92.31 4.51 1.71 1,191.15 7.79 (130.59)
2,199.35 923.80 283.58 1,306.04 760.90 42.51 (1.34) 11.31 2.91 30.54 4.37 441.17 0.47 119.86 12.80 620.00
56.58 1,582.96 89.50 206.56 0.31 204.39 52.33 5.20 66.50
30.54 19.21 121.43 206.56 0.37 157.58 4.73 43.11 66.50
84
for the year ended March 31, 2007 (Rs. Millions) 2007 2006 16.20 17.80 29.00 28.00
(xii) Advances to associate companies in the nature of loan included in (xi) above Ashley Holdings Limited Ashley Investments Limited Ashok Leyland (UAE) LLC Avia Ashok Leyland Motors s.r.o Maximum loan outstanding during the year from associate companies Ashley Holdings Limited Ashley Investments Limited Ashok Leyland Project Services Limited Ashok Leyland (UAE) LLC Avia Ashok Leyland Motors s.r.o
6.43 1,582.96 16.20 17.80 10.00 6.43 1,582.96
8. The company raised US$ 100 million (Notes of US $ 1000 each) during April 2004 by way of Foreign Currency Convertible Notes (FCCN) bearing interest rate of 0.5% per annum. During the year 102,283,541 Equity shares (2006 : 32,292,576) were allotted consequent to conversion of 71,900 (2006 : 22,700) FCCN aggregating to US$ 71.90 million (2006 : US$ 22.70 million). Upon declaration of interim dividend on March 21, 2007 the conversion price has been reset at Rs. 30.00. Note holders have an option to convert each note into 1470 shares of Re.1 each or such number of shares of Re.1 each as per terms of issue. The balance notes unless previously converted, redeemed or repurchased and cancelled, will be redeemed on April 30, 2009 at 100% of their principal value. 9. The company has entered into operating lease arrangements with various parties during the year, for leasing out windmills. Ashok Leyland Project Services Limited, an associate company, through its wind energy division, operates and maintains these assets and has guaranteed the following minimum lease rentals: (Rs. Millions) 2007 (a) (b) (c) (d) Receivable Receivable Receivable Receivable within one year from the end of the year between one year and five years after five years during the year 55.00 255.00 285.00 36.60 2006 70.80 283.20 212.40
10. Derivatives The Company uses derivative financial instruments such as forward contracts, currency swap to hedge certain currency exposures, present and anticipated, denominated mostly in US dollars, EURO, Japanese YEN and Great Britain Pounds. Generally such contracts are taken for exposures materialising in the next six months. The company actively manages its currency/interest rate exposures through a centralised treasury setup and uses derivatives to mitigate the risk from such exposures. The information on derivative instruments are as follows: a) Derivative instruments outstandings:
(Millions) Details Foreign Exchange Contracts USD/INR USD/INR EUR/USD GBP/USD USD/JPY Currency Swaps USD/JPY Buy/ Sell Amount in foreign currency 2007 Sold Bought Bought Bought Sold Bought $31.89 $10.07 2.62 0.50 $ 2.91 $20.00 2006 $17.22 2.02 $2.16
85
b) Foreign currency exposure not hedged by derivative instrument Details Amount (foreign currency in millions) 2007 Amount receivable on account of sale of goods, loans, deposits, etc. Amount payable on account of purchase of goods, loans, interest, etc. $68.03 Others $97.55 39.70 839.70 2.61 Others 2006 $71.03 Others $80.72 14.15 668.55 0.86 Others Amount Rs. in millions 2007 2,957.26 37.93 4,240.50 2,297.44 309.41 222.13 7.01 2006 3,169.00 3,601.32 764.17 253.50 66.65
11. Employee Benefits a) The company has determined the liability for Employee benefits as at March 31, 2007 in accordance with the revised Accounting Standard 15 Employee benefits issued by ICAI and adjusted Rs. 517.90 million (net of tax of Rs. 263.64 million) relating to the period upto March 31, 2006 from the opening General Reserve, in terms of the said Standard. b) Defined benefit plans - As per Actuarial valuation on March 31, 2007 Gratuity A Expense recognised in the statement of Profit & Loss Account for the year ended March 31, 2007 1 Current service cost 2 Interest cost 3 Expected return on plan assets 4 Net actuarial (gain) / loss recognised during the year 5 Total expense Actual return on plan assets 1 Expected return on plan assets 2 Actuarial gain/ (loss) on plan assets 3 Actual return on plan assets Net Asset/ (Liability) recognised in the Balance Sheet 1 Present value of the obligation 2 Fair value of plan assets 3 Funded status [surplus/ (deficit)] 4 Unrecognised past service cost 5 Net Asset/ (Liability) recognised in the Balance Sheet Change in Present value of the Obligation during the year ended March 31, 2007 1 Present value of obligation as at April 1, 2006 2 Current service cost 3 Interest cost 4 Benefits paid 5 Actuarial (gain) / loss on obligation 6 Present value of obligation as at March 31, 2007 Change in Assets during the year ended March 31, 2007 1 Fair value of plan assets as at April 1, 2006 2 Expected return on plan assets 3 Contributions made 4 Benefits paid 5 Actuarial gain / (loss) on plan assets 6 Fair value of plan assets as at March 31, 2007 Compensated absences (Rs. Millions) Other defined benefits plans
77.02 77.84 (69.54) 126.71 212.03 69.54 20.49 90.03 1,282.38 1,070.35 (212.03) (212.03)
57.23 32.80 0.60 90.63 482.26 (482.26) (482.26)
14.25 4.55 7.03 25.83 76.89 (76.89) (76.89)
1,074.15 77.02 77.84 93.83 147.20 1,282.38 874.16 69.54 199.99 93.83 20.49 1,070.35
428.49 57.23 32.80 36.86 0.60 482.26
62.62 14.25 4.55 11.56 7.03 76.89
86
Gratuity F Major categories of plan assets as a percentage of total plan 100% Qualifying insurance policy
Compensated absences Unfunded
Other defined benefits plans Unfunded
Actuarial Assumptions 1 Discount rate 2 Expected rate of return on plan assets 3 Mortality rate 4 Future salary increases consider inflation, promotion, seniority and other relevant factors.
7.5% 7.5% LIC (1994-96) Table
c)
Gratuity is administered through Group gratuity scheme with Life Insurance Corporation of India. The expected return on plan assets is based on market expectation at the beginning of the year, for the returns over the entire life of the related obligation. During the year the Company has recognised the following amounts in the Profit and Loss Account in Schedule 2.3 B: Salaries and wages includes compensated absences Rs. 90.63 million and other defined employee benefits Rs. 0.40 million. Contribution to provident, gratuity and other funds includes Provident fund and family pension Rs. 226.65 million, super annuation fund Rs. 54.05 million, gratuity fund Rs. 212.03 million and other funds Rs. 42.01 million. Welfare expenses includes contribution to employee state insurance plan Rs. 2.17 million and other defined employee benefits Rs. 25.43 million.
d)
e)
This being the first year in which the company has adopted the Revised Accounting Standard 15 on Employee benefits, comparatives have not been included.
12. The Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at the year end together with interest paid / payable as required under the said Act have not been furnished. 13. Figures for the previous year have been regrouped / amended wherever necessary.
Signatures to Statement of Significant Accounting Policies, Schedules and Notes to the Accounts. For and on behalf of the Board
K. Sridharan Chief Financial Officer
N. Sundararajan Executive Director & Company Secretary
R. Seshasayee Managing Director
R. J. Shahaney Chairman
May 04, 2007 Chennai
87
Balance Sheet Abstract

I. Registration Details Registration No. Balance Sheet Date 3
Date
and Companys General Business Profile
0 1 0 3
0 2
0 0
0 0
5 7
State Code
Month
Year
II.
Capital Raised during the year (Amount in Rs. Thousands) (See note below) Public Issue Bonus Issue N N I I L L Rights Issue Private Placement N N I I L L
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands) Total Liabilities Sources of Funds Paid-up Capital Secured Loans Deferred Tax Liability Application of Funds Net Fixed Assets Net Current Assets Accumulated Losses 1 5 9 4 4 4 1 5 8 2 5 N 3 9 I 6 4 L Investments Misc. Expenditure 2 2 2 1 4 0 4 9 1 4 7 4 8 1 3 1 3 6 9 2 0 6 3 2 9 8 1 2 7 6 9 0 0 4 Reserves & Surplus Unsecured Loans 1 7 2 6 8 2 0 1 1 8 8 0 1 9 9 4 4 8 7 7 4 9 8 Total Assets 4 4 8 7 7 4 9 8
IV. Performance of Company (Amount in Rs. Thousands) Turnover Profit/Loss before Tax
Earnings Per Share in Rs.
+ +
2 6
3 0
8 4
9 5 3
7 0 .
8 5 3
6 6 8
Total Expenditure + Profit/ Loss after Tax + Dividend Rate%
6 4
3 4
4 1
4 2
7 8 1
3 5 5
0 6 0
V.
Generic Names of Three Principal Products of Company Item Code No. (ITC Code) 8 8 8 7 4 7 0 0 0 6 8 8 0 9 0 0 0 0 4 1 0 2 0 0 Product Description C O M M E R C E N G S I N E E S P A R T S I A L V E H I C L E S
P A R
Note: Share capital of the Company has increased during the year by Rs. 102,283,541/- due to allotment of 102,283,541 equity shares on conversion of FCCNs (Refer Note 8 in Notes to the Accounts).
For and on behalf of the Board
K. Sridharan Chief Financial Officer
N. Sundararajan Executive Director & Company Secretary
R. Seshasayee Managing Director
R. J. Shahaney Chairman
May 04, 2007 Chennai
88
Annexure F to Directors Report
Information as per Section 217(2A)(b)(ii) read with the Companies (Particulars of Employees) Rules, 1975
Date of Commencement of Employment 15.11.91 06.05.85 2432316 MA, LLB 30 3179821 B.Sc., MA, DMM, DBM 35 Manager, PR and Publicity, MICO Ltd Dy Mgr, Travancore Titanium Products Ltd Receivable (Years) Received / Experience Remuneration Qualification Total Particulars of Previous Experience
and forming part of the Directors' Report for the year ended 31st March 2007
Sl.
Name
Age
Designation
No.
Abraham TT
56
General Manager - Corporate Communications
Akbar Khan A
51
Deputy General Manager - Personnel &
Administration 01.01.74 16.05.80 (P.M.& L.W.) 18.04.79 14.06.00 01.10.02 13.04.06 01.01.73 7891997 B.E., Dip.in SQC & OR, ICWA (Inter) 07.01.02 7136799 B.Sc. (Mech.Engg.) MBA 38 General Manager (Engg & R&D) Trans Mobile Ltd., Karachi, Pakistan. 16.11.81 22.03.05 30.06.04 17.04.06 2619387 466146 3287049 3447844 BE, MBA BE, PGDIM B.Sc., DMIT B.Com, ACA, ACS, LLB, CAIIB 03.02.97 3232032 B.E. 31 Manager - Maintenance, Voltas Ltd 25 21 32 33 COO, Aryaomnitalk Wireless Solutions Ltd, Pune CEO, Esix Technologies President, Orchid Chemicals & Pharmaceuticals Ltd 2632742 B.Tech., DBM, MMS 4901029 BE, MS, Ph.D, MBA 21 26 38 5944063 B.Tech 28 2648098 B.Sc., DMIT 33 8419086 BA(Hons), M.A. 36 2797156 BE, Dip in SQC & OR 26 Selection & Training Manager, Brooke Bond India Ltd., Calcutta Sales Engineer, L&T Ltd Divisional GM, Eicher Royal Enfield Motors Advisor, TVS Motor Co. Director-Operations, Piaggio Vehicles P Ltd
Akhileswaran MN
58
General Manager - Materials
Amrolia J.N.
59
Executive Director - HR
Anand TV
56
General Manager - Defence Sales
Anup Bhat
50
Executive Director - Strategic Sourcing
Aravind S Bharadwaj Dr
42
Head - Advanced Engineering
Avinash Kumar Jain *
47
Executive Director - Project Planning
Balasubramanian S
59
Executive Director - Project Planning
10
Begg J.R.W.
62
Head (Vehicle Engineering)
11
Chandramohan PG
50
General Manager - Pricing & Product Cost Engg
12
Chandramouli R Sarma*
46
Chief Executive Officer - Telematics
13
Chandrasekaran N
55
General Manager - Information Technology
14
Chandrasekharan AR *
54
Commercial Director - Special Projects
15
Chatterjee AK
55
General Manager - Bhandara
89
90
Date of Commencement of Employment 01.01.74 01.10.68 25.01.05 01.07.74 01.10.80 01.08.05 01.09.82 13.10.79 05.08.79 01.10.72 16.05.02 21.08.80 05.12.96 01.07.77 5181318 B.Sc., ACA. 31 2557509 B.Sc., ACA ; CAIIB 28 2576572 BE 26 Vice-President, Apple Credit Corporation Group Accounts Officer, Eastern Coal Fields Ltd., West Bengal 10.10.81 01.10.74 01.05.75 01.07.77 01.07.74 02.04.97 2979971 7731312 2736238 B.E. B.E. B.E., PG Dip. in Industrial Admn. 04.09.06 01.10.72 2907701 3508502 BE, MS, MBA B.Sc. , DIM 15 37 3384498 B.E. 2467606 B.Sc., BE, AMIE 3028700 BE 25 32 30 39 31 39 Managing Director, MAC Industrial Products, Chennai Chrysler , USA 2979046 B.Tech., M.S., Ph.D 28 2502886 B.E. 36 Sr. GM - Research, Kirloskar Oil Engines Ltd 3941018 B.E. 34 2543943 B.Sc., DMIT 27 Regional Service Engineer, Hindustan Motors 2902204 B.Tech., MBA 30 Engineer-Market Planning, HMT Ltd 2977440 B.Sc., DBM 21 Director-Sourcing, GE Power Controls 2563635 BE 39 Site Representative, Jessop & Co Ltd 2451388 BE 32 2599998 B.S., PhD 22 General Manager, L&T Tech Centre 5415805 B.Sc., DMIT 39 3088996 B.Tech. PGDIT 32 Receivable (Years) Received / Experience Remuneration Qualification Total Particulars of Previous Experience
Sl.
Name
Age
Designation
No.
16
Cowsik R
57
General Manager - Exports
17
Devarajan R
65
Special Director - Product Development
18
Dilip K Mahanty
46
Head - Technical, Ashley Design & Engg Services
19
Gaffar A A
59
Deputy General Manager - Project Planning
20
Guin AK
63
Deputy General Manager - Product Development
21
Harihar P
45
General Manager - Hosur II
22
Hombali VM
54
Special Director - Customer Support
23
Jeyagopu E
53
Deputy General Manager - Technical Services
24
Khaitan B
57
Special Director - Defence Sales
25
Krishnamurthy KN *
61
Technical Advisor to MD
26
Lakshminarayanan PA Dr.
57
Head - Engine R&D
27
Lobo A
52
Deputy General Manager - Exports
28
Mohana Srinivasan Mrs
52
Deputy General Manager - Finac Services
29
Mohanakrishnan N
55
Executive Director - Internal Audit
30
Murali S
49
General Manager - Neptune Project
31
Muralidhar V
59
Deputy General Manager - East Land
32
Murugappan N
57
Plant Director - Ennore
33
Muthusubramanian K *
61
General Manager - Corporate Quality Engineering
34
Muthusubramanian CS
57
General Manager - Exports
35
Nagarajan S
62
Executive Director - Projects
36
Nagesh Basavanahalli *
42
Executive Director - Ashley Design & Engg Services
37
Nair MKR
60
General Manager - Special Projects
Sl. Commencement of Employment 07.04.78 Bearings Ltd., Coimbatore 07.12.05 01.10.81 20.01.82 2519000 B.Sc, ACA, CIA, CISM 33 2555185 BE 34 Engineer-QC, Telco 2418027 BE, PGDM 23 Vice-President (Operations), Tata Teleservices Ltd 7822530 B.E. 43 Manager - Plg. & Devpt. Bimetal Receivable (Years) Received / Experience
Name
Age
Designation
Date of
Remuneration
Qualification
Total
Particulars of Previous Experience
No.
38
Natraj M
65
Executive Director - Product Development
39
Padmanabhan M
48
Chief Executive Officer - Telematics
40
Patel AK
57
Deputy General Manager - Purchase
41
Pillai NSN
58
Deputy General Manager -
Information Security & Risk Management 09.08.80 29.05.02 19.04.78 10.11.00 PGDIE, FICWA 17.05.00 19.01.00 01.09.73 10.05.82 30.09.93 01.07.74 26.09.05 18.04.04 02.05.73 21.01.76 02.01.81 01.03.74 21.10.79 06.03.82 18767546 3700231 3240075 2454982 8418178 619991 2406684 2909053 1447894 B.E. BE, MS, PhD, MBA BE, MS, PhD B.Sc., ACA B.Com., A.C.A. B.A., MSW B.E. DIM BE B.Com., ACA, Grad.CWA 3458325 B.E. MMM 3106357 B.E. 32 30 32 12 16 33 36 30 32 27 30 240906 B.Sc, BL, PGDHRD 33 Sales Executive, Greaves Cotton & Co. Ltd. Sales Engineer , Lucas TVS Ltd Strategic Planning Manager, Intel Corporation, USA Principal Engineer, Dana Corporation, USA Manager - Accounts, Hindustan Lever Ltd., Mumbai Personnel Officer, Oswal Steel Sr.System Analyst, Tata Consultancy Services, Mumbai 2354617 BE, M.Tech, DMM 32 2579337 BE, M.Tech. 34 Associate Vice-President, JBM Tools Rane (Madras) Ltd 2567105 B.Tech (Mech), 26 4877603 M.E. 35 7932771 B.Sc (Engg.) 41 Consultant Senior Development Engineer, TELCO Business Devpt Manager, BOC India Ltd 2840918 B.Tech. 26
42
Rajagopala Menon R
52
43
Rajinder Malhan
58
Executive Director - International Operations
44
Raju SK
60
Head - Current Vehicle Engineering
45
Rakesh Gupta
48
Deputy General Manager - Corporate HR
46
Rama Rao KK
58
Deputy General Manager - Cab Panel Press Shop
47
Ramachandran V *
58
General Manager - Strategic Sourcing
48
Ramalingam P *
59
Senior Manager - Industrial Relations
49
Ramadurai SG
55
Special Director - Special Projects
50
Rao RN
53
Special Director - Sales & Service
51
Sarathy V *
59
General Manager - ACCL
52
Saravanan N Dr
41
General Manager - Product Development
53
Sathya Prasad M Dr
38
Section Head - Advanced Engineering
54
Sambasivam S *
59
General Manager - Finac Services
55
Seshasayee R
59
Managing Director
56
Shekhar Arora
54
Special Director - Management Development
57
Soundararajan G
58
General Manager - Hosur I
58
Sridharan Balaji K
52
Deputy General Manager - Vehicles
59
Sridharan K
53
Chief Financial Officer
91
92
Date of Commencement of Employment Receivable (Years) Received / Experience Remuneration Qualification Total Particulars of Previous Experience 26.03.82 01.08.76 10.07.82 24.07.96 05.06.96 FCS, PGDBM 01.10.78 3354635 B.E., M.S. 28 5832452 B.Com., AICWA, 35 President, Sundaram Industries Ltd., 2825266 BE, Dip in Mkg & Advg 36 AGM -Projects Hero Honda Motors Ltd 2472419 B.Com, ACA 29 Chief Accountant, Cymax Distributors P Ltd 3114977 B.Sc., ACA 30 3904819 B.Com., MA (Pers Mgt) 28 Personnel Officer, ACC Ltd. 16.03.81 01.07.74 19.08.81 01.08.03 02.01.06 01.12.83 2529614 B.Com, ACA 29 3287000 B.E. M.Tech. 30 3603910 B.Tech. PGDBM 20 2709514 B.Sc., DMIT 35 6001140 B.E. 36 Senior Engineer, International Instruments Ltd GM - Sales , TVS Motor Co. Head - Engg, Tata Motors Accounts-cum-Admn Officer, Geep Industrial Syndicate Ltd 01.04.05 MBA (Kellog) 13113116 BS (Engg) , ME, 18 JMD, Cummins India Ltd. 379412 B.E. 37 Engineer, The English Electric Company of India Ltd.
Sl.
Name
Age
Designation
No.
60
Srikant Srinivasan
50
Special Director - Corporate HR
61
Srinivasan R
58
General Manager - Finance
62
Srinivasan SR
54
Deputy General Manager - Internal Audit
63
Subramanya G
59
General Manager - Planning & Quality
64
Sundararajan N
57
Executive Director & Company Secretary
65
Sundaram Parthasarathi
54
General Manager - Business Planning
66
Thyagarajan V *
59
Deputy General Manager - Systems
67
Udayashanker BM
57
Executive Director - Manufacturing
68
Vasudevan NS
59
General Manager - Special Projects
69
Venkat Subramaniam B
45
Special Director - Marketing & Customer Group
70
Venkatesh S
54
71
Venugopalan R
55
Deputy General Manager - Finance
72
Vinod K Dasari
40
Chief Operating Officer
* Part of the year
1.
Gross remuneration shown above is subject to tax and comprises Salaries, Bonus, Allowances, medical benefits, Leave Travel Assistance as applicable in accordance with the Company's rules, Commission, Company's
Contribution to Provident Fund and Superannuation Fund and perquisites evaluated as per Income-Tax rules. In addition to the above, the employees are entitled to Gratuity.
2.
All appointments are contractual.
3.
None of the employees is a relative of any Director of the Company.
4.
The above list does not include employees on deputation.

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Engineering

is the way we think

We are Engineering Your Tomorrows.

Our passion for engineering

Ashok Leyland Annual Report 07

Commercial Vehicle operations since

From function to strategy

March 17, 2006

Ashok Leyland Annual Report 07

Team meetings among

Time invested per member involved

by top management It covered an in-depth analysis on capacity; volume

Engineering a solution around regulatory compliance

Ashok Leyland Annual Report 07

Engineering a cost-effective product innovation

Ashok Leyland Annual Report 07

From bottleneck to surplus

Ashok Leyland Annual Report 07

Engineering ergonomics at the shop floor

Ashok Leyland Annual Report 07

Locating solution where problem exists

Ashok Leyland Annual Report 07

Nurturing passion for engineering

Faith: As a first step, research is presented to the

Facilities: The organisation supports research with

Freedom: The research executives are given the

Ashok Leyland Annual Report 07

Boosting customer profitability

Vehicle maintenance: The team studied each

Driving skills: The team chose 15 drivers and

Ashok Leyland at Prague

The D 120 at the Auto Show at Birmingham

Ashok Leyland Annual Report 07

Bus assembly unit in UAE

Cab assembly at AALM

152 kw Common Rail engine

Ashok Leyland Annual Report 07

ISO/TS 16949-2002 Corporate Certification an industry first

Environment and safety

Ashok Leyland Annual Report 07

Water Consumption Trend

Power Consumption Trend

Secured landfill facility

Ashok Leyland Annual Report 07

Corporate Social Responsibility

Our outreach initiatives Community outreach

Beyond the call of work

Driver outreach Our partners

Road safety outreach

Setting up a core group of Ashok Leyland volunteers on road safety:

Study and assess safety on the highway around our Units:

Disaster and crisis management group

Ashok Leyland Annual Report 07

Affirmative action in Ashok Leyland

Details of recruitments made in 2006-07:

Employee details in our manufacturing units as on March 31, 2007:

Ten years at a glance

Vehicle and engine sales

Revenue (Gross sales)

EBIDTA and Profit after tax