annual report 2002 - 2003 - international training centre

A N N U A L R E P O R T 2 0 0 2 - 2 0 0 3

Even as it provides wheelsto a sub-continent, India’sroad transport sector hasbeen a lively engine ofgrowth, powered by theboundless energy of humanenterprise. It is repletewith stories – of its unsungheroes, their struggles andsuccesses. Of courageousmen who overcame themany roadblocks in lifewith drive, grit, hard workand self-belief. Thegeographies vary, so do thecircumstances. Yet theessential plot has anunmistakable sameness,including the ride on AshokLeyland vehicles that theytook at some crucial phase

in their life, to reachdestinations set byambition. Through their single-minded pursuit, theyhave actualized thepromise inherent in"Engineering yourTomorrows." Not justthat: they have, inturn, been catalysts-touching andchanging livesaround them,spreading further theripples of prosperity.In the process,partnering AshokLeyland in“Engineering yourTomorrows”.

Poverty thwarted Kisanrao Dalvi’s academic life at 17, in a night

school. Eldest among six brothers and a sister, he started selling

tea from a cart outside the sales office of Rajesh Motors, Kolhapur.

His clientele was the convoy drivers who brought Ashok Leyland

chassis from the Ennore plant. Throughout the day, the teenager

would watch the powerful machines being driven in and will sit

behind the wheels when the drivers were in a good mood. The

youngster dreamt of owning a truck one day. Trucks fascinated him

and became his passion. And the sales yard, his classroom.

Passing on the tea cart to a younger brother, Dalvi joined Ghadge

Patil as a cleaner. That was in 1976. A monthly salary of Rs 45 came

with a perk: a sleeping place at the garage. For a while he drove

a businessman’s car. Till his grandfather told him : "do you want to

end up in life washing someone else’s vehicle? Why can’t you get

one for yourself? " Dignity and dream hardened the family’s will to

find a way forward. In 1978, Dalvi took his first step in the

transport trade by mortgaging the family’s modest house for margin

money to buy a Matador. ("100% finance 25 years back!", he

beams). Slowly but steadily things started looking up. The family

diversified into businesses, including hotels.

A breakthrough for Dalvi came when he got a construction contract

for Indal’s mining operations "in the middle of the jungle, where no

vehicle can reach, no electricity nor water." The last three

kilometers could be crossed only by foot. Employing the tribals, he

built a road of sorts. This was a testing time. Unanticipated

problems created self-doubt. But then, having dared, there was no

turning back. What Dalvi lacked in experience was made up by his

“Education isnot a must,but there isno substitutefor enterprise”“Education is not amust, but there isno substitute forenterprise”

FROM

TEA

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T TO

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EET

Mr. Dalvi in his self designed mansion

grit. When the mines became

operational in 1994, Indal offered him

a contract for transporting bauxite from

the mines to their factory – the

established contractors were not

interested, so bad were the roads.

Dalvi bought six Ashok Leyland Comet

Supers - one for each brother. Six more

were bought in 1995 and another six

the next year.

Dalvi is almost offended when asked

why he chose Ashok Leyland trucks.

"I grew up dreaming about them sitting

outside the Company gates, I owed it to

the Company and the dealership", he

says. "And market reports were good

and I liked them." With expansion in

the mining operation, Dalvi roped in

acquaintances by arranging for truck

finance and built a reputation for

reliable leadership in co-operative

trucking business. The group that Dalvi

built around him has a total fleet of 40

vehicles. "If the members are good and

the leadership reliable, groups can last

and flourish", explains Dalvi. "When

money starts coming in, some get

tempted to divert it for life’s comforts.

If you do it too early, you can fold up",

says Dalvi, based on the few failures in

his own group.

Success succeeded success. In 1997,

came a contract from Narmada Cement

for 25 trucks. Dalvi passed the acid test

of acquiring and offering 19 trucks in

under three months – by now he had

built a reputation with the truckers, the

financiers and the dealership. In no

time, Dalvi had built a group of truckers

with a total fleet strength of 90.

Dalvi does not recommend formalized co-

operative societies – "Leadership can

make or mar them. All members have to

be good alike. Also, different members

will have their ups and downs which can

affect the Society". Dalvi finds his style

of federal group structure advantageous

to all – the end-customer who does not

have to deal with individual truckers; the

truckers who get the trucks, finance and

business more easily. As for himself, his

leadership helps him make a mark in the

trade. "I have made a name for myself. I

have helped people find a livelihood and

build their lives. And they give me

respect".

At 47, Dalvi looks back at his past 30

years of struggles and success with

contentment. Today, all the brothers live

in palatial bungalows. Dalvi’s two sons

went to the best school where they

made no secret of their admiration for

their dad who made it from nowhere.

Dalvi summarises the moral of his story

as "education is not a must, but there is

no substitute for enterprise". That will

not stop him from shortly adopting a

couple of under-privileged children and

taking care of their education "as long

as they want to study".

Modesty must have stopped him from

describing his brand of enterprise as the

uncanny knack of spotting opportunities

in the midst of adversities. His latest

move is yet another example:

Two years back, Dalvi’s pet dog fell ill.

His sick dog in hand, Dalvi set out

looking for medicines. To his

disappointment and shock, he could not

find a pharmacist for miles and his dog

died. In this unhappy situation, Dalvi

spots an opportunity. The incident

becomes a trigger for opening

a pharmacy specializing in veterinary

medicines. In a matter of two years,

Dalvi has a thriving business. He is now

mulling over taking up wholesale agency

for medicines. And his next move?

To start a factory for basic drugs. The

CEO is in the making: his first son Sagar,

who has joined B. Pharm.

Mr. Kisanrao Dalvi can be contacted at +91 231 5682556 / 2691803

Ashok Leyland annual report 2002-03............................. III

Every day, more people in the State of Karnataka wake up to the

headlines in Vijay Karnataka than any other newspaper. And to

remember that, till three years ago, it was only an idea in one

man’s mind, is to recognize an unparalleled success story in the

world of Indian publishing where well-established leaders do not

yield ground easily. A newspaper is, after all, a habit. And habits

are often for a lifetime.

For a newcomer in the field, its founder Vijay Sankeshwar’s product

positioning is so rational, one wonders how come no one before him

noticed the so very obvious void. By focusing on the felt needs of

rural regions through content mix and reach, Sankeshwar has

expanded the market. In effect, Vijay Karnataka has spread the

reading habit to distant villages. New readers, according to him,

make up half the 500,000 plus circulation of this Kannada daily.

Vijay Karnataka’s newsgathering network spreads wide and far with

over 500 stringers. Its nine editions published from as many centers

give it the statewide stature – a conscious break from the city-

centricity prevalent among newspapers.

An equally powerful USP is time. "We deliver copies even in the

remote villages before six in the morning," explains Sankeshwar.

This is a new experience for far-flung villages. In distribution,

Sankeshwar has an unmatched competitive advantage: the statewide

network of offices that supports the operations of Vijayanand

Roadlines with a fleet strength of 1,200 trucks and 170 buses, with

Ashok Leyland models dominating.

Product and distribution taken care of, Vijay Karnataka, clearly

gunning for leadership position, dropped price to Rs 1.50 for a copy

"We delivercopies even inthe remotevillages beforesix.00 in themorning”"We deliver copieseven in the remotevillages before six in the morning”

VIJA

Y SA

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Thanks to the logistics backbone of VijayanandRoadlines, Vijay Karnataka can keep its earlymorning tryst with its readers

– "less than the cost of a cigarette."

Competition had to match price and,

in the process, bleed: bleed more on

their larger circulation base. The pricing

action worked: it expanded the market.

Through the resultant penetration and

conversion, circulation boomed.

Advertisers could no more ignore Vijay

Karnataka.

Not content with this success,

Sankeshwar was quick to exploit the

obvious synergy in newsgathering and

distribution by starting Vijay Times,

an English daily.

Publishing is in Sankeshwar’s genes.

In 1920, Basavannappa, his father,

migrated from Sankeshwar village to

settle down near Hubli where he set up

a successful business in printing and

publishing educational literature.

Sankeshwar’s entrepreneurial abilities

surfaced in his teens. As a 16-year-old,

he took charge of the family printing

press and modernized it. Yet, the

distribution end of his business left him

unhappy what with its dependence on

a monopolistic transport agency who,

Sankeshwar felt, ignored the customer

and his needs.

In this unpleasantness, Sankeshwar

detected an opportunity and despite

the family’s dissuasion, entered the

trucking trade with a single truck in

1976. He was quick to realize that in

this trade, big was beautiful. When

Vijayanand Roadlines was born three

years later, it had just two trucks. He

rapidly expanded operations by opening

booking offices and acquiring trucks to

support parcel services.

In his own unhappy experience as a

customer, Sankeshwar found the

ingredients of his customer-centric

mission statement. Size and

geographical coverage apart, he knew

how customers could benefit from

specialized services and set a trend by

offering courier, express cargo and parcel

services. He was a trendsetter also in

offering time-bound, assured deliveries

with compensation in the event of

failures. As a leader, he set values and

ensured their practise. Anyone who

reports an unauthorized person travelling

in the driver’s cabin in any of his

vehicles, is rewarded and the cost

debited to the driver. Old timers also

remember the time Sankeshwar received

the "Udyog Ratna" award in 1994. The

first thing he did was to raise

employees’ salaries by 25% because "it

was they who are responsible for the

spectacular growth of the Company".

By 1990, Vijaynand Roadlines had 125

branches in 12 States and a fleet of 100

vehicles. It only took him another 10

years to cross 1,000 vehicles and 600

branches. In 1996, Vijayanand Roadlines

diversified into passenger transportation,

with emphasis on connecting neglected

interiors. The diversification had obvious

synergies with the parcel services.

A public limited company since 1996,

Vijayanand Roadline’s 2002-03 turnover

was Rs 3 billion. Today, the

breadwinners of over 10,000 families

work directly or otherwise for Vijayanand

Roadlines.

1996 marked Sankeshwar’s jumpstart in

politics when he won from the Dharwad

(North) parliamentary constituency.

Re-elected in 1998 and a third time in

1999, he is a sitting MP. Sankeshwar

ensures that his political convictions do

not colour the pages of his newspaper.

Vijay, in most Indian languages, means

success. In Vijay Karnataka and

Vijayanand Roalines, even in politics,

Sankeshwar’s common success formula

stems from a grassroot level

understanding of the market.

"I dip into my own experience as a

customer", he says with more sincerity

than bitterness.

Mr. Vijay Sankeshwar can be contacted at +91 836 237511e-mail : [email protected] (or) [email protected]

Ashok Leyland annual report 2002-03............................. V

Constantly updated through incessant incoming calls, he carries it

all in his head: the departure/arrival details of 104 trucks ever

on the move across the country with tight delivery deadlines. "What

else is my work?", asks Raj Singh Narwal of Ahmedabad Bengal

Roadways, sitting in his functional office-cum-workshop near the

Delhi-Gurgaon border. The largest truck contractor for the fast-

growing SafExpress and Om Carrying Corporation, Raj Singh’s self-

confessed single obsession in life is Ahmedabad Bengal Roadways.

And make no mistakes, his mind is ever ticking on how to drive

down costs and turnaround time, how to fight the squeeze on

margins.

But for the brick kilns in his native village named Rithal, in Rohtak

district in the North Indian State of Haryana, Raj Singh, in all

probability, would have become a farmer like his father. But the

brick kilns – rather, the trucks that frequented the kilns – became

persuasive direction boards that changed his life’s course. His

earliest childhood memories revolve around those powerful trucks

that cast a spell on the youngster.

Chasing his dream, Raj Singh left his 9th standard studies in 1975

and went through the typical learning and start-up process of an

Indian trucker. An apprenticeship with a mechanic followed a

helper’s job with a trucker and acquisition of the all-important

driving license. He turned down a secure Government job – greatly

coveted by village lads – and instead chose to drive trucks. By

1978, he had saved enough to part-own and self-drive a second-

hand truck. All the earnings went into buying trucks for the four

brothers who followed Raj Singh’s example. 1982 and an Ashok

"I have survivedon Rs. 250 amonth. God hasraised me to thislevel. Beinghumane mattersnot money”

"I have survived on Rs. 250 a month. Godhas raised me to thislevel. Being humanematters, not money”

WIT

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Leyland Tusker joined Raj Singh’s stable.

Thus began a tryst leading to a strong

association and loyalty.

Raj Singh’s truck fleet kept growing but

the five brothers continued to drive

trucks, maximizing revenue and they

loved driving, anyway. The 44-year-old

recalls a round trip he did in the early

90s. His truck loaded with high-density

(but compact) metal springs, Raj Singh

drove from Chennai to Bangalore where

he topped it with tyres. Enroute Delhi,

outside Bijapur he came across a loaded

truck, its cabin badly damaged in an

accident. Its front tyres removed and

the front mounted on his Delhi-bound

truck, Raj Singh drove the makeshift

"trailer", earning Rs 28,000 as against a

normal Rs 9,000 for that trip. "Those

days, we had easy delivery deadlines

and could wait for market loads",

remembers Raj Singh.

Today, delivery schedules have become

tighter and meeting them without fail is

pivotal to the success of Ahmedabad

Bengal Roadways. "We manage 98%

compliance", says Raj Singh, who has

won awards from SafExpress for

exemplary delivery record. Raj Singh’s

crew routinely covers the Delhi –

Mumbai route in 45 hours and Delhi –

Ahmedabad in 24 hours. From October

2002, he has been able to slash running

time for all routes by around 10%. How

he manages such efficiency

improvements is simple – befitting the

simple man that he is. "We brothers (the

five are equal partners in the Company)

drive the trucks with our drivers by our

side, see the time it takes, the fuel

consumption and expect them to match

it. We don’t put pressure. It is no miracle

either – after all, the roads are

improving and so are the vehicles". Over

80% of his fleet are Ashok Leyland

vehicles – their "reliability, lower

maintenance cost and better fuel

average help us maintain delivery

schedules and operate them in these

times of thin margins". His mind is

already at work to further cut running

time to command more remunerative

rates from the customer – and more

trips.

For someone who cannot stand waste,

his closed fists loosen for essentials.

Without batting an eyelid, he flies down

drivers as replacement for their

indisposed colleagues. A heart ailment

or losing eyesight, his drivers can count

on Raj Singh’s benevolence. Raj Singh

dismisses his acts of kindness by saying:

"I have survived on Rs 250 a month.

God has raised me to this level. Being

humane matters, not money".

Raj Singh’s only other obsession is the

satsangh (a prayer group, literally

meaning, group of the good) held every

Saturday in his native village which none

of the 38-member joint family will miss.

His is a family of teetotalers. Raj Singh

believes his simple ways have helped in

his success and is fiercely proud that

success has not spoilt him: he has not

changed even his dress style, he has no

fancy for flashy cars. Distinctly hands-

on, Raj Singh is at his desk, day or

night, whenever business demands.

"Timely service is not easy", he explains,

even as answering into his mobile – his

only personal concession to modernity.

Mr. Raj Singh Narwal can be contacted at +91 11 5062377

Ashok Leyland annual report 2002-03............................. VII

In 1999, the Bangalore Metropolitan Transport Corporation (BMTC)decided to hire private buses to augment its services in the

burgeoning garden city with a population of over eight million.Today, nearly a quarter of its 2,800 buses are the hired variety. With a fleet of 270 buses, the largest vehicle provider to BMTC isAmanath Motor Owners’ Co-operative Society Limited, popularlyknown as Amanath Motors, which has set new benchmarks foroperational efficiency through scientific fleet management andemployee motivation.

Headed by A M Nadaf, a former Managing Director of the North WestKarnataka Road Transport Corporation, Amanath Motors startedoperations with 100 buses, half of them Ashok Leyland. The firststrategic decision the organisation took was to locate its owndepots close to the five BMTC depots where these buses weredistributed, thus minimizing the ‘dead’ kilometer cost of Rs 5 perkm. Assisted in the management by efficient and experienced ex-employees of State Transport Undertakings, Nadaf runs theoperations with no compromise to the daily, weekly, monthlymaintenance routines and backed by information on each vehicle."Data is the basis to cut out inefficiencies", says Nadaf. Data wasalso the basis for Amanath Motors to opt for Ashok Leyland for theentire lot of 140 buses inducted into operations in 2002.

With fuel making up over 50% of the running cost, Nadaf and hismen keep an eagle eye on this factor of cost. Six drivers wholearned scientific driving at Ashok Leyland’s Driver Training Centreat Namakkal, are today working as driver instructors. "There is aclear improvement in KMPL and we are very happy", says Nadaf.There is also the incentive of the ‘KMPL Awards’, with cash prizes todrivers who stretch a litre beyond 4.3 and 4.5 kilometers. Around

"Those of uswhom God hasbeen kind to,have an addedresponsibilityto the society”TR

IUM

PH O

F TR

UST"Those of us whom

God has been kindto, have an addedresponsibility to thesociety”

At daybreak, the buses are ready to roll out

10% of the drivers qualify for theseawards every month. In the offing is anannual awards scheme for consistentfuel efficiency.

Even with all costs under reins, Nadaf isconscious that if the employees do notbuy into the efficiency mission, therecan be no results. "Our employees hadto realize that a cancellation of a tripmeans a loss to the organisation. Justkeeping 2.5% spare bus capacity is notenough; human response is thedeterminant", says Nadaf. A cancellations rate of under 0.5% forAmanath Motors is a new benchmarkwhere the industry average is 3~4%.This maximizes revenues from the BMTC.

Amanath Motors was born out of twochance happenings in the mind of

K Rahman Khan, a Bangalore-basedChartered Accountant. Khan’s majorinfluence in life has been his father, a principled man, who used to tell hisson: "Those of us whom God has beenkind to, have an added responsibility tothe society". Even while practisingAccountancy, Khan entered politics ashe found it "a powerful instrument forsocial change". In 1978, Khan became a member of the Karnataka LegislativeCouncil and was Chairman of theLegislative Council from 1982 to 1984.Since 1994, he has been a member ofthe Rajya Sabha.

In his close interactions with themasses, Khan realized how "lack ofaccess to funds and education were

blocking growth opportunities to under-privileged sections of the community". This prompted him to promote a bank inthe co-operative sector. Appropriately,he named it "Amanath Co-operativeBank". Amanath, meaning "trust", wasideal branding in the financial sector;soon it was to become Khan’s own brandvalue. What was started with a capital of Rs 300,000 has grown to become thelargest urban bank in the State with 15 branches, 500 employees anddeposits and reserves together exceedingRs 5 billion. Khan rationalizes theunexpected success of the bank bypointing out that the bank became analternative to moneylenders whoexploited sections of society notoriented towards banking.

Khan also has three decades ofassociation with the Al-AmeenEducational Society and had been itsChairman during 1985-2000. The 100plus educational institutions fromnurseries to professional colleges provideeducation to 40,000 students, with a fees structure that underscores theobjective: provide a window ofopportunities to growth. The KKEducational Trust, which commemoratesKhan’s father, runs two popular schoolsin Bangalore under the franchise of theDelhi Public School.

The two chance happenings thatprompted the birth of Amanath

Motors date back to 1999. One was anapplication the co-operative bank

received for a vehicle loan. Scrutinyconfirmed Khan’s suspicion: the loanamount was hugely inflated. He alsolearned that this prevalent practice wasthe cause of many entrepreneurs failing,unable to repay the equally inflatedmonthly installments. Around the sametime, while visiting Gujarat, Khan saw a successful trucker co-operative whichhad the financial strength to disbursemuch-needed funds to its members whena calamity struck, without waiting forGovernment help to arrive. An idea tookshape in his mind.

The trigger that actualized the idea asAmanath Motors was the BMTC move tohire buses. Khan sought 100 membersbut had 300 registrations, thanks to hisreputation. The terms: make a deposit ofRs 275,000 for six years for a monthlyreturn of Rs 4,500. The membership hassince grown to 215 with over 100applicants in the waiting list.

Amanath works. Every time.

Mr. K Rahman Khan can be contacted at +91 80 6539168 / 6539183

Ashok Leyland annual report 2002-03............................. IX

When he left his family in Mahagaon village and took a four-

hour bus ride to Kolhapur town in Western India, all that

Marutarao Konduskar had were the clothes on him and hope within.

The year was 1952 and Marutarao Konduskar was all of 17 years.

And lucky to be staying in the out-house of the village Mukhia’s city

house and working in his petrol pump. Gradually he rose, to handle

the accounts desk. But he had bigger plans for his life. After

working hours, he will cart around kerosene, delivering the shortage

item at customer doorsteps. Soon Marutarao reached a sale of 500

barrels a month and Burma Shell gave him a direct agency, which

Marutarao nurtured with all his time and energy into a petrol pump.

"Being born poor gave me the constant urge to do better", says

Marutarao, popularly known as Abha, looking back at the 50 years.

Personalised service has always been his trump suit. Being the

owner never stopped him from picking up the fuel gun. If a regular

customer missed his weekly visit for fuel, Abha would visit him to

ensure everything was OK. It fitted Kolhapur’s small town psyche

and values.

With the Pune-Belgaum by-pass road diverting traffic from the city,

in 1986, Abha set up Konduskar Auto Centre on NH4 with an

attached garage, a mini super market, washrooms and a hotel.

Instantly, it became a welcome comma in the long sentence on the

highway. It became a popular stopover for trucks and buses. For six

consecutive years, it registered the highest sales of diesel among all

the Bharat Petroleum outlets in the country. The buses pulling up to

fill diesel were good business and, more importantly, in the

enterprising mind of Abha, the cue for a future business idea. Soon,

"Being bornpoor gave methe constanturge to dobetter”

MAH

ALAX

MI’S

BLES

SING

S "Being born poorgave me theconstant urge todo better”

Sons Deepak and Prabhakar in front of a newA/C sleeper bus

Abha had a bus fleet of his own and

built a reputation for punctuality and

customer orientation. In 1995 came

a transport contract from Bharat

Petroleum and Abha built up a fleet of

84 tankers, mostly of Taurus, Comet and

Cargo 1512. The tanker and bus fleet

together with the petrol bunk

operations plus the latest diversification

– a travel agency – employ over 450

people.

The synergy in Abha’s business portfolio

is obvious, so are the succession plan

and delegation.

Elder son Prabhakar, a globetrotter and

an ‘ideas’ man, now directs business,

with younger brother Deepak running

the show on the ground. Abha, now 68,

is the benevolent leader, a benign

presence and the organization’s living

vision-mission statement. A handful of

hand-picked technocrats oversee the

major profit centres and technical

functions. Without claiming so, the

Konduskars practise modern

management concepts. For instance,

before the fall – and even the rise - of

the ESOP era, Konduskars had their own

patented wealth sharing scheme. Their

most valuable employees own trucks

which operate with the rest of the

Konduskar fleet, with the Konduskars

standing personal guarantee for finance.

"They have made us tanker maliks", says

Adnaik, a senior executive. Regular

employee picnics is a practise started in

the early 90s – transport is not a

problem and attitude never was.

Customer segmentation and price-value

equation come naturally to the

Konduskars. To them, these concepts are

more embedded than overwritten

through academic exposure. They do not

seek a consultant’s wisdom about the

market, which they know like the back of

their palm. Be it new models or new

product concepts, the Konduskars want

to be first, but they do not take

business risk impulsively. Recently, using

a captive sample of 20,000+ bus

passengers, a market survey was

conducted, before Konduskars decided to

add six sleeper buses. Built on Ashok

Leyland chassis ("air and rubber-ended

suspension is a great combination")

each has 30 sleeper berths. The product

proposition: an air-conditioned sleeper

berth for the price of a non-air-

conditioned one in trains. Irresistible,

feel the Konduskars, for a trip of over 12

hours or 500 kms.

Meanwhile, Abha has bought farmland in

the outskirts and wants to retire into

"a two-room bungalow." Because, he has

"no ambition left to be fulfilled".

He refuses to take credit for his success

except conceding, "I could do the right

things at the right time." A deeply

religious man, Abha believes, it is all

Mahalaxmi’s blessings. Mahalaxmi’s

akshayapatra (mythological pot with

undiminishing content), Abha vouches,

did the trick for him. Mahalaxmi is

Konduskar’s gram devata (village

Goddess). Mahalaxmi is also the

presiding deity at Kolhapur’s famous

temple.

Mr. Marutarao Konduskar can be contacted at +91 231 2672411 / 2672463

Ashok Leyland annual report 2002-03............................. XI

Reams of black and grey ribbons are rolling out rapidly acrossIndia’s remote countryside, connecting cities and villages,

shortening distances, slashing transit time and transportation costs.B Seenaiah, President, National Highways Builders Federation,estimates that 6,000 commercial vehicles – of which, 60~70% AshokLeyland vehicles – are engaged in the mammoth task of buildingover 13,000 kms of modern roads under the Golden Quadrilateraland the North South East West corridor projects.

Seenaiah is also Managing Director of M/s B Seenaiah & Company(Projects) Limited (BSCPL), one of the largest road constructioncompanies in the country. The Hyderabad-based BSCPL is in thethick of action, with two projects, together worth over Rs 4.8billion, under execution. BSCPL also partners GVK Group and L&T inthe Rs 6 billion Jaipur-Kishangarh BOT project.

Hailing from Mamuduru village, 35 kms off Nellore in AndhraPradesh, Seenaiah gives all the credit for the joint family’s fortunes,to the education he and his two brothers received. ("Father ran up adebt of Rs one lakh in the process, though," reminiscences 51-yearold Seenaiah). After his post-graduation in Agricultural Science, the23-year old entered road construction field via the partnership firmelder brother Krishnaiah, an M.Tech, had just set up. With fiveAshok Leyland Comet tippers, the partnership firm started small, butgrew. After ten years, in 1983, the two brothers set up BSCPL. Thefirst breakthrough for the fledgling firm came when an initiallyskeptical district administration realized the virtue of hot mixconcreting that the two technocrats insisted on and demonstratedin a small job. As years passed, the project sizes kept growing.BSCPL has done many prestigious mega projects, some of themfunded by the World Bank and Asian Development Bank, in theprocess, partnering some big international players. For BSCPL’s scale

"I insistedthat everyfamilycontributes, ifnothing else,with labour"

"I insisted that everyfamily contributes, ifnothing else, withlabour"

THE

BUIL

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OFRO

ADS

But for the school built by Seenaiah’s family,many of these students might have been farmhands

of operations, sample this : thecommercial vehicle fleet is 120 strongwith 90% Ashok Leyland vehicles; theCompany’s operations consume 70,000litres of diesel as also 12,000 tonnes ofblue metal produced by Seenaiah’snetwork of crushing units, everyday.Seenaiah expects his turnover to triple,to over Rs 4.5 billion, in the currentyear.

Mamuduru village owes its refreshinggreenery and widely shared

prosperity, to the adjacent river Pennar.Yet, till not so long ago, the land wasbarren. And during the rainy months theriver swelled, the village would beflooded. What has brought about thedramatic change are rural roads,irrigation and grassroots participation."The village’s first bore well was put upby my family in 1964. Today, the villagehas 400 bore wells and 23 transformers"to take care of the months when theriver shrinks, points out Seenaiah, theprincipal change agent.

Seenaiah’s frequent visits to his nativevillage kindled an urge to help in itsdevelopment. From the mid 90s, hestarted spending more time in thevillage addressing local issues andresolving community problems to familydisputes. He quickly envisioned what adeep road network and watermanagement, together, can achieve.Diverting his construction machineryfrom his work site, Seenaiah firstaddressed total road connectivity for hisvillage under the Janmabhoomi schemeof the State Government. "I insisted

that every family contributes, if nothingelse, with labour". He matched it byexecuting the Rs 20 million project,"without a profit, with contribution incash and kind worth Rs 1.4 million". Inthe next one month, some 40 cycleswere bought in the village. Land pricesbegan to rise. Seenaiah estimates theroad access has benefited over 1,000acres of agricultural land. "Before theroads came, transportation ofagricultural produce used to cost Rs 5,000 per acre", he explains.

Seenaiah stationed two excavatorspermanently in the village, to handleany community work that benefits all -activities like desilting of irrigationcanals and mass house construction. By channelising government grants andhis own resources and organizing ability,Seenaiah could complete 54 houses inMamuduru’s harijan (one-timeuntouchable “lower” caste) colony. Eachhouse has tap water.

In deference to the wishes of his father,Seenaiah and brothers built classroomsin a seven-acre plot and handed over tothe district administration to run aschool. Today, the place teems with 300children who, otherwise, would havebeen free farm-hands. The adjacenthostel houses 100 students, spreadingthe benefits of education to surroundingvillages without schools.

The 150-bed, Bollineni Super SpecialtyHospital is proving to be a boon to theneighbouring Nellore town andsurroundings. Bollineni is the family

surname and heading the institution isDr B Bhaskar Rao, heart surgeon and theyoungest brother in the joint family.

Another instance of how this roadbuilder connects needs to createopportunities is his latest project: a sixmegawatt biomass power plant that willconsume 200 tonnes of fuel wood andagricultural waste everyday. While thepower is enough to light up over 32,000homes, the plant will pay out Rs 140,000 to the villagers for theorganic fuel everyday.

So seamlessly does Seenaiah manage hisbusinesses and social work, inevitablyhis family was drawn into politics, withelder brother Krishnaiah winning hismaiden election to become a Member ofthe State Legislative Assembly in 1999.

As he juggles his multi-locationalconstruction work and the demands ofthe villages, with the help of an ever-active mobile phone and trustedsupervisors at each work spot, it is clearthat Seenaiah likes what he is doing.Rather, he is doing what is to his liking.

Mr. B Seenaiah can be contacted at +91 40 23307831 / 23307704email : [email protected]

Ashok Leyland annual report 2002-03............................. XIII

Virtually orphaned with the death of his mother when seven

months old and then at the age of eight, the loss of his

grandmother, rest of childhood under the care of an uncle, and, at

13, a shed cleaner for a coal-fired truck – what psychologists will

describe as a troubled and deprived childhood was, to K Rengarajan,

his baptism by fire that steeled his will to secure his own place

under the sun.

In 1949, the 15-year-old earned his independence by moving to the

South Indian town of Trichy. There he realized his childhood

ambition of "learning something in the mechanical line" by landing

a fitter’s job. Followed seven years of grime, grease, learning and

saving. Then, in 1959, Rengarajan applied for a truck permit.

Rengarajan traded his savings for a condemned truck, assembled

separately procured grill, chassis and truck body. A few months of

long days and hard work, and Rengarajan became the owner of MDU

3368. It did not matter that the engine would stop without the

weight of his foot on the accelerated pedal, it did not matter the

only way to start the truck was a specially fitted cranker, because

he had enough technical expertise to make the junk work – and the

work ethic to earn the goodwill of construction contractors which

ensured regular business. A new brand was born: K R T, for

K Rengarajan Transport.

Looking back, the septuagenarian recalls: "I don’t know how this

sounds to you. Whenever the shift driver failed to turn up, I had to

work on continuous shifts, driving long distances. Sometimes it was

too tiring… I felt too sleepy. For such times, I used to keep a ready

stock of chillies in a small hole near the windshield wiper. To keep

"I was thefirst tointroduceAshokLeyland busesin Trichy”

"I was the first tointroduce AshokLeyland buses inTrichy”

DHAR

MA

INBU

SINE

SS

Sons Venkatesh and Suresh Kumar are bothpart of the Internet generation

myself awake, I would squeeze some

chilly juice into my eyes…

it would burn for a while… but it

definitely kept me awake".

"In my 10 years of work I have taken,

maybe, 20 days leave – and no tea or

coffee", Rengarajan reminiscences.

Slowly but surely, a decade of hard work

started paying. More route permits,

more second-hand buses done up and

readied – till he bought his first Ashok

Leyland bus – a Viking – in 1976.

Since then, it has only been Ashok

Leyland, over 150 of them, bought and

sold off at regular intervals. There is a

special twinkle in his eyes when he

talks about the Viking he assembled

with separately bought spares and

aggregates, in the 80s when Vikings

were in short supply. "I was the first to

introduce Ashok Leyland buses in

Trichy", says this longstanding

customer, his voice choked with

emotions, and points out that today

Ashok Leyland’s market share in the

Trichy passenger market is 90 plus.

The Indian concept of dharma is lot

more than just "duty". Rengarajan

has always treated his hard-earned

prosperity as an instrument to fulfill his

dharma. He married the daughter of an

acquaintance who showed compassion

in his childhood. Against the Indian

custom, he bore the entire marriage

expenses because his father-in-law

could not afford it. Taking under his

wings his extended family, Rengarajan

took care of 18 marriages (read finding

alliances, matching horoscopes, and

funding). Peeved by admission denied to

a deserving student, Rengarajan

galvanized his community to start the

Cauveri Women’s College, of which he is

the President and the Cauveri

Matriculation School. As for his business,

retaining two buses for himself, in 1990

Rengarajan divided the remaining buses

between his two sons, then in their mid

20s.

K R Venkatesh and K R Suresh Kumar are

both part of the Internet generation.

Venkatesh has diversified into vehicle

finance besides taking up a two-wheeler

dealership. Internet is his telescope as

he scans the horizon for new business

ideas. Venkatesh is determined to make

a comeback in trucking, undeterred by

his unhappy experience and exit once –

it has made him wiser, he feels. Suresh

Kumar’s 12-hour day is not complete

without Internet surfing. His 30-strong

fleet transporting LPG bullets covers

entire India. Leyparts.com (the website

for Ashok Leyland genuine spares) comes

in handy to direct his drivers in case of

a vehicle breakdown. He maintains an

all-Ashok Leyland fleet of 3516s and CO

1611s – and a complete fleet logbook in

his IBM Thinkpad supported by a

custom-built software.

Both sons retain the KRT brand in all

their operations – and the business

ethics of their father. Neither will

compromise on KRT’s reputation which is

an extension of Rengarajan’s dharma

principle. To the customer, it translates

as punctuality; to the supplier, dues paid

on time; and to all associates, a fair

deal. "We are enjoying the fruits of our

father’s ethics", says Venkatesh.

Mr. K Rengarajan can be contacted at +91 431 2410877

Ashok Leyland annual report 2002-03............................. XV

Ashok Leyland annual report 2002-03............................. xvi

Contents Board of Directors 2

Highlights of Performance 3

Directors’ Report 4

Report on Corporate Governance 7

Management Discussion and Analysis Report 17

Directors’ Responsibility Statement 23

Auditors’ Report to the Members 24

Balance Sheet 26

Profit and Loss Account 27

Cash Flow Statement 28

Statement on Significant Accounting Policies 30

Schedules to Balance Sheet 32

Schedules to Profit and Loss Account 38

Notes to the Accounts 41

Balance Sheet Abstract and Company’s General Business Profile 48

Annexure to Directors’ Report - Particulars of Employees 49

Annual Report 2002 - 2003

Ashok Leyland annual report 2002-03............................. 2

Board of Directors R J Shahaney, Chairman

D J Balaji Rao

M Bianchi (Alternate : G Sagone)

P K Choksey

A K Das (Alternate : I N Chatterjee)

D G Hinduja (Alternate : Y M Kale)

H Klingele

S R Krishnaswamy (Nominee of LIC)

E A Kshirsagar

F Sahami (Alternate : B D Punjabi)

R Seshasayee, Managing Director

R Jagannath, Dy. Managing Director

(upto 31/3/03)

Executive Directors J N Amrolia

T Anantha Narayanan

K K S Bhalla

A S Mundkur

S Nagarajan

M Natraj

Secretary N Sundararajan

Auditors M S Krishnaswami & Rajan

Price Waterhouse

Cost Auditor Geeyes & Co.

Bankers Bank of America

Bank of Baroda

Bank of India

Canara Bank

Central Bank of India

Citibank N.A.

ICICI Bank Limited

Punjab National Bank

Standard Chartered Bank

State Bank of India

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

Uppal, Hyderabad


2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96 1994-95 1993-94

Sales Volume

Vehicles (nos.) 36444 29673 32475 37859 29741 31547 43352 37399 30410 24226

Engines (nos.) 5924 5258 6311 6004 7185 7611 8331 6537 5258 5666

Spare Parts and Others 3997 5492 5139 2145 2145 2520 2030 1962 1596 1411

Sales Value 30740 26304 26067 25987 20451 20143 24825 20097 15133 11813

Profit Before Tax 1701 1322 1019 933 233 207 1570 1336 706 353

Profit After Tax 1202 923 917 785 204 184 1249 1131 706 353

Assets

Fixed Assets 9398 10098 9613 9458 9547 9026 8399 7142 5904 5021

Investments 1576 1173 1179 1204 625 485 583 781 681 523

Net Current Assets 7478 9825 10223 10329 10491 13914 13679 11284 9000 4463

18452 21096 21015 20991 20663 23425 22661 19207 15585 10007

Financed by

Shareholders’ Funds - Capital 1189 1189 1189 1189 1189 1189 1189 1189 1189 780

- Reserves 8406 9131 10496 10145 9852 9763 9704 9152 8485 3902

Loan Funds 7172 8884 9330 9657 9622 12473 11768 8866 5911 5325

Deferred Tax Liability (Net) 1685 1892 – – – – – – – –

18452 21096 21015 20991 20663 23425 22661 19207 15585 10007

Earnings per Share (paise) 1011 776 771 660 171 154 1050 951 837 491

Dividend (%) 50 45 40 35 10 10 50 40 35 27

Employees (nos.) 11860 13218 13489 14056 14254 14635 15274 14545 13616 12596

Highlights of Performance

(Rs. Million)


Dividend

The Directors recommend a dividend of50% (Rs.5/- per equity share of Rs.10/-)

for the year ended March 31, 2003.

Sales

After a prolonged period of recession /reduced demand, there was asignificant improvement in the marketconditions during 2002-03. The overallimprovement in economic activity, theconsiderable investments made ininfrastructure activities, including theGolden Quadrilateral Highway projectsand increase in the cyclical replacementdemand of vehicles, all contributed tothe growth. However, for a major partof the year, distribution of thepattern within the country was notuniform, with a much higher growth inthe Northern markets (where yourCompany’s market share is lower), anda lower growth in the Southernmarkets, where your Company has a

larger market share.

Directors’ Report

Part - I Performance/Operations

The Directors are happy to present the Annual Report of the Company togetherwith the audited Accounts for the year ended March 31, 2003.

Financial Results

2002-2003 2001-2002

(Rs. Million) (Rs. Million)

Profit Before Tax 1,701.02 1,322.06

Less : Provision for Taxation 498.90 399.50

1,202.12 922.56

Add : Transfer from/(to):

Debenture Redemption Reserve 141.67 (24.59)

Balance in Profit and Loss Account

Brought forward from previous year 799.23 736.44

General Reserve (500.00) (300.00)

Profit available for appropriation 1,643.02 1,334.41

Appropriation :

Proposed Dividend 594.64 535.18

Tax on Dividend 76.19 —

Surplus - Balance in Profit and Loss Account

Carried forward to next year..... 972.19 799.23

Basic Earnings Per Share (Face Value Rs.10) Rs. 10.11 Rs. 7.76

The Company achieved total sales of36444 vehicles (including for export).The improvement came mostly fromthe goods segment; with off-take fromthe State Transport Undertakings beinglower than anticipated. The Company’ssales to Defence segment (includingsales to Vehicles Factory, Jabalpur in kit

form) continued to be satisfactory.

Exports

Your Company’s export during 2002-2003 was 2550 vehicles, compared to2170 in the previous year. YourCompany has been able to also export

to new markets during the year.

Production

The various initiatives to alignproduction with market requirementwere further strengthened during theyear. Employee productivity improveddue to sizeable reduction in workforcethrough Voluntary Retirement

Schemes.

Profitability

Your Directors are happy to reportsatisfactory profits achieved during theyear 2002-03. While improvement insales was the major factor, significantcontributions to profitability camethrough continued emphasis on costcontrol, better treasury managementetc.

Adjustment against Securities

(Share) Premium Account

Shareholders, at the ExtraordinaryGeneral Meeting held on January 18,2003, had approved the Board’sproposal to adjust against theCompany’s Securities (Share) PremiumAccount, a sum not exceeding Rs.160crores representing MiscellaneousExpenditure not written off, theestimated future diminution in thevalue of certain investments, andestimated future diminution in value ofcertain fixed assets and capital work-in-progress. This proposal was confirmedby the Hon’ble Madras High Court, andthe other procedures have been fullycompleted. The necessary adjustmentshave been incorporated in the accounts

for the year ended March 31,2003.

Dispute Regarding Central Sales Tax

The Company’s appeal against thedisputed levy of Central Sales Tax bythe Government of Tamilnadu ispending before the Supreme Court.Meanwhile, the Stay granted by itcontinues to be in force. The CentralGovernment proposal to establish aCentral Adjudicatory Mechansim andother related aspects of the disputehave been challenged on various

grounds.

Industrial Relations

The year under review registeredfurther improvements in industrialrelations and there was commendablecooperation between Management and

the Unions.


Research and Development,

Technology Absorption, Energy

Conservation etc.

The particulars prescribed by theCompanies (Disclosure of Particulars inthe Report of Board of Directors)Rules,1988 relating to Conservationof Energy, Technology Absorption,Foreign Exchange are furnished in

Annexure - A to this Report.

Part - II Corporate Matters

Corporate Governance

Your Directors are happy to report thatfrom 2001, your Company has beenfully compliant with the SEBI Guidelineson Corporate Governance, which havebeen incorporated in Clause 49 of theListing Agreement with the StockExchanges. In many areas, the Boardand Management practices exceed SEBIstipulations.

A detailed report on this subject formsAnnexure-B to this Report.

The Statutory Auditors of the Companyhave examined the Company’scompliance, and have certified thesame, as required under SEBIGuidelines. Such certificate isreproduced as Annexure - C to thisReport.

A Management Discussion and AnalysisReport covering a wide range of issuesrelating to performance, outlook etc., isgiven as Annexure - D to this Report.

The Directors’ Responsibility Statementas required under Section 217 (2AA) ofthe Companies Act,1956 is furnishedas Annexure - E to this Report.

The particulars of employees asprescribed by the Companies(Particulars of Employees) Rules,1975are furnished in Annexure - F to this

Report.

Directors

Mr R Jagannath, Deputy ManagingDirector, ceased to be a Director on the

Directors’ Report

expiry of his term of office on March31, 2003. Having joined the Companyas a Graduate Engineer, he handledvarious roles in Product Development,Marketing, Exports, Manufacturingetc., before he became WholetimeDirector and then Deputy ManagingDirector. Your Directors wish to placeon record the deep appreciation ofMr Jagannath’s dedicated service andvaluable contribution during his longtenure of 38 years with the Company.It is not proposed to fill this vacancy forthe time being.

Mr P A Balasubramanian, whorepresented LIC of India as a largeshareholder, stepped down from theBoard on July 26,2002 consequent tohis appointment as a Member of theInsurance Regulatory DevelopmentAuthority (IRDA). Your Directors wish tothank Mr Balasubramanian for hisadvice and guidance during hisassociation with the Board.

Mr S R Krishnaswamy, ExecutiveDirector (P&GS) joined the Board as aDirector from July 26, 2002 as aNominee of LIC, in place of Mr P ABalasubramanian.

Mr R Sorce ceased to be a Director ofthe Board effective from October 25,2002. In his place, Mr M Bianchi,General Legal Counsel of IVECO SpA,Italy was nominated to the Board bythe major shareholder M/s LRLIHLimited. The Board wishes to record itsappreciation of Mr Sorce’s services.

Mr D G Hinduja, Mr S R Krishnaswamy,Mr E A Kshirsagar and Mr M Bianchiretire by rotation at the forthcomingAnnual General Meeting, and areeligible for re-appointment. Thenecessary resolutions are being placed

before the members for approval.

Cost Auditor

The Government has stipulated CostAudit of the Company’s records in

respect of commercial vehicles as wellas engines. M/s GEEYES & Co., CostAuditors have carried out theseassignments. Their findings have beenvery satisfactory.

Secretarial Audit

As directed by Securities and ExchangeBoard of India (SEBI), Secretarial Auditis being carried out at the specifiedperiodicity by a Practising CompanySecretary. The findings of theSecretarial Audit were entirely

satisfactory.

Auditors

M/s M S Krishnaswami & Rajan andM/s Price Waterhouse retire at theensuing Annual General Meeting andare eligible for re-appointment. TheAudit Committee of the Board hasrecommended their re-appointment.The necessary resolution is being placedbefore the shareholders for approval.

The Company has receivedconfirmation that their appointmentwill be within the limits prescribedunder Section 224(1B) of the

Companies Act, 1956.

Acknowledgement

The Directors wish to express theirappreciation of the continuedco-operation of the Central and StateGovernments, Bankers, FinancialInstitutions, Customers, Dealers andSuppliers and also the valuableassistance and advice received frommajor shareholders LRLIH Ltd., theHinduja Group and IVECO. TheDirectors also wish to thank all theemployees for their contribution,support and continued co-operation

through the year.

On behalf of the Board of Directors

Chennai R J SHAHANEY

May 2, 2003 Chairman


Annexure A to Directors’ Report

2. Benefits derived as a result of the above R & D :

– Increased customer acceptance – Better value

equation.

3. Future Plan of Action :

– To achieve total self-reliance in vehicle

engineering.

– Increase manpower, significantly upgrade

skills.

– Improve and increase infrastructure

4. Expenditure on R & D :

(Rs. Million)

(a) Capital 136.88

(b) Revenue 169.11

(excluding depreciation)

Total 305.99

Total R & D Expenditure

as % of total turnover 1%

Technology Absorption, Adaptation and Innovation

– A 4x2, 16 tonne truck with 6E, “H” series

engines was launched and performance isgood.

– Validation of upgraded 6 speed synchro gear

box has been completed and bulk productionhas commenced.

– a tipper version of the Hippo 6 x 4 vehicle has

been developed and trials are scheduled to

commence shortly.

(C) Foreign Exchange Earnings and Outgo

The details of earnings and outgo of foreignexchange is given in Schedules 1.6 to 1.9 of Notes tothe Accounts. The Company continues to strive toimprove its export earnings.

(A) Conservation of Energy

As part of the Company’s Policy of continuous

improvement, various energy conservation measureshave been pursued during 2002-03 also. There isclose monitoring of various processes as well asenergy consumptions at all the Plants. The majorsignificant contributions to the conservation ofenergy are :

– 10% reduction in fixed energy consumption.

– 5% reduction in overall energy consumption

against an increase in production of 7%.

– Improvement in power factor to optimum

levels.

– Continuous and systematic monitoring of

non-production energy consumption.

(B) Technology Absorption

Research and Development (R&D)

1. Specific areas in which R & D carried out by

the Company :

– Development work on the “H” series

engines, in 4 & 6 cylinder versions formeeting BS-II Emission standards has beencompleted and all versions have been typeapproved. Prototype / bulk production ofvehicles with above engines has alsocommenced.

– Development work on 6.5 litre 6 cylinder

BS-II engine is progressing to target.

– Development of Euro-III version of “H” series

engines is under progress.

– CNG version of 4 cyl. “H” series has been

developed.

– An uprated version of Stallion 4x4 vehicle (for

Defence) has been developed and is

undergoing durability trials.


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 prevalent mandatory guidelines on CorporateGovernance

- regularly reviewing the Board processes and the Management systems for further improvement

2) BOARD OF DIRECTORS

a) Composition : The Board of Directors of the Company, headed by a non-executive Chairman, consisted of thefollowing Directors, as on March 31,2003, categorised as indicated:

i) Non-executive Directors

a) Promoter Group Mr A K Das (Alternate : Mr I N Chatterjee)

Mr D G Hinduja

Mr H Klingele

Mr F Sahami (Alternate : Mr B D Punjabi)

Mr M Bianchi (Alternate : Mr G Sagone)

b) Connected with Associate

Companies Mr R J Shahaney (Chairman)

c) Independent Mr D J Balaji Rao

Mr P K Choksey

Mr E A Kshirsagar

Mr S R Krishnaswamy (representing LIC as shareholder)

ii) Executive Directors

a) Managing Director Mr R Seshasayee

b) Deputy Managing Director Mr R Jagannath

Mr R Jagannath ceased to be a Director from April 1, 2003.

Mr Y M Kale is Alternate Director to Mr D G Hinduja from May 2, 2003.

b) Attendance at Board Meetings and last A.G.M. and details of memberships of Directors in other Boards

and Board Committees

Details of Board Meetings held during the year 2002-03

• The time gap between any two meetings did not exceed four months.• The last Annual General Meeting was held on July 26, 2002.

Date of Meeting Board Strength No. of Directors present

May 7, 2002 12 11

July 26, 2002 12 11

October 25, 2002 12 10

December 10, 2002 12 9

January 24, 2003 12 12


Name of the Director No. of Whether Other Boards Other BoardBoard attended (excluding Committees

meetings last A.G.M. Ashok Leyland) (excludingattended held on (Note 1) Ashok Leyland)

July 26, 2002 (Note 2)

Mr R J Shahaney 5 Yes 5 1(of which 4 as Chairman)

Mr D J Balaji Rao 5 Yes 4 8(of which 3 as Chairman)

Mr P A Balasubramanian (Note 3) 1 N.A. N.A. N.A.

Mr P K Choksey 5 Yes 5 7(of which 1 as Chairman) (of which 3 as Chairman)

Mr A K Das 2 No NIL NIL

Mr D G Hinduja 4 Yes 5 1

Mr H Klingele 4 Yes 1 NIL

Mr S R Krishnaswamy (Note 4) 3 N.A. NIL NIL

Mr E A Kshirsagar 5 Yes 1 2(of which 1 as Chairman)

Mr F Sahami 4 Yes 3 3(of which 1 as Chairman)

Mr R Sorce (Note 5) – No N.A. N.A.

Mr M Bianchi (Note 6) 1 N.A. 1 NIL

Mr R Seshasayee 5 Yes 7 5(of which 1 as Chairman)

Mr R Jagannath 5 Yes 2 NIL

Alternate Directors :

Mr B D Punjabi 3 N.A. 4 4

Mr Matta Luigi (Note 7) – N.A. N.A. N.A.

Mr I N Chatterjee (Note 8) – N.A. 2 3

Mr G Sagone (Note 9) 1 N.A. 1 NIL

Note 1 : The above excludes Foreign companies, Private Limited Companies and Alternate Directorships.Note 2 : Only Remuneration Committee, Audit Committee, and Shareholders/Investors Grievance

Committee are reckoned for this purpose.Note 3 : Ceased to be a Director effective July 26, 2002.Note 4 : Appointed as a Director effective July 26, 2002.Note 5 : Ceased to be a Director effective October 25, 2002.Note 6 : Appointed as a Director effective October 25, 2002.Note 7 : Appointed as Alternate Director to Mr M Bianchi effective October 25, 2002 and ceased to be such Alternate

Director effective January 24, 2003.Note 8 : Appointed as Alternate Director to Mr A K Das effective October 25, 2002.Note 9 : Appointed as Alternate Director to Mr M Bianchi effective January 24, 2003.

MEMBERSHIPS AS ON 31/3/2003 IN


Secretarial Standards relating to Board Meetings

The Institute of Company Secretaries of India (ICSI) have laid down Secretarial Standards - SS-1 — relating to meetings of theBoard and Board Committees, and SS-2 relating to General Meetings. These Standards are so far only recommendatory, andare likely to be mandated in due course. The secretarial and the operating practices of the Company are in full conformitywith the above Secretarial Standards.

All the information required under Annexure-1 to Clause 49 of the Listing Agreement with Stock Exchanges are being placedbefore the Board with current status update at every meeting.

N.A. – Not Applicable


3) AUDIT COMMITTEE

a) Constitution

The Audit Committee of the Company was constituted in July 1987 with Terms of Reference, which covered mostof the aspects stipulated by SEBI in 2000. These were comprehensively reviewed once again by the Company’sBoard in the year 2000, and the Audit Committee has been mandated with the same Terms of Reference asspecified in Clause 49 of the Listing Agreements with Stock Exchanges. The current Terms of Reference also fullyconform to the requirements of Section 292A of the Companies Act, 1956.

b) Composition, names of members and Chairperson

The composition of the Audit Committee is as follows :

Independent - Mr P K Choksey (Chairman)

Mr D J Balaji Rao

Mr E A Kshirsagar

Promoter Group - Mr D G Hinduja (Alternate : Mr Y M Kale)

Mr F Sahami (Alternate : Mr B D Punjabi )

( Mr Y M Kale is Alternate Director to Mr D G Hinduja from May 2, 2003)

All the members of the Audit Committee have good exposure to finance as well as general management. Three of thefive members are / had been senior partners in leading firms of Chartered Accountants.

c) Meetings and Attendance

Audit Committee Meetings held during the year 2002-03 and Attendance Details

Attendance : Date of the Meeting Committee No. of DirectorsStrength present

May 6, 2002 5 3

July 25, 2002 5 5

October 24, 2002 5 5

January 23, 2003 5 4

• Mr N Sundararajan, Company Secretary is the Secretary to the Committee.

He is also the Head of the Internal Audit function since mid-May 2002, and has attended all the Meetings ofthe Committee.

• Mr T Anantha Narayanan, Executive Director - Finance attended all the meetings of the Committee as Invitee.

The Statutory Auditors of the Company and the Cost Auditors are invited to join the Audit Committee Meetings.The Audit Committee holds discussions with the Statutory Auditors on the “Limited Review” of the half-yearlyaccounts, the yearly Audit Plan, matters relating to compliance of Accounting Standards, their observations arisingfrom the annual audit of the Company’s accounts and other related matters. The Committee discusses with theCost Auditor about his observations in the Annual Cost Audit Reports and allied matters.

4) REMUNERATION COMMITTEE

a) The Remuneration Committee consists entirely of non-executive Directors. Mr P K Choksey, independent Director isthe Chairman of the Committee. Mr R J Shahaney and Mr F Sahami are the other members.The Committee is mandated with the following Terms of Reference :-

– Determination and approval of the quantum of commission and special allowance payable to the Managing/Deputy Managing Director(s); and

– Finalisation and approval of the annual increments to the Managing/Deputy Managing Director(s)

Within the financial limits approved by the shareholders, the above decisions are based on the overallperformance/ results of the Company during the relevant financial year, and also based on the Committee’sassessment of the personal contribution and achievements of the concerned director(s).




b) The Committee met once during the year (on May 6, 2002). All the members were present at this meeting.

c) The Remuneration Policy of the Company is :

(i) For Managing / Deputy Managing Directors :

The total remuneration, subject to shareholders’ approval, consists of

• a fixed component — consisting of salary, allowances and perquisites; the perquisites and benefits are inline with the Company’s Rules for senior managerial personnel.

• a variable component — linked to the performance of the Company as well as of the individual Director —consisting of Commission and Special Allowance, as may be determined by the Remuneration Committee,within the limits approved by the shareholders.

(ii) For Non-executive Directors

Sitting Fees as permitted under the Companies Act, 1956 (Rs.5000/- for every meeting of the Board or anyStatutory Committee of the Board attended by the Director) plus reimbursement of actual travel costs andincidental expenses incurred for attending such meetings.

At present there is no other remuneration to non-executive directors. Though the shareholders, at the AnnualGeneral Meeting held on July 24, 2001, have approved the payment of Commission to the non-executiveDirectors of the Company, no decision has been taken by the Board so far.

d) The details of remuneration paid/payable to the Directors for the year 2002-03 are :-

i) Non-executive Directors — Sitting Fees :- (excluding reimbursement of travel and other expenses incurred forthe business of the company)

Rs. Rs.

Mr R J Shahaney 65000 Mr H Klingele 20000

Mr D J Balaji Rao 45000 Mr E A Kshirsagar 45000

Mr P A Balasubramanian (*) 5000 Mr F Sahami 45000

Mr S R Krishnaswamy (*) 15000 Mr R Sorce –

Mr P K Choksey 60000 Mr M Bianchi 5000

Mr A K Das 10000 Mr B D Punjabi, Alt. Director 15000

Mr D G Hinduja 30000 Mr G Sagone, Alt. Director 5000

(*) Amount paid directly to the Life Insurance Corporation of India, whom the Director represents

ii) Managing / Deputy Managing Director(s) (No Sitting Fees)

Managing Director Deputy Managing Director(Rs.) (Rs.)

a) Fixed ComponentSalary 13,20,000/- 9,60,000/-

Perquisites (**) 13,20,000/- 8,41,409/-

b) Variable ComponentCommission 26,40,000/- 9,60,000/-Special Allowance 26,40,000/- 15,60,000/-

Total 79,20,000/- 43,21,409/-

(**) Certain perquisites are valued as per the Income Tax Rules. Does not include contribution to ProvidentFund @ 12% and Superannuation Fund @ 15% of the salary.

Both Mr Seshasayee and Mr Jagannath are under contract of employment with the Company. There is also acontract corresponding to Mr Seshasayee’s appointment as Managing Director, with 3 months’ notice period fromeither side. Mr Jagannath also had a contract corresponding to his appointment as Deputy Managing Director forthe period April 1,2002 to March 31, 2003. There is no severance fees payable to either of them.

The Company does not have any Stock Option scheme.



5) SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

a) The Shareholders/Investors Grievance Committee has been functioning since August 2000. Mr R J Shahaneyis the Chairman of the Committee; Mr R Seshasayee, Managing Director is a member. Mr R Jagannath,Dy. Managing Director was a member till March 31, 2003.

b) Mr N Sundararajan, Company Secretary is the Compliance Officer nominated for this purpose.

c) The Committee reviews the system of dealing with and responding to correspondence from all categoriesof investors viz., shareholders, debentureholders and fixed deposit holders. Every complaint letter receivedfrom Stock Exchanges/ SEBI/ Dept. of Company Affairs etc., and the responses thereto are reviewed by thisCommittee. The Committee also reviews the feedback from the Investor Satisfaction Surveys, and approvesinitiatives for further improvements in investor servicing.

During the year 12 complaint letters were received from the above authorities, and 11682 letters were receivedfrom investors on normal routine aspects; all these were dealt with satisfactorily.

d) Detailed internal norms have been laid down as a “Charter of Investor Services”, specifying time-limits forresponding to investor correspondence, and these norms which are displayed at our website have been adhered toand are being further improved. The very few letters, which occasionally remained pending beyond the norms,were due to inadequate documentation or clarifications being awaited.

e) As on March 31, 2003, there were no requests pending/overdue beyond the due dates.

6) GENERAL BODY MEETINGS

a) Details of location and time of holding the last three AGMs.

Year Location Date & Time

51st AGM - 2000 Narada Gana Sabha, May 30, 2000254 TTK Road, Chennai – 18 11.00 a.m.

52nd AGM - 2001 Rani Seethai Hall, July 24, 2001603 Anna Salai, Chennai – 6 10.45 a.m.

53rd AGM - 2002 Narada Gana Sabha, July 26, 2002314 TTK Road, Chennai – 18 10.15 a.m.

In addition, during the year, an Extraordinary General Meeting was held at Narada Gana Sabha, 314 TTK Road,Chennai – 600 018 on January 18, 2003 at 11.00 a.m.

b) Some Special Resolutions were approved at the above meetings. There has been no use of Postal Ballot so far.

7) DISCLOSURES

There have been no materially significant related party transactions with the Company’s Promoters, Directors,the Management, the Subsidiaries or relatives which may have potential conflict with the interests of the Company atlarge.

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 statutoryauthority on such matters.


8) MEANS OF COMMUNICATION

a) The half-yearly results are being mailed to all shareholders, along with a letter to the shareholders from theManaging Director.

b) The quarterly results are being published in leading national (English) newspapers and in vernacular (Tamil)newspapers. The quarterly results are also displayed on the Company’s website www.ashokleyland.com

c) The Company’s website also displays official press /news releases, and Presentations made to institutional investorsand to analysts.

d) A Management Discussion and Analysis Report has been part of the Annual Report from the year 1998-1999 onwards.

9) GENERAL SHAREHOLDER INFORMATION

a. 54th Annual General Meeting

— Date and Time July 22, 2003 - 10.00 a.m.

— Venue Narada Gana Sabha, 314 TTK Road, Chennai - 600 018.

b. Financial Calendar

Annual General Meeting July 22, 2003Unaudited results for the quarter ending June 30, 2003 July 22, 2003Unaudited results for the quarter/half-year ending September 30, 2003 Last week of Oct. 2003Unaudited results for the quarter ending December 31, 2003 Last week of Jan. 2004Audited Results for the year ending March 31, 2004 May 2004

c. Book Closure Date From July 1, 2003 to July 22, 2003 (both days inclusive)

d. Dividend payment date From July 22, 2003 onwards

e. a) Listing of Equity Shares Madras, Mumbai, *Ahmedabad, *Kolkata, *New Delhi and NationalStock Exchanges.

b) Listing of Global Depository London Stock ExchangeReceipts (GDRs)

The Listing Fee has been paid up-to-date, to all the Stock Exchanges.

f. Stock Code

a) Trading Symbol at Madras Stock Exchange ALL

Bombay Stock Exchange (Physical) 477

(Demat) 500477

National Stock Exchange ASHOKLEY

*Ahmedabad Stock Exchange 05550 ASHOKLEYL

*Calcutta Stock Exchange (Physical) 11477

(Demat) 10011477

*Delhi Stock Exchange 001159

b) Demat ISIN Numbers in Equity Shares INE 208A01011NSDL & CDSL

*Delisting from these Exchanges is being proposed, subject to Shareholders‘ approval at the 54th AGM.



h. Share Price performance in comparison to broad based indices – BSE Sensex and NSE Nifty

Share Price Movement (BSE) See Chart inside back cover

Share Price Movement (NSE)

i. Registrar and Transfer Agents :

All Securities Transfer work was done in-house till March 31, 2003. SEBI has directed that all Share Registrywork in respect of both physical and demat segments should henceforth be handled by a single CommonAgency and that such arrangement should be put into effect latest by March 31, 2003. Accordingly, fromApril 1, 2003, 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.

j. Share Transfer System

The authority relating to share transfer has been delegated to the Share Transfer Committee which consists ofMr R J Shahaney (Chairman), Mr P K Choksey and Mr R Seshasayee. Mr R Jagannath was also a member uptoMarch 31, 2003. The Committee met 5 times during the year 2002-03 for approving transfers, transmissionsetc. In addition, in order to further improve investor servicing, the Board has authorised the Managing Directorto approve all routine transfers and transmissions of shares. Such approval is being given by the ManagingDirector about twice a month (27 times during 2002-03). Transfers, transmissions etc., were approved within15 days (as against the Stock Exchange norm of 30 days); requests for dematerialisation were confirmedwithin 10 days (as against the norm of 15 days). Letters are sent to the shareholders after transfer of physicalshares in their names giving an option for dematerialisation of their shares. Wherever the option is exercised,the physical shares are dematerialised and electronic credit is given to those shareholders; in respect of othershareholders who have not opted for dematerialisation, share certificates are despatched by Registered Post.


g. Stock Market Data

The Stock Exchange, Mumbai National Stock Exchange

Share Price Sensex Share Price S&P CNX Nifty

Month High Low High Low High Low High Low

(Rs.) (Rs.) (Rs.) (Rs.)

April 2002 115.00 79.00 3538.49 3296.88 114.00 77.50 1153.30 1073.30May 2002 117.20 89.05 3478.02 3097.73 117.00 89.25 1136.55 1020.10June 2002 122.50 97.00 3377.88 3148.57 123.00 96.55 1102.05 1029.25July 2002 122.75 86.45 3366.74 2932.35 123.00 86.00 1087.40 943.60Aug 2002 104.00 90.60 3185.08 2931.78 105.00 90.95 1012.75 933.55Sep 2002 102.50 83.00 3227.62 2973.97 102.40 85.00 1024.65 960.20Oct 2002 96.10 84.30 3038.92 2828.48 97.00 84.30 983.60 920.10Nov 2002 98.00 80.25 3245.98 2928.63 95.95 80.25 1057.45 946.40Dec 2002 101.70 87.80 3413.83 3186.62 100.65 89.10 1103.95 1034.10Jan 2003 107.60 92.00 3416.92 3199.18 107.45 91.50 1105.60 1026.20Feb 2003 109.50 92.80 3341.61 3218.37 109.50 92.30 1103.80 1032.90Mar 2003 105.00 92.75 3311.57 3039.83 103.30 92.75 1070.85 974.10



k. (i) Distribution of Shareholding as on March 31, 2003

No. of Shares Shareholders No. of Shares

Number % Number %

Upto 50 27720 36.81 933750 0.79

51-100 19770 26.25 1721571 1.45

101-200 15715 20.86 2412515 2.03

201-500 9605 12.75 3017987 2.54

501-1000 1660 2.20 1206147 1.01

1001-2000 478 0.63 687311 0.58

2001-5000 204 0.27 635253 0.53

5001-10000 51 0.07 349687 0.29

10001 & above 120 0.16 107965199 90.78

TOTAL 75323 100.00 118929420 100.00

(ii) Pattern of Shareholding as on March 31, 2003

Sl.No CategoryNo. of No. of

%Holders Shares

1 Promoter - LRLIH Ltd(Includes 16460007 shares in GDR Form) 1 60576675 50.93

2 Resident Individuals 74082 12321627 10.37

3 Financial Institutions 21 21517264 18.09

4 Foreign Institutional Investors 23 8857024 7.45

5 Non-Resident Indians 223 74037 0.06

6 Corporate Bodies 874 2018845 1.70

7 Mutual Funds 51 7799422 6.56

8 Trusts 7 2522 0.00

9 Banks 40 226783 0.19

10 Others – GDR 1 5535221 4.65

TOTAL 75323 118929420 100.00

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 theCompany are accepted in the Stock Exchanges for delivery compulsorily in dematerialisation form only fromNovember 29, 1999. As on March 31, 2003, 69890027 shares representing 58.77% of the shareholdingshave been dematerialised.

Shares of the Company are actively traded in Mumbai and National Stock Exchanges, and hence have goodliquidity.

m. Outstanding GDR/ Warrants and Convertible Bonds, Conversion date and likely impact on the equity.

No GDR/ADR/Warrant is outstanding for conversion, and hence there is no impact on equity.

n. Plant LocationsEnnore Hosur – Unit I Hosur – Unit IIPost Box No.3 175 Hosur Industrial Complex 77 Electronic ComplexEnnore Hosur 635 126 Perandapalli VillageChennai 600 057 Tamil Nadu Hosur 635 109Tamil Nadu Tamil Nadu



Hosur – Unit IIA Bhandara AlwarCab Panel Press Shop Plot No.1 MIDC Industrial Area Plot No.SPL 298SIPCOT Industrial Complex Village Gadegaon Matsya Industrial AreaMornapalli village Sakoli Taluk, Bhandara 441 904 Alwar 301 030Hosur 635 109 Maharashtra RajasthanTamil Nadu

Hyderabad Ambattur, ChennaiDuctron Castings 3A/A&2 North PhaseB-15, IDA-Uppal Sidco Industrial EstateHyderabad 500 039 AmbatturAndhra Pradesh Chennai 600 098

Tamil Nadu

o. Address for Correspondence

To contact R&TA for all matters M/s. Integrated Enterprises (India) Ltd. Tel : 91-44-2814 0801/ 03relating to Shares, Dividends, 2nd Floor, Kences Towers Fax : 91-44-28142479Annual Reports 1, Ramakrishna Street e-mail : [email protected]

North Usman RoadT. NagarChennai 600 017

For Fixed Deposits Manager – Treasury Tel : 91-44-2573 3001/ 2573 3233Ashok Leyland Limited Fax : 91-44-2573 3798Ennore e-mail : [email protected] 600 057

For any other general Manager - Secretarial Tel : 91-44-24331120/24331128/matters or in case of Ashok Leyland Limited 24331129any difficulties/ Building No. 2, 2nd Floor Fax : 91-44-24335633grievances Khivraj Complex II e-mail : [email protected]

477-482, Anna Salai [email protected], Chennai 600 035

Ashok Leyland Website address : www.ashokleyland.com

NON MANDATORY REQUIREMENTS

1. Non-executive Chairman

The Company maintains the office of the Non-executive Chairman and reimburses expenses incurred in the performanceof his duties.

2. Remuneration Committee

The Company has constituted a Remuneration Committee; full details are furnished under Item 4 above.

3. Shareholder Rights

The statement of half yearly results is being published in the Press. The Company has commenced mailing half-yearlyreports to shareholders starting from the half-year ended September 2001.

4. Postal Ballot

The Company has had no occasion to use the postal ballot so far.


Annexure C to Directors’ Report

CERTIFICATE ON COMPLIANCE WITH THE CONDITIONS OF CORPORATE GOVERNANCE UNDERCLAUSE 49 OF THE LISTING AGREEMENT(S)

To the Members ofAshok Leyland Limited

1. We have reviewed the compliance of conditions of Corporate Governance by Ashok Leyland Limited (the Company)during the year ended March 31, 2003 with the relevant records and documents maintained by the Company and fur-nished to us.

2. The compliance of conditions of corporate governance is the responsibility of the management. Our examination has beenlimited to a review of the procedures and implementation thereof, adopted by the Company for ensuring the complianceof the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statementsof the Company.

3. On the basis of our review and according to the information and explanations given to us, we certify that the Companyhas, for the year ended March 31, 2003, complied in all material respects with the conditions of Corporate Governanceas stipulated in Clause 49 of the listing agreement(s) with the Stock Exchange(s).

4. We state that no investor grievance is pending for a period exceeding one month against the Company as per the recordsmaintained by the Shareholders/Investors’ Grievances Committee.

5. We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiencyor effectiveness with which the management has conducted the affairs of the Company.

For M.S. KRISHNASWAMI & RAJAN N. RAMESH RAJANPartner

M.K. RAJAN For and on behalf ofMay 2, 2003 Partner PRICE WATERHOUSEChennai Chartered Accountants Chartered Accountants


Annexure D to Directors’ Report - Management Discussion and Analysis Report

Fiscal year 2002–03 witnessed revival inworld economies but the outlook wasovershadowed in the later part of theyear by war clouds over Iraq. The Indianeconomy, in 2002–03, is estimated tohave achieved 4.4% growth in GDPover the previous year, with 6.1%growth in industry and 7.1% growth inservice sectors. Poor monsoon andrainfall falling short of ‘normal’ by 19%dampened across-the-board economicrecovery. Agriculture and allied sectorsare estimated to have declined by3.1%. However, core infrastructureindustries cement, steel, electricalpower and petroleum production allrecorded positive growth.

The Indian economy is moving awayfrom being dominated by agriculture,which was the most importantdeterminant of economic fortunes inthe first half of the 1990s, after whichInformation technology led servicessector gained prominence. Contributionto GDP of agriculture & allied industriesreduced from 31.5% in 1992–93 to22.2% in 2002–03 while that ofservices sector increased from 42.1%to 50.7%. This shift has implications inrespect of lag effect on freightmovement.

The National Development Councilapproved the tenth 5-Year Plan inDecember 2002, with an ambitiousannual average growth target of 8%.Government’s continued focus oninfrastructure development, initiativesto maintain growth momentum in coreinfrastructure industries and continuedslackening of interest rates provide thenecessary framework for optimism onhigher growth in GDP being achievedon a sustained basis.

A. Commercial Vehicle Industry:Trends and Developments

An increase in Commercial Vehicle (CV)demand in India reflects the strongperformance by industry andmanufacturing sectors. Demand forMedium and Heavy duty Commercial

Vehicles (M&HCV), the Company’s corebusiness, registered 29.1% increaseover 2001–02.

The goods segment (including forDefence) grew by 31.5% over theprevious year. In contrast to thedeclining trend witnessed in the lastfew years, the 4x2 goods vehiclesegment showed substantial increase involumes. Though in terms of operatingeconomics on a per tonne-kilometrebasis, 4x2 goods vehicle is lesseconomical than multi-axle vehicles(MAV), new entrants to the business,motivated by increased freight activity,appear to prefer 4x2 vehicles for lowcapital cost and their relative inability toget larger unit loads.

Demand for goods vehicles increased inall regions, but was skewedgeographically, with northern marketleading in terms of growth percentage.

The bus segment increased by 18.6%over 2001–02. Financial health of mostState Transport Undertakings (STUs)continues to be poor, resulting inpostponement of vehicle purchases.Despite Honourable Supreme Court’sorder that buses operating in theNational Capital Region should bepowered by CNG, demand for CNGbuses during the year was disappointing.

Investments on road up-gradationshould increase freight movement byroad and will encourage use of vehicleswith higher power and torque forimproving vehicle productivity throughreduced turnaround time and higherpayload capacity. Transporters arerealizing the benefits of using highercapacity vehicles in terms of lower pertonne-kilometre costs and have startedexperimenting with the hub-and-spokeconcept of moving goods. Legislationon scrapping old vehicles now beingproposed is prompting transporters toreplace older trucks with moreproductive new vehicles.

Contribution of multi-axle vehicles andtractor-trailers (above 16.2 T GVW) to

overall goods volume increased from1.5% in 1990-91 to about 40% in2002-03. Low cost and tailor madevehicle-financing options tend tomitigate higher initial capital costs andtransporters are beginning to be lessprice sensitive. Preference isemerging for vehicles that embodyappropriate technology and are costcompetitive in the long run.

The market is segmented to a largeextent and there is a need for vehiclemanufacturers to develop appropriatecost-effective products. There is alsoa compelling need for vehiclemanufacturers to provide completeproduct solutions to transporters.

Increasing diesel fuel cost and stagnantfreight rates continue to be a concernfor the road transport Industry. WhileRailways are taking steps to becompetitive compared to roadtransport, road haulage is expected tomaintain the advantages of higherflexibility, less lead-time and lowerhandling costs, besides not facing theissue of secondary transportarrangements from railhead to deliverypoint.

B. Business Review

Market dynamics in India in 2002-03were adverse to maintenance of theCompany’s market position. Much ofthe growth was in the North where theCompany has relatively low presenceand the passenger segment, where theCompany has a strong presence, didnot grow as expected. To mitigate this,the company has embarked on a two-pronged strategy, viz., to launchsuitable products with the ‘H’ seriesengines to provide competitive productadvantage and, secondly, by improvingmarket reach and customersatisfaction.

The Company focused on improvingprocess efficiencies and continued thecost control initiatives. ‘Mission’ teamswere constituted to progress various



projects with high quality andcost-effectiveness. In order to achievestep jumps in improvement of theCompany’s operations right fromdesign to marketing, the Companyadopted the ‘Breakthrough’ conceptfor individual and team functioningduring the year.

An initiative code named ‘ACCESS’, forimproved market leverage throughCustomer Relationship Management,was launched with the help of externalconsultants. The project identified keyareas for improving value added by theCompany to Commercial Vehicleclientele to create greater customeracceptance and loyalty. Several pilotprojects have been initiated in ACCESS.Besides addressing the issues ofcustomer value and loyalty, projectACCESS is expected to generate somenew revenue streams.

With a view to creating value throughuse of excess or surplus resources ofthe Company, feasibility of supplyingcomponents and aggregates to variousclients in India and overseas is beingexplored.

Domestic Market

Strengthening the Company’s presencein the domestic market is vital. To thisend, the Company, apart from focusingon greater market reach in northernand eastern regions, introduced newmodels and up-graded aggregatesaimed at improving vehicle productivity.These have enabled market shareimprovements in several segments andareas.

During the year, the Company’s marketshare in the M&HCV category droppedto 28.9% from 30.3% in 2001–02.Market share in the passenger segmentdropped from 49.3% to 48.9%, whilegoods market share (including forDefence) fell from 25.9% to 24.8%.This drop can largely be attributed todemand growth distribution havingbeen adverse.

In line with the market driven strategyof a preferred single-engine platform,the Company has commenced launchof ‘H’ series vehicles in the goodssegment, initially with 4x2 goodsvehicle ‘1612’ in last quarter of 2002-03.Though the volume seeded was small,the vehicle gained large acceptanceand the company has lined up a seriesof trucks for launch under ‘H’ series tofurther leverage this advantage. Inaddition, the introduction of variousvehicles conforming to Bharat Stage IIemission norms has been well acceptedby the market.

Demand from the STU segment, inwhich the Company has a dominantpresence, has been lacklustre.However, the Company registeredmarket share improvement in theprivate passenger segment, and thisis expected to increase in the yearsto come.

Defence Supplies

Supplies to Defence comprise a majormarket segment for the Company.CKD vehicle-set sales to Defence fell by22.4% compared to the previous yeardue to deferred demand. Two newmodels have been developedfor Defence and are undergoing fieldevaluation.

Exports

Export market in the SAARC regionappears to have reached a plateau.Sri Lanka may provide someopportunity if the ongoing talksbetween the Government of Sri Lankaand LTTE continue to pave the way topeace and development.

The Company’s Falcon buses have beenwell accepted in Gulf countries andpotential for enhancing supplies exists.Efforts have been initiated to exportsuch buses to West Africa. Inroadshave been made into Seychelles andAfghanistan. Since Afghanistan is adeveloping economy, it is expected thatthe territory would provide further

opportunities to AL. The Company isalso pursuing a major contract forsupply of trucks to Iraq. Thereconstruction of Iraq may provide yetanother opportunity for the Company.

The Company’s vehicle exports in2002-03 increased by 17.5% overprevious year in contrast to a 9.8%drop in total Indian CV exports.

The Company is committed to work onbusiness development overseas andbeing globally competitive in terms ofboth quality and price.

Engines

During 2002–03 the Company’s salesoutperformed the market byregistering 12.7% increase over2001–02, whereas the market grew byabout 9%. The Company increased itsmarket share in the special enginessegment and further consolidated itsdominant position in the marineengines segment while retaining itsmarket share in the generator-setsegment.

The Company is ready with enginesconforming to emission norms notifiedto be effected for industrial engines inthe second quarter of 2003–04.

Spare Parts

Apart from continuing stiffcompetition from auto ancillaries in theoriginal equipment supplier market,which has put severe pressure on spareparts prices, consumption of spares pervehicle is declining owing to improvedlife and reliability of aggregates on acontinual basis.

The Company is focussing on brandvalue enhancement by creating branddifferentiation for the Leyparts name,improved packaging and use oftamper-proof cartons, in addition topromotional activities.

Spare parts sales, (including spare partsexports but excluding sales by way ofCKD packs) increased by 2.7% over2001–02 to Rs. 2,019 million.



Technology Up-gradation

As mentioned last year, the Company ismoving to a market-driven preferredengine platform with the ‘H’ engineseries. The Company is also gearing upwith engines that will conform toemission standards beyond BharatStage-II.

The Company has taken measures totie up with world-renowned aggregatemanufacturers for the lower endsegment of Light Commercial Vehiclesand for up-grading its Heavy-dutyCommercial Vehicle product offerings.

To cater to the market requirement forhigher-powered engines, the Companyhas obtained technology formanufacture of 260 hp J08C-TI enginesfrom Hino Motors, Japan, whichprovide essential fuel-efficiency andsuperior reliability and performance aswell.

Higher power engines require highertorque gearboxes - the Company is inthe process of finalising its strategy fora suitable gearbox, which is expectedto be in place shortly.

Up-graded versions of the Company’s 5and 6-speed synchromesh gearboxeshave been successfully developedindigenously by the Company and willbe offered for select vehicleapplications. Technology has beenobtained from ZF Friedrichshafen,Germany, for a new 6-speedsynchromesh gearbox - these will beintroduced during 2003-04 in theCompany’s products.

The Company has already introducednew rear axles - several of the newmodels lined up for launch during2003–04 would feature upgradedaggregates packaged with other chassisimprovements for better vehiclereliability and durability.

Centralised R&D facility near Chennaihas been commissioned, to cater toall chassis engineering activities.

Emphasis will continue to reduceconcept-to-market lead-time.

An Advanced Engineering Group hasbeen constituted as part of ProductDevelopment to identify and developnew technologies that are capable ofprofitable commercial exploitation incommercial vehicles.

During the year, the Company spent1% of its turnover towards R&D andhas budgeted to increase this to 2%during 2003–04, targeting 3% ofturnover for R&D in two to three yearstime. The Company is committed toadopting contemporary technology toimprove driver comfort and passengersafety. The Company is fullyconscious of the various challenges itneeds to address and is confident offulfilling the expectations of society,Government and its customers.

Information Technology

The Company has successfullyupgraded IT infrastructure at itsmanufacturing units and marketingoffices. Focus will be to realise benefitsof the IT investment already put inplace. In addition, it is planned todevelop a suitable CustomerRelationship Management programmeand upgrade the IT architecture forproduct development.

All manufacturing units, marketingoffices and corporate office have beeninterconnected through the newlycommissioned Ennore Data Centre, thecentralised data processing hub.

Human Resources

To meet various emerging challenges,the Company has made significantstrides in an organizational renewalprogramme, with focus on enhancingorganizational efficiencies, employeecompetencies and commitment.

The employee profile is rapidlychanging with reduction in average agethrough fresh large-scale inductionfrom the best business schools andengineering institutions. Ashok Leyland

is a day-1 recruiter in many prestigiouscampuses. An experimental initiative isunderway, of “Special AssignmentInternships”, involving the top tenB-Schools and top five technicalschools.

The Company’s global ambitions and itsimminent plans to enter frontiertechnologies have facilitated significantlateral induction, forming the nucleusof an international talent-pool in themaking.

At the same time, homegrown talent isbeing nurtured for taking up criticalassignments through CompetencyDevelopment Workshops and FutureLeaders Programme. The Company hasidentified over 200 key executives withhigh potential through monitoring andmentoring their contribution to theorganization.

Added impetus to employeeinvolvement has been a combination ofrecognition and reward schemes tosalute individual, team and unit levelcontributions. Among them are Rewardfor Individual Search for Excellence(RISE) and 100% Club, a coveted listingand the highest recognition to beconferred by the Managing Committeeupon individuals and teams foroutstanding performance.

‘Integrated employee involvement ratio’is a path-breaking concept thataggregates the breadth, depth andintensity of employee involvement toform the basis for an inter-unitcompetition leading to the BITES shield(Breaking Thresholds by Involving TotalEmployees). IMPROVE, the annualcelebration of innovative thinking in theteam format had a record 93 teams atthe preliminaries.

Mutli-channel communication andmultiple platforms covering theworkplace to employee families andcommunities, engage employeesmeaningfully and with psychologicalrewards. Opportunities to be of value to


society, these activities are also animportant first-hand learning on thepurpose of business beyond thebalance sheet.

C. Management of Risks

The Company is exposed to Business,Asset and Financial risks:

Business risks include cyclical nature ofdemand for CVs due to economicslowdown, risks of technologicalobsolescence due to stricter emission/safety norms and more intensecompetition. Other potential risksinclude disruption in production due toacts of God and man-made. All theserisks are continuously addressed in thebusiness plans – both long term as wellas short term; risk mitigation strategiesare drawn up and acted upon. Besides,specific risk covers are taken, whereveravailable, based on risk perceptions,past experience, cost of cover, etc.

Asset risks include threat to physicalassets through accidents, naturalcalamities, obsolescence, riots,terrorism, etc. The Company has aninternal system to assess these risks,define the limits of exposure foroperation and take appropriateinsurance cover.

Foreign exchange risks are inherent inexports of products, import ofmaterials, capital equipment,technology, etc., and loans in foreigncurrency. The Company has a well-defined exposure management systemto review its exchange exposure and totake appropriate measures to mitigatelosses.

The Company has also taken a policyfor its Directors and other Officers tocover them from risks, if any, arisingfrom discharge of officialresponsibilities.

D. Internal Control systems and theiradequacy

The Management Committeeconsisting of senior management meets

every month to discuss various issuesthat directly influence the business andto take strategic decisions to ensurethat the Company’s financial health andthe shareholders’ interests areprotected.

The Company’s systems and internalcontrols address the following:

. Operational efficiency

. Protection and conservation ofresources

. Accuracy and promptness infinancial reporting

. Compliance with laws andregulations

The Company has a well-definedorganisational structure, clearly definedauthority levels and well-documentedpolicy and guidelines facilitated by an ITinfrastructure at the manufacturingunits and marketing offices to ensureprocess efficiencies.

The Internal Audit department of theCompany carries out pre-audit andpost-audit checks, reviews and ensuresthat audit observations are acted upon.The Audit Committee of the Board ofDirectors reviews the internal auditreports and the adequacy of internalcontrols.

E. Financial Performance

Revenues

Turnover for the year at Rs.30740million has increased by 16.9% ascompared to previous year, mainly dueto increase in sale of commercialvehicles by 22.8% and engines by12.7%. However the sale of castingsand spare parts and others were lowerby 31.0% and 13.1% respectivelymainly due to lower offtake of castingsby tractor industry and lower ordersfrom Defence.

Costs

With the focus more on deliveringhigher value to the customer, costmanagement has emerged as key

determinant of the enterpriseprofitability. Thus, total costmanagement approach was pursued inright earnest to improve processes,enhance productivity of men andmachines, rationalize resourcesdeployment, prudent fundsmanagement for maximum benefit.The upheavals in the prices movementof commodities like steel, aluminium,rubber, etc., increase in other inputcosts like power and changes in CentralMotor Vehicle Rules had inflationaryeffect on costs. Despite this, overallmaterial costs have remained stagnantdue to mitigative steps initiated. Majorinitiative was undertaken during theyear to right size the manpower with1173 employees opting for VoluntaryRetirement Schemes introduced duringthe year. Consequently, manpowerstrength at the end of the year hasgone down to 11860 as against 13218at the beginning of the year –representing a decrease of 10.3%.Overall manpower cost, has however,gone up, due to full year impact ofwage settlements in the manufacturingunits, pay revision for Executives, higherprovision for retirement benefits due toreduction in interest rates, etc. Otheroperating expenses have moved intandem with increased level ofoperations.

Depreciation has increased from Rs.954million in the previous year to Rs.1030million due to full year impact of lastyear’s additions as well as the charge ofRs.153 million on additions during theyear.

Effective working capital managementincluding aligning production to salescoupled with prudent borrowalsmanagement have helped in reducingthe financial expenses to Rs.585 millionfor the year as against Rs.825 million –a steep reduction of 29.1%.

Extraordinary item of Rs.87 millionrepresents amortisation ofcompensations paid under Voluntary




Rs. Million

2002-03 2001-02

Sources of FundsShareholders’ Funds 9595 10320Loan Funds 7172 8880Deferred Tax Liability-Net 1685 1892

Total 18452 21092

Application of FundsFixed Assets 9398 10099Investments 1576 1173Net current Assets 7478 9820

Total 18452 21092

Retirement Schemes (VRS) made uptoSeptember 2002 for the year 2002-03.

Resources

During the year, the Company incurredcapital expenditure of Rs.1182 millionmainly towards investments in capacityexpansion (including throughconversions), for “H” series engines,other aggregates, R & D andInformation Technology.

Net Current Assets as on 31.3.2003was Rs.7478 million as against theprevious year level of Rs.9820 million.Inventories have come downsignificantly to Rs.4105 millioncompared to Rs.5953 million as atMarch 2002, due to alignment ofproduction to sales and focusedregulation of inwarding of materials.Increase in debtors level from Rs.4928million in the previous year to Rs.5182million is mainly due to higher level ofsales. The high level of cash and bankbalance is due to substantial collections

from Debtors / Bill Discounting duringthe last days of the financial year.

Financial Restructuring

Pursuant to the approval ofShareholders at the ExtraordinaryGeneral Meeting held on January 18,2003 and confirmation by theHonourable High Court of Madras vide

its Order dated February 28, 2003, theCompany adjusted to the SecuritiesPremium Account certain items ofexpenditure / diminution in value of itsassets.

As mentioned earlier, the Companyeffected reduction in manpower acrossall Units thereby incurring Rs.628million as VRS compensation. Inaddition, the Company retired relativelyhigh cost loan to the extent of Rs.1550million thereby enabling furtherreduction in interest cost. Apart fromthese types of expenditure (termed as“Miscellaneous Expenditure”) theCompany also recognized possiblediminution in carrying values of itsmanufacturing facilities in the light ofchanging emission / technologystandards. Further, the erosion in valueof investments, mainly in AssociateCompanies, necessitated a need torecognize likely diminution in thecarrying value of these investments. Byobtaining shareholders’ approval andHigh Court’s confirmation, theCompany aims to present the intrinsicworth of its financial assets in a morerealistic manner for objectiveunderstanding of the same. It is firmlybelieved that such transparentpresentation would help in betterunderstanding of the financial positionof the Company and improve its futureEarning Per Share potentials.

Rs. Million

2002-03 2001-02 Inc / (Dec) %

Income

Sales 30740 26304 16.9

Other Income 153 180 (15.0)

Total 30893 26484 16.6

Expenditure

Manufacturing Expenses 22063 18593 18.7

Employee Expenses 2906 2571 13.0

Other Expenses 2521 2189 15.2

Depreciation 1030 954 8.0

Financial Expenses 585 825 (29.1)

Total 29105 25132 15.8

Profit before Extraordinary Item 1788 1352 32.3

Extraordinary Item 87 30 190.0

Profit before Tax 1701 1322 28.7

Tax Provision - Current 443 307 44.3

- Deferred 56 92 (39.1)

Profit After Tax 1202 923 30.2

Earnings Per Share (in Rs.) 10.11 7.76 30.3

Cash Earnings Per Share (in Rs.) 19.24 16.55 16.3


Rs. Million

Miscellaneous Expenditure (to the extent not written off)

- Compensation under Voluntary Retirement Scheme 571.91

- Debenture Issue / Loan Raising Expenses 4.99

- Premium on Prepayment of Borrowings 69.63 646.53

Diminution in value of

- Plant and Machinery 816.19

- Investments 116.71

Capital work-in-progress written off 19.71

Total amount utilized out of Securities Premium account 1,599.14

Rs. Million

2002-03 2001-02

Profit from operations 2636 2508

(Inc.) / Dec.in Net Working Capital 1605 1194

Net cash flow from operating activities(before extraordinary item) 4241 3702

Payments under Voluntary Retirement Scheme (628) (2)

Net cash flow from operating activities 3613 3700

Payment for Assets acquisition - net (1232) (1171)

Other Investments - net (204) 260

Cashflow from Financing activities (2758) (1593)

Net Cash inflow / (outflow) (581) 1196

The details of such adjustments to Share Premium Account are given below: previous year from Rs.1352 million(5.1% of turnover) to Rs.1788 million(5.8% of turnover). After providing forExtraordinary item of amortisation ofRs.87 million towards payments underVoluntary Retirement Scheme, theProfit Before Tax (after extraordinaryitem) stood at Rs.1701 million ascompared to Rs.1322 million achievedin the previous year. Provision forcurrent taxation has increased toRs. 443 million for the current yearas against Rs.307 million in theprevious year. The provision fordeferred taxation for the yearamounted to Rs.56 million as againstRs.93 million for the previous year. Profitafter Tax, for the year, works out toRs.1202 million as against Rs.923million for the previous year.

F. Outlook

The Indian economy has once againshown great resilience by absorbing thedrought conditions that prevailed in2002–03. However, average 8%growth rate considered in the tenthfive-year plan seems ambitiousconsidering three consecutive years ofless than 6% GDP growth.

Government’s initiatives such asreduction in excise and customs duties,focus on infrastructure development,thrust on agriculture, setting up ofExpert Advisory Council to monitorissues concerning agriculture,promoting investment by making stockmarkets more attractive, etc., providethe necessary impetus to optimism forsustained growth in the years to follow.All these factors can be expected tofuel the demand for commercialvehicles.

Having consolidated its presence inthe growth sectors of the commercialvehicle industry and having successfullyanticipated needed changes in productofferings and market interactions, theCompany is in a position to derive

benefits from market trends.

Liquidity

The Company’s principal sources ofliquidity arise from

a) Cash generated by operations

b) Cash and Bank balances

c) Unutilised limits with Banks

d) Unutilised limits of additionalborrowings

The Company enjoys AA- rating fromCRISIL and IND AA from FITCH for itslong term borrowings and P1+ ratingfrom CRISIL for its Commercial Paperprogramme. The Company believesthat it has sufficient liquidity to meet itsworking capital requirements and otheranticipated cash outflows.

The Company has considerably reducedits foreign exchange exposure throughminimizing imports and hedging

Foreign Currency loans. The Companyhas been actively monitoring itscurrency / interest rate exposuresthrough a centralized TreasuryDepartment for taking appropriateactions.

The Company registered Rs.2636million cash inflow from operations.After meeting working capitalrequirements, and extraordinary item ofPayments for Voluntary RetirementScheme of Rs.628 million, theCompany earned a net cash inflow ofRs. 3613 million. After meeting capitalexpenditure and other investmentoutlays, the net cash outflow for theyear was Rs.581 million.

During the year, the Companyimproved its Profit Before Extraordinaryitem significantly by 32.3% over



Responsibility in relation tofinancial 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

ICAI 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 31.3.2003

and of the results of operations for the

year ended 31.3.2003.

The financial statements have been

audited by M/s M.S. Krishnaswami &

Rajan and Price Waterhouse 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.

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& Internal controls

The company has taken proper and

sufficient care for the maintenance of

adequate accounting records as

required by the Statute.

Annexure E to Directors’ Report — Directors’ Responsibility Statement

Directors’ Responsibility Statementas per section 217(2AA) of theCompanies Act, 1956

Directors have overall responsibility for

the Company’s 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 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 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 Company’s 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.


Auditors’ Report to the Members

1. We have audited the attachedBalance Sheet of ASHOK LEYLANDLIMITED as at March 31, 2003, therelative Profit and Loss Account and theCash Flow statement for the yearended that date, signed by us underreference to this report. These financialstatements are the responsibility ofthe Company’s management. Ourresponsibility is to express an opinionon these financial statements basedon our audit.

2. We have conducted our audit inaccordance with auditing standardsgenerally accepted in India. ThoseStandards require that we plan andperform the audit to obtain reasonableassurance about whether the financialstatements are free of materialmisstatement. An audit includesexamining, on a test basis, evidencesupporting the amounts and disclosuresin the financial statements. An auditalso includes assessing the accountingprinciples used and significantestimates made by management, aswell as evaluating the overall financialstatement presentation. We believethat our audit provides a reasonablebasis for our opinion.

3.1 In our opinion and to the best ofour information and according to theexplanations given to us, the aforesaidFinancial Statements read with theStatement on Significant AccountingPolicies and Notes to the Accounts, givethe information required by theCompanies Act, 1956, (the Act) in themanner so required and also give a trueand fair view, in conformity with theaccounting principles generallyaccepted in India:

a) in the case of the Balance Sheet, ofthe state of the affairs of theCompany as at March 31, 2003;

b) in the case of the Profit and LossAccount, of the profit for the yearended on that date; and

approved valuer without mentioningtheir age. The fixed assets are beingphysically verified under a phasedprogramme of verification which, in ouropinion, is reasonable and no materialdiscrepancies have been noticed onsuch verification.

4.2 The fixed assets have not beenrevalued during the year.

4.3 Finished goods, stores, spareparts and raw materials includingcomponents of the Company at all itslocations have been physically verifiedby the Management at reasonableintervals.

4.4 In our opinion, the procedures ofphysical verification of the aforesaidstocks followed by the Managementare reasonable and adequate in relationto the size of the Company and thenature of its business.

4.5 The discrepancies noticed onphysical verification of such stocks werenot material as compared to bookrecords.

4.6 In our opinion, the valuation ofthe aforesaid stocks is fair and properin accordance with the normallyaccepted accounting principles and ison the same basis as in the precedingyear except for inclusion of customsduty in respect of imported goods lyingin bond, which however does not haveany impact on the profit for the year.

4.7 The Company has not taken anyloans, secured or unsecured, fromcompanies, firms or other parties listedin the register maintained underSection 301 of the Act.

4.8 The Company has not grantedany loans, secured or unsecured, tocompanies, firms or other parties listedin the register maintained underSection 301 of the Act.

4.9 The parties to whom loans oradvances in the nature of loans have

c) in the case of cash flow statement,of the cash flows for the year endedon that date.

3.2 We have obtained all theinformation and explanations which, tothe best of our knowledge and belief,were necessary for the purposes of ouraudit.

3.3 In our opinion, proper books ofaccount, as required by law, have beenkept by the Company so far as appearsfrom our examination of those books.

3.4 The Financial Statements dealtwith by this report are in agreementwith the books of account.

3.5 In our opinion, the aforesaidFinancial Statements comply inall material respects with the applicableAccounting Standards issued by theInstitute of Chartered Accountants ofIndia referred to in sub-section (3C) ofSection 211 of the Act.

3.6 On the basis of writtenrepresentations received from thedirectors, and taken on record by theBoard of Directors, we report that noneof the directors is prima faciedisqualified as on March 31, 2003 frombeing appointed as a Director in termsof Section 274 (1) (g) of the Act.

4. As required by the Manufacturingand Other Companies (Auditor’s Report)Order, 1988 issued by the Governmentof India and on the basis of such checksas we considered appropriate andaccording to the information andexplanations given to us, we furtherreport that:

4.1 In our opinion, the Company ismaintaining proper records to show fullparticulars including quantitative detailsand situation of fixed assets except inthe case of furniture, fittings andequipment acquired before 1.10.1973where the records maintained showquantitative details with their situationand values based on valuation by an


been given by the Company arerepaying the principal amounts asstipulated and are also regular inpayment of interest in most cases. Inthose cases where principal amountsand/or interest are not being paid asstipulated, reasonable steps have beentaken by the Company for recovery ofthe principal and/or interest.

4.10 In our opinion, there is anadequate internal control procedurecommensurate with the size of theCompany and the nature of its businessfor the purchase of stores, rawmaterials including components, plantand machinery, equipment and otherassets, and for the sale of goods.

4.11 There were no transactions ofpurchase of goods and materials andsale of goods, materials and servicesmade in pursuance of contracts orarrangements entered in the registermaintained under Section 301 of theAct and aggregating during the year toRs.50,000 or more in respect of eachparty.

4.12 The Company has a system ofdetermining unserviceable or damaged

stores, raw materials and finished /trading goods on the basis of technicalevaluation and on the aforesaid basis,in our opinion, adequate amounts havebeen written off such stocks in theAccounts.

4.13 In the case of public depositsreceived by the Company, theprovisions of Section 58A of the Actand the rules framed thereunder, havebeen complied with.

4.14 In our opinion, the Company ismaintaining reasonable records for thesale and disposal of significantrealisable scrap. The Company does nothave any by-products.

4.15 In our opinion, the Companyhas an internal audit systemcommensurate with its size and natureof its business.

4.16 On the basis of the recordsproduced, we are of the opinion thatprima facie, the cost records andaccounts prescribed by the Governmentof India under Section 209 (1) (d) of theAct have been maintained by theCompany. However, we are notrequired to carry out and have not

Auditors’ Report to the Members


M.K. RAJAN For and on behalf of2 May, 2003 Partner PRICE WATERHOUSEChennai Chartered Accountants Chartered Accountants

carried out any detailed examination ofsuch records and accounts.

4.17 The Company is regular indepositing Provident Fund andEmployees’ State Insurance dues withthe appropriate authorities.

4.18 At the last day of the year, therewere no material amounts outstandingin respect of undisputed income tax,wealth tax, sales tax, customs duty andexcise duty which were due for morethan six months from the date theybecame payable.

4.19 During the course of ourexamination of the books of accountcarried out in accordance with thegenerally accepted auditing practices inIndia, we have not come across anypersonal expenses which have beencharged to Profit and Loss Account.

4.20 The Company is not a sickindustrial company within the meaningof Section 3(1)(o) of the Sick IndustrialCompanies (Special Provisions) Act, 1985.


31 March,

2002Schedules Rs. Million Rs. Million Rs. Million

SOURCES OF FUNDS

Shareholders’ Funds

Capital 1.1 1,189.29 1,189.29

Reserves and Surplus 1.2 8,405.57 9,180.24

9,594.86 10,369.53

Loan Funds

Secured Loans 1.3 5,045.62 5,919.93

Unsecured Loans 1.4 2,126.69 2,959.91

7,172.31 8,879.84

Deferred Tax Liability - Net 1,684.99 1,891.50

Total 18,452.16 21,140.87

APPLICATION OF FUNDS

Fixed Assets 1.5

Gross Block 18,120.69 16,904.31

Less Depreciation (Refer Note 6 of Schedule 1.5) 9,095.50 7,343.32

Net Block 9,025.19 9,560.99

Capital Work-in-Progress 373.19 537.35

9,398.38 10,098.34

Investments 1.6 1,575.76 1,173.38

Current Assets, Loans and Advances

Inventories 1.7 4,104.56 5,953.40

Sundry Debtors 1.8 5,181.50 4,928.46

Cash and Bank Balances 1.9 2,219.23 2,748.94

Loans and Advances 1.10 1,899.41 1,920.96

13,404.70 15,551.76

Less Current Liabilities and Provisions 1.11

Liabilities 4,931.56 4,943.46

Provisions 995.12 788.20

5,926.68 5,731.66

Net Current Assets 7,478.02 9,820.10

Miscellaneous Expenditure 1.12 – 49.05

Total 18,452.16 21,140.87

Statement on Significant Accounting Policies, Schedules 1.1 to 1.12 andNotes to the Accounts form part of this Balance Sheet.

T. ANANTHA NARAYANAN For and on behalf of the BoardExecutive Director - Finance

N. SUNDARARAJAN R. SESHASAYEE R.J. SHAHANEYCompany Secretary Managing Director Chairman

This is the Balance Sheet referred to in our report of even date.


M.K. RAJAN For and on behalf ofPartner PRICE WATERHOUSEChartered Accountants Chartered Accountants

2 May, 2003Chennai

Balance Sheet as at 31 March, 2003


31 March,

2002Schedules Rs. Million Rs. Million Rs. Million

INCOME

Sales 2.1 30,739.95 26,304.48

Other Income 2.2 152.93 179.43

30,892.88 26,483.91

EXPENDITURE

Manufacturing and 2.3

Other Expenses 2.4 27,490.38 23,353.50

2.5

Depreciation 2.6 1,029.69 953.55

Financial Expenses 2.7 585.10 825.12

29,105.17 25,132.17

Profit Before Extraordinary Item 1,787.71 1,351.74

Extraordinary item (Refer Note 10 to the Accounts) 86.69 29.68

Profit Before Tax 1,701.02 1,322.06

Provision for Taxation – Current 442.50 307.00

– Deferred (Refer Note 5 (a) to the Accounts) 56.40 92.50

Profit After Tax 1,202.12 922.56

Balance Profit from last year 799.23 736.44

Transfer from / (to) - Debenture Redemption Reserve (437.50) (613.34)

579.17 588.75

- General Reserve (500.00) (300.00)

1,643.02 1,334.41

Proposed Dividend [Subject to Tax - for 2001-02] 594.64 535.18

Tax on Proposed Dividend 76.19 —

Balance Profit carried to Balance Sheet 972.19 799.23

Basic Earnings Per Share (Face value Rs. 10) Rs.10.11 Rs. 7.76

Statement on Significant Accounting Policies, Schedules 2.1 to 2.7 and

Notes to the Accounts form part of this Profit and Loss Account.

Profit and Loss AccountFor the Year Ended 31 March, 2003



This is the Profit and Loss Account referred to in our report of even date.


M.K. RAJAN For and on behalf ofPartner PRICE WATERHOUSEChartered Accountants Chartered Accountants

2 May, 2003Chennai


31 March,2002

Rs. Million Rs. Million

CASH FLOWS FROM OPERATING ACTIVITIES

PROFIT BEFORE TAX 1,701.02 1,322.06

ADJUSTMENTS FOR:

Depreciation 1,029.69 953.55

Other Amortisations 100.25 60.68

Unrealised foreign exchange gains / losses (2.24) 7.75

Interest expense 810.42 872.66

Interest income (360.02) (324.70)

Income from Investments (92.11) (134.74)

Provision for diminution in value of Investments / Advances 20.72 52.37

(Profit)/Loss on disposal of Fixed Assets / Long Term Investments (13.00) (16.64)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 3,194.73 2,792.99

ADJUSTMENTS FOR CHANGES IN:

Inventories 1,848.84 (776.66)

Debtors (254.16) 1,739.82

Advances (125.20) (30.09)

Current Liabilities and Provisions 135.13 260.48

CASH GENERATED FROM OPERATIONS 4,799.34 3,986.54

Income Tax (Paid) / Refund (558.78) (283.99)

NET CASH FLOW FROM OPERATING ACTIVITIES BEFOREEXTRAORDINARY ITEM 4,240.56 3,702.55

Payments under Voluntary Retirement Scheme (627.86) (2.26)

NET CASH FLOW FROM OPERATING ACTIVITIES AFTEREXTRAORDINARY ITEM (A) 3,612.70 3,700.29

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for assets acquisition (1,243.20) (1,192.67)

Proceeds on sale of Fixed Assets 11.61 21.64

Purchase of Long Term Investments (671.00) —

Sale/Redemption of Long Term Investments 48.04 94.77

Income from Investments - Interest 42.46 27.44

- Dividend 92.06 134.12

Changes in Advances 284.07 3.31

NET CASH FLOW FROM INVESTING ACTIVITIES (B) (1,435.96) (911.39)

CASH FLOWS FROM FINANCING ACTIVITIES

Long term Borrowings - Raised 2,321.17 2,046.33

- Repaid (3,155.91) (2,409.61)

Changes in Short term borrowings (871.42) (77.34)

Debenture issue and Loan raising expenses paid (1.66) (2.05)

Premium paid on Prepayment of Loan (65.18) –

Interest paid - net (449.81) (626.47)

Dividend Paid and tax thereon (535.18) (524.24)

NET CASH FLOW FROM FINANCING ACTIVITIES (C) (2,757.99) (1,593.38)

NET CASH INFLOW / (OUTFLOW) (A+B+C) (581.25) 1,195.52

OPENING CASH AND CASH EQUIVALENTS (D) 2,842.98 1,647.46

CLOSING CASH AND CASH EQUIVALENTS (E) 2,261.73 2,842.98

NET INCREASE IN CASH AND CASH EQUIVALENTS (E-D) (581.25) 1,195.52

Cash Flow Statement for the Year Ended 31 March, 2003


31 March,2002


NOTES TO THE CASH FLOW STATEMENT

1. Components of Cash and Cash equivalents:

Cash and Bank balances excluding those relating to Unpaid Dividend 2,211.85 2,742.79

Investments in money market instruments or deposits which have a tenorof three months or less 50.11 100.00

Unrealised foreign exchange gains / losses (0.23) 0.19

2,261.73 2,842.98

2. The adjustments referred to in Note 9 to the Accounts are excludedfrom the above Cash Flow Statement.

Cash Flow Statement for the Year Ended 31 March, 2003 (Continued)

This is the Cash Flow Statement referred to in our report of even date.


M.K. RAJAN For and on behalf of2 May, 2003 Partner PRICE WATERHOUSEChennai Chartered Accountants Chartered Accountants




Statement on Significant Accounting Policies

1. Accounting Convention

Financial statements are prepared inaccordance with the generally acceptedaccounting principles in India underhistorical cost convention except so faras they relate to revaluation of certainland and buildings.

2. Fixed Assets and Depreciation/Amortisation

2.1 Cost of all civil works (includingelectrification and fittings) is capitalisedwith the exception of alterations andmodifications of a capital nature toexisting structures where the cost ofsuch alteration or modification is Rs. 1Lakh and below. Cost of other fixedassets, where it exceeds Rs. 10,000 andthe estimated useful life is two years ormore, is capitalised. Cost of initialspares and tools is capitalised alongwith the respective assets. Cost of fixedassets is net of credits under CenvatScheme. Interest and other relatedcosts, including amortised costs ofborrowings attributable to majorprojects are capitalised as part of thecost of the respective assets.

2.2 Assets are depreciated/amortised(100% or 95% of the cost as the casemay be) on straight line basis:

a) in respect of Leasehold Land, over40 years or the period of the lease,whichever is less;

b) in respect of Buildings and Plantand Machinery (except technical know-how fees and assets subject matter ofdiminution in value as at September 30,2002) at the rates specified in ScheduleXIV to the Companies Act, 1956;

c) in respect of assets subjected todiminution in value, on the asset’srevised carrying amount, over itsremaining useful life; and

d) in respect of other assets(including technical know-how fees),over their estimated useful lives, subjectto statutory requirements.

In respect of Leasehold Land andBuildings subjected to revaluation as at31 December, 1984, depreciation /amortisation is calculated on therespective revalued amounts, over thebalance useful life as determined by thevaluers in the case of buildings and asper (a) above in the case of land.

2.3 Depreciation/Amortisation ischarged for the full year on theadditions made during the first half ofthe year and for six months on theadditions made during the second halfof the year. Changes to the cost of anasset in subsequent years on account ofexchange fluctuations, priceadjustments, changes in duties or similarfactors are depreciated/ amortised in thesame way as done in the case of theoriginal cost of the asset. Nodepreciation is provided for in respect ofassets disposed of during the year.

3. Investments

Current Investments are valued at costor market value whichever is lower.Long Term Investments are stated atcost less provision for diminution otherthan temporary, if any, in value of suchinvestments.

4. Inventories

4.1 Inventories are valued at cost ornet realisable value whichever is lower;cost is ascertained on the followingbasis:

— Stores, Spares, Consumable tools,Raw materials and components: onmonthly moving weighted averagebasis. In respect of works-madecomponents, cost includes applicableproduction overheads.

— Work-in-Progress, Finished / Tradinggoods: under absorption costingmethod.

4.2 Cost includes taxes and duties andis net of credits under Cenvat Scheme.

4.3 Cost of patterns and dies isamortised equally over five years.


Statement on Significant Accounting Policies

over the period of such borrowings.Premium paid on prepayment of anyborrowing is amortised over theunexpired period thereof or sixtymonths, whichever is less.

Compensation under VoluntaryRetirement Scheme is amortised overthirty six months.

7. Revenue Recognition

Revenue from sale of products isrecognised on despatch or appropria-tion of goods in accordance with theterms of sale and is inclusive of exciseduty and export incentives, but net ofincentive on sales including commissionand rebate. Revenue arising due toprice escalation claim is recognised inthe period when such claim is made inaccordance with terms of sale.

8. Government Grants

Grants in the form of Capital/Investment subsidy are treated asCapital Reserve. Incentives in the natureof subsidies given by the Governmentare reckoned in revenue in the year ofeligibility.

9. Research and Development

Expenditure on the design andproduction of prototypes is charged torevenue as incurred.

10. Retirement Benefits

Liabilities for gratuity to all employeesand for superannuation to the eligibleemployees are determined inaccordance with the schemesadministered by Life InsuranceCorporation of India and contributionspayable under the said schemes arecharged to revenue. Liability for leaveencashment is provided on actuarialbasis.

4.4 Surplus / Obsolete / Slow movinginventories are adequately provided for.

5. Foreign Currency Transaction

5.1 All foreign currency transactionsare recorded at the rates prevailing onthe date of the transaction.

5.2 All foreign currency assets andliabilities, other than investments andthose covered by forward contracts,are restated at the exchange rateprevailing at year end.

5.3 Investments outside India arecarried in the Balance Sheet at therates prevailing on the date of thetransaction. Foreign currency assets andliabilities covered by forward contractsare stated at the contracted rates.

5.4 Income / Expenditure of OverseasBranches is recognised at the averagerate prevailing during the month inwhich transaction occurred.

5.5 Exchange differences arisingon booking of forward contractsare recognised as income or expenseover the life of the contract, except inrespect of liabilities incurred foracquiring fixed assets, in which casesuch differences are adjusted to thecost of the fixed assets.

5.6 All other exchange differencesarising out of actual purchase/sale offoreign currencies (including substitu-tion of one foreign currency loan byanother) and those arising out ofrestatement mentioned in 5.2 aboveare:

a) adjusted to the cost of fixedassets, if the foreign currency liabilityconcerned is contracted for acquisitionof fixed assets, and

b) recognised as income/expense forthe period, in all other cases.

6. Amortisation of DeferredExpenditure

Expenditure incurred on issue ofdebentures / raising loans is amortised


31 March, 31 March,

2003 2002Rs. Million Rs. Million

1.1 CAPITAL

Authorised

150,000,000 Equity Shares of Rs. 10 each 1,500.00 1,500.00

Subscribed

118,929,420 Equity Shares of Rs. 10 each fully paid up 1,189.29 1,189.29

Add Forfeited Shares (Rs. 3,800)

1,189.29 1,189.29

1. Issued Capital

a) 33,005,163 Shares of Rs. 5 each, issuedearlier, consolidated and divided intoShares of Rs. 10 each 165.03 165.03

b) 34,174,294 Shares of Rs. 10 each issued byway of conversion of Debentures 341.74 341.74

c) 32,315,724 Shares of Rs. 10 each issued through

Global Depository Receipts 323.16 323.16

d) 35,957,288 Shares of Rs. 10 each 359.57 359.57

1,189.50 1,189.50

2. Shares allotted under an agreement without payment being

received in cash 1,478,888 1,478,888

3. Shares allotted as fully paid up by way of Bonus Shares bycapitalisation out of General Reserve and from Securities Premium account 6,230,811 6,230,811

4. LRLIH Ltd., the holding Company, holds 44,116,668 EquityShares of Rs. 10 each and 5,486,669 Global DepositoryReceipts equivalent to 16,460,007 Equity Shares of Rs. 10 each

31 March, Additions/ 31 March,2002 (Deductions) 2003

1.2 RESERVES AND SURPLUS Rs. Million Rs. Million Rs. Million

Capital Reserve 8.95 – 8.95

Revaluation Reserve 265.21 (6.44) 258.77

Securities Premium 6,388.36 (1,599.14) 4,789.22

Debenture Redemption Reserve 1,084.17 437.50 942.50

(579.17)

General Reserve 634.32 299.62 1,433.94

500.00

Surplus - Balance in Profit and Loss Account 799.23 972.19

9,180.24 8,405.57

(a) Refer Note 3.7 (b) to the Accounts.(b) Refer Note 9 to the Accounts.(c) Refer Note 5 (a) to the Accounts.

Schedules to Balance Sheet

(a)

(b)

(c)


Schedules to Balance Sheet (Continued)

31 March, 31 March,


1.3 SECURED LOANS

Debentures 3,770.00 4,336.70

Term Loans

– From Banks 1,230.00 1,430.00

– From Financial Institutions 27.64 34.55

Post Shipment Credit 17.98 118.68

5,045.62 5,919.93

1. a) Debentures and Term Loans from Financial Institutions and Banks aggregating Rs. 3,750.00 Million (2001-02:Rs. 5,766.70 Million) are secured by a first charge created on certain immovable properties and movable assetsof the Company.

b ) Debentures and Term Loans from Financial Institutions aggregating Rs. 1,277.64 Million (2001-02: Rs.34.55Million) 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(excluding deferred receivables) and also by a charge on the immovable properties subordinate to the existingcharge 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 isalso guaranteed by the concerned governments and/or customers’ bankers.

2. a) The Company has powers to reissue Debentures aggregating Rs. 11,667.12 Million (2001-02: Rs.6,867.12Million).

b) Debentures as at March 31, 2003 are to be redeemed at par in single/equal instalments, as stated below:

Debenture Balance as at Dates of RedemptionSeries 31 March, 2003

Rs. Million

XXIII 166.67 01 July 2003

XXV 166.67 01 May 2003 and 01 November 2003

XXIX 250.00 01 August 2004, 2005 and 01 February 2005, 2006

XXXI 66.66 01 August 2003 and 01 February 2004

XXXII 100.00 01 August 2004, 2005 and 01 February 2005, 2006

AL 1 500.00 15 June 2004, 2005 and 2006

AL 2 250.00 15 October 2004, 2005 and 2006

AL 3 50.00 19 December 2004, 2005 and 2006

AL 4 400.00 10 January 2007, 2008 and 2009

AL 5 20.00 15 February 2005, 2006 and 2007

AL 6 50.00 15 February 2007, 2008 and 2009

AL 7 1,000.00 01 June 2004, 2005 and 01 December 2004

AL 8 250.00 01 June 2005, 2006 and 2007

AL 9(A) 250.00 15 October 2007

AL 9(B) 250.00 15 October 2008

3,770.00

3. Loans include Rs.574.89 Million (2000-01: Rs. 1,642.29 Million) repayable within 12 months.


31 March, 31 March,

2003 2002


1.4 UNSECURED LOANS

Fixed Deposits 0.52 –

Loans and Advances – From Banks 53.07 823.78

– From Others 2,073.10 2,136.13

2,126.69 2,959.91

1. Of the above, repayable within 12 monthsLoans and Advances – From Banks 53.07 823.78

– From Others 230.00 84.66

2. Commercial Paper– Outstanding at the end of the year – 800.00

– Maximum amount raised at any time during the year 800.00 1,250.00


1.5 FIXED ASSETS (Rs. Million)

DESCRIPTION GROSS BLOCK (COST / VALUATION) DEPRECIATION / NET BLOCK

DIMINUTION

31 March, Additions Deductions 31 March, Upto 31 31 March, 31 March,

2002 2003 March, 2003 2003 2002

Land – Freehold 251.35 – – 251.35 – 251.35 251.35

– Leasehold 146.02 – – 146.02 38.76 107.26 110.98

Buildings 2,246.68 84.08 – 2,330.76 708.57 1,622.19 1,609.33

Plant and Machinery 13,336.40 1,070.11 87.71 14,318.80 7,650.32 6,668.48 7,259.63

Furniture, Fittings and

Equipment 750.12 139.58 5.73 883.97 545.04 338.93 304.28

Vehicles 172.41 32.76 15.38 189.79 152.81 36.98 25.42

Vehicles given on Lease 1.33 – 1.33 – – – –

16,904.31 1,326.53 110.15 18,120.69 9,095.50 9,025.19 9,560.99

Capital Work-in-Progress 373.19 537.35

9,398.38 10,098.34

1. Deed of acquisition in respect of lands at Alwar on leasehold basis costing Rs. 0.61 Million is under execution and registration.

2. A portion of buildings in Bhandara (estimated gross value 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, 2003 includes:

a) Rs. 0.34 Million being cost of shares in Housing Co-operative Society representing ownership rights in residential flats and furniture

and fittings thereat.

b) Rs. 13.09 Million representing cost of residential flats including undivided interest in land.

4. Cost of additions and Capital Work-in-Progress includes :

a) Exchange difference for the year (Rs. 0.26 Million) (March 31, 2002 : Rs. 7.27 Million)

b) Expenditure incidental to the construction / acquisition of fixed assets Rs. Nil (March 31, 2002: Rs.2.64 Million)

5. Depreciation / Diminution upto March 31, 2003 includes amortisation of cost / value of leasehold assets.

6. Depreciation / Diminution upto March 31, 2003 includes diminution in value of certain Plant and Machinery provided and adjusted

against Securities Premium account Rs.816.19 Million (Refer Note 9 to the Accounts)


31 March, 2003 31 March, 2002Nos. Rs. Million Nos. Rs. Million

1.6 INVESTMENTSDESCRIPTION

I Current Investments - other than tradeMutual Fund Units of Rs. 10 eachK Bond (Wholesale Plan) - Growth 1,899,059 20.00 – –Prudential ICICI Liquid Plan Institutional - Growth Option 6,965 0.10 – –Magnum Insta Cash Fund - Short term Plan 2,910,401 30.00 – –Standard Chartered Cash Fund - Growth (Rs.4,025.51) 360 – –GCBG Grindlays Cash Fund Plan B (Instl. - plan) - Growth 1,053 0.01 – –Standard Chartered Grindlays Cash fund – – 10,000,000 100.00

II Long term InvestmentsA) Trade

1) Equity Shares of Rs. 10 eachAshok Leyland Finance Ltd. 9,231,562 239.02 9,231,562 239.02Automotive Coaches and Components Ltd. 1,410,664 11.23 1,410,664 11.23Ennore Foundries Ltd. 1,426,854 23.20 1,426,854 23.20Shriram Transport Finance Ltd. – – 18,901 0.19

2) Equity Shares of Srilankan Rs. 10 eachLanka Ashok Leyland Ltd. 1,008,332 5.75 1,008,332 5.75

3) Equity Shares of Rs. 100 each, partly paid-upAdyar Property Holding Co. Ltd. (Rs. 65 paid up) 400 0.03 400 0.03

4) 9% Cumulative Convertible Preference Sharesof Rs. 50 eachAshok Leyland Finance Ltd. 9,900,087 495.00 9,900,087 495.00

5) 10% Cumulative Non-Convertible RedeemablePreference Shares of Rs. 100 eachEnnore Foundries Ltd. 1,500,000 150.00 1,500,000 150.00

6) 9% Cumulative Non-Convertible RedeemablePreference Shares of Rs.100 eachAshok Leyland Finance Ltd. 5,000,000 500.00 – –

7) Non-Convertible Debentures of Rs.70 each(Rs.14 redeemed each year from 1988-99)Ennore Foundries Ltd. – – 267,809 3.75

8) Units of Rs.5,000 eachAuto Ancillary Fund 425 2.13 425 2.13

B) Other than trade1) Equity Shares of Rs. 10 each

Ashley Holdings Ltd. 750,000 7.50 750,000 7.50Ashley Investments Ltd. 750,000 7.50 750,000 7.50Ashok Leyland Project Services Ltd. 1,442,400 14.42 1,442,400 14.42Ashok Leyland Investment Services Ltd. 720,000 7.20 720,000 7.20Chennai Willingdon Corporate Foundation (cost Rs. 900) 100 100HDFC Bank Ltd. 500 0.01 500 0.01HDFC Ltd. 24,450 0.33 26,425 0.70Hinduja HCL Sing Tel Communications Private Ltd.(cost Rs. 100) 10 10Hinduja TMT Ltd. 524,058 104.81 569,058 113.81ICICI Bank Ltd. (formerly ICICI Ltd.) 44,231 1.92 88,463 1.92

2) 2% Non-Cumulative Non-ConvertibleRedeemable Preference Shares of Rs.10 eachAshley Holdings Ltd. 8,430,000 84.30 – –Ashley Investments Ltd. 8,670,000 86.70 – –

3) Mutual Fund Units of Rs. 10 eachUnit Trust of India – – 2,000,000 26.37

1,791.16 1,209.73Less Provision for diminution in value 215.40 36.35(Includes Rs. 116.71 Million provided and adjustedagainst Securities Premium account in 2002-03- Refer Note 9 to the Accounts)

1,575.76 1,173.38



31 March, 31 March,


1.6 INVESTMENTS (Contd.)

1. Investments are fully paid-up unless otherwise stated.

2. a) Quoted Investments — Cost 914.41 903.98

— Market value 1,080.36 1,015.96

Unquoted Investments — Cost 876.75 305.75

b) In the absence of quotations for 267,809 Non-convertible Debentures inEnnore Foundries Ltd., and 9,900,087 Preference shares in Ashok LeylandFinance Limited, their face value has been stated as their market value.

3. The shares in the following companies can be disposed of/encumbered onlywith the consent of Banks / Financial Institutions who have given loans to/subscribedto the Debentures of those companies :

a) Ashok Leyland Finance Ltd.

b) Automotive Coaches and Components Ltd.

c) Ennore Foundries Ltd.

4. Units of various mutual funds (costs aggregating Rs. 8,649.97 Million) have beenbought and sold/redeemed during the year.

5. 12,225 Equity shares were allotted by HDFC Ltd. as bonus shares during the year.

6. Consequent to merger of ICICI Limited with ICICI Bank Limited, one share ofICICI Bank Limited was received for every two shares of ICICI Limited.

1.7 INVENTORIES

Stores and Spares 181.91 190.98

Consumable tools 117.23 118.57

Raw materials and Components (including patterns and dies) 1,512.60 1,745.21

Work-in-Progress 559.77 571.28

Finished/Trading goods 1,733.05 3,327.36

4,104.56 5,953.40

1.8 SUNDRY DEBTORS

Trade 5,069.54 4,850.69

Others (including Export incentives) 126.42 98.02

5,195.96 4,948.71

Less Provision 14.46 20.25

5,181.50 4,928.46

Of the above,

1. Unsecured — Considered good 5,181.50 4,928.46

— Considered doubtful 14.46 20.25

2. Age analysis of Debts— Outstanding for more than six months 2,161.66 2,022.92

(includes deferred receivables Rs. 2,000.00 Million(2001-02:Rs.1,553.99 Million))

— Other debts 3,034.30 2,925.79

3. Debtors include Bills receivable – 26.20




31 March, 31 March,


1.9 CASH AND BANK BALANCESCash and Stamps on hand 3.27 3.04Cheques on hand and remittances in transit 0.22 9.80Balances with Scheduled Banks— Current account 1,761.83 1,672.51— Deposit account 444.99 1,062.50Balances with Other Banks— Current account

National bank of Sharjah - Sharjah - US$ account 1.20 0.45[Maximum balance at any time during the yearRs.8.92 Million (2001-02: Rs. 3.06 Million)]

National bank of Sharjah - Sharjah - Dirham account 0.49 0.11[Maximum balance at any time during the yearRs.2.11 Million (2001-02: Rs. 2.58 Million)]

ABSA Bank - South Africa 7.23 0.53[Maximum balance at any time during the yearRs.7.41 Million (2001-02: Rs. 1.16 Million)]

2,219.23 2,748.941.10 LOANS AND ADVANCES

Loans and Advances recoverable in cash or in kindor for value to be received 1,918.21 1,943.77Balances with Customs, Port Trust, Central Excise etc. 125.35 162.96

2,043.56 2,106.73Less Provision 144.15 185.77

1,899.41 1,920.96Of the above,1. Unsecured — Considered good 1,899.41 1,920.96

— Considered doubtful 144.15 185.772. Due from Directors/Officers

— At the end of the year 1.88 2.04— Maximum amount due at any time during the year 2.34 2.44

3. Loans and Advances include advances for Capital items and Investments 142.89 366.641.11 CURRENT LIABILITIES AND PROVISIONS

LiabilitiesAcceptances 959.79 939.73Creditors for materials and expenses— Small Scale Industrial undertakings 220.72 242.27— Others 2,953.29 3,094.93Investor Education and Protection Fund to be credited with— Unclaimed Dividends 8.05 6.64— Unclaimed matured deposits 1.95 3.43— Interest accrued on the Unclaimed matured deposits and on

matured debentures 8.92 10.90Interest accrued but not due on loans 206.46 165.86Other Liabilities 572.38 479.70

4,931.56 4,943.46ProvisionsProposed Dividend 594.64 535.18Tax on Proposed Dividend 76.19 —Others 324.29 253.02

995.12 788.205,926.68 5,731.66

1.12 MISCELLANEOUS EXPENDITUREDebenture issue/Loan raising expenses — 5.31Premium on prepayment of borrowings — 13.00Compensation under Voluntary Retirement Scheme (VRS) — 30.74

— 49.05


Unit of 31 March, 2003 31 March, 2002

Measurement Volume Rs. Million Volume Rs. Million

2.1 SALES

Commercial Vehicles Nos 36,444 25,256.31 29,673 20,370.80

Engines Nos 5,924 1,084.81 5,258 892.51

Ferrous Castings Tonnes 3,997 144.96 5,795 211.14

Spare Parts and Others 4,771.10 5,491.61

31,257.18 26,966.06

Less Commission and Rebate 517.23 661.58

30,739.95 26,304.48

2.2 OTHER INCOME Rs. Million Rs. Million

Income from current investments

Dividend — 1.45

Income from long term investments

Dividend – Trade 88.52 124.12

– Others 3.5492.06

10.00134.12

Interest – Trade 0.05 0.62

92.11 136.19

Rent 2.13 1.87

Profit on sale of fixed assets – Net 4.64 17.38

Profit/(Loss) on sale of investments – Net

– Current 23.24 (0.27)

– Long term 8.3631.60

(0.74)(1.01)

Miscellaneous income 22.45 25.00

152.93 179.43

Tax deducted at source on income fromlong term investments 9.68 0.13

2.3 MANUFACTURING AND Schedules

OTHER EXPENSES

Consumption of Raw materialsand Components 16,263.57 15,515.89

Less Scrap sales 140.9516,122.62

151.9615,363.93

Purchase of Trading goods 583.33 587.04

Employee expenses 2.4 2,906.46 2,570.68

Other expenses 2.5 2,520.83 2,188.66

Excise duty 3,753.31 3,692.00

Movement in value of Stock of Finished/Trading goods and Work-in-Progress

Opening Stock 3,898.64 2,852.73

Closing Stock 2,292.82 3,898.64

(Increase)/Decrease 1,605.82 (1,045.91)27,492.37 23,356.40

Less Expenses capitalised 1.99 2.90

27,490.38 23,353.50

Schedules to Profit and Loss Account


31 March, 31 March,

2003 2002Rs. Million Rs. Million Rs. Million

2.4 EMPLOYEE EXPENSES

Salaries, Wages and Bonus 2,149.42 1,967.14

Contribution to Provident, Gratuity and other Funds 377.27 300.33

Welfare expenses 379.77 303.21

Compensation under VRS 571.91

Less Adjusted against Securities Premium account 571.91 — —(Refer Note 9 to the Accounts)

2,906.46 2,570.68

2.5 OTHER EXPENSES

Power and Fuel 408.11 397.64

Consumption of Stores and Tools 209.12 240.11

Repairs and Maintenance

– Buildings 70.08 61.87

– Machinery 189.27 180.68

Rent 98.56 85.02

Rates and Taxes 163.11 118.11

Insurance 60.83 74.94

Selling and Administration expenses – net 1,214.16 899.85

Provision for diminution in value of Investments (excluding adjustmentagainst Securities Premium account) 20.72 10.75

Research and Development 87.22 74.23

Bad and Doubtful Debts/Advances provided/written-off– net of recovery/write back (0.35) 45.46

Provision for diminution in value of Investments 116.71

Less Adjusted against Securities Premium account 116.71 – –(Refer Note 9 to the Accounts)

Capital Work-in-Progress written off 19.71

Less Adjusted against Securities Premium account 19.71 – –(Refer Note 9 to the Accounts)

2,520.83 2,188.66

1. Rent includes amortisation of cost/value ofleasehold assets as reduced by transferfrom Revaluation Reserve 3.03 3.33(Refer Note 3.7 (b) to the Accounts)

2. Selling and Administration expenses includeDirectors’ Sitting fees 0.37 0.37

2.6 DEPRECIATION

Buildings 71.21 71.25

Plant and Machinery 838.62 795.22

Furniture, Fittings and Equipment 104.52 77.74

Vehicles 21.09 15.09

Diminution in value of certain Plant and Machinery 816.19

Less Adjusted against Securities Premium account 816.19(Refer Note 9 to the Accounts) — —

1,035.44 959.30

Less Transferred from Revaluation Reserve 5.75 5.75(Refer Note 3.7(b) to the Accounts)

1,029.69 953.55

Schedules to Profit and Loss Account (Continued)


31 March, 2003 31 March, 2002

Rs. Million Rs. Million Rs. Million Rs. Million

2.7 FINANCIAL EXPENSES

Interest 810.42 890.47

Debenture issue / Loan raising expenses / Premiumon prepayment of borrowings 74.62

Less Adjusted against Securities Premium account 74.62(Refer Note 9 to the Accounts) — —

Others 145.73 280.02

956.15 1,170.49

Less Interest earned on Bills receivable,Deposits and other accounts 360.02 324.70

Cash discounts earned 11.03371.05

2.71327.41

585.10 843.08

Less Expenses capitalised — 17.96

585.10 825.12

Of the above,

1. Debenture issue / Loan raisingexpenses amortised # 1.98 5.24

2. Premium on prepayment ofborrowings amortised # 8.55 22.43

3. Tax deducted at source from interest earned 77.04 60.19

# Excluding adjustments to Securities Premium account

Schedules to Profit and Loss Account (Continued)


Unit of 31 March, 31 March,Measurement 2003 2002

1. INFORMATION REGARDING GOODSMANUFACTURED, IMPORTS ANDFOREIGN CURRENCY TRANSACTIONS

1.1 Licensed Capacities : Not NotApplicable Applicable

1.2 Installed Capacities: Two Shifts(as certified by the Managing Director)

Commercial Vehicles Nos. 50000 50000

Ferrous Castings Tonnes 16500 16500

1.3 Production :

Commercial Vehicles Nos. 33646 31824

Engines @ Nos. 5917 5201

Ferrous Castings Tonnes 9770 10849@ Engines manufactured against spare

capacity of Commercial vehicles

1.4 Finished/Trading goods and Work-In-Progress Rs. Million Rs. Million

Opening Stock :

Commercial Vehicles Nos. 4976 2,687.20 2830 1,459.96

Engines Nos. 337 52.15 412 52.25

Parts for sale

– Bought out Finished 381.71 334.88

– Works made 206.30 188.92

Work-in-Progress 571.28 816.72

Closing Stock :

Commercial Vehicles Nos. 2174 1,229.75 4976 2,687.20

Engines Nos. 325 45.79 337 52.15

Parts for sale

– Bought out Finished 328.94 381.71

– Works made 128.57 206.30

Work-in-Progress 559.77 571.28Given on lease/taken for own use/dismantled, net of leasedvehicles repossessed

– Commercial Vehicles Nos. 4 5

– Engines Nos. 5 18

– Ferrous Castings Tonnes 5773 5054

Notes to the Accounts


31 March, 31 March,Unit of 2003 2002Measurement Rs. Million Rs. Million

1.5 Consumption of Raw Materialsand Components

Plates, Sheets and Angles Tonnes 26477 571.15 39927 824.22

Bars Tonnes 3756 96.09 4746 131.81

Steel Tubes Metres 1177340 36.77 1297380 34.81

Tyres, Tubes and Flaps Sets 286600 1,410.00 250093 1,266.64

Pig Iron, Steel Scrap and Alloys Tonnes 10411 153.60 12521 182.85

Forgings and Castings 2,194.21 2,093.28

Finished and Other Items 11,801.75 10,982.28

16,263.57 15,515.89

Of the above

– Imported Items 836.55 1,219.39

5.14% 7.86%

– Indigenous Items 15,427.02 14,296.50

94.86% 92.14%

1.6 Imports (c.i.f.) :

Raw materials 500.03 779.17

Trading goods and others 4.81 4.59

Spares and Tools 32.49 37.18

Capital goods (Including TechnicalKnow-how fees capitalised) 282.37 216.01

819.70 1,036.95

1.7 Expenditure in Foreign Currency :

Research and Development 19.62 13.95

Royalty 9.49 16.61

Commission paid on Sales 155.69 157.26

Travel 11.64 12.85

Interest and Commitment charges 7.19 13.21

Other expenses 111.03 35.42

314.66 249.30

1.8 Earnings in Foreign Exchange :

Export – FOB value 2,034.16 1,591.32

Interest 0.14 4.02

Others (Freight, Insurance and Commission earned) 64.58 61.52

2,098.88 1,656.86

1.9 Dividend remitted in Foreign Currency :

No. of Non-Resident Shareholders 1 1

No. of Shares on which dividend was remitted 44,116,668 44,116,668

Dividend remitted during theyear relating to previous year 167.26 176.47




31 March, 31 March,2003 2002


2. INFORMATION REGARDING MANAGERIAL REMUNERATION

2.1 Remuneration to Managing and Deputy Managing Director

Salary 6.48 5.60

Commission 3.60 3.24

Perquisites 3.32 2.89

13.40 11.73

Perquisites include amounts evaluated as per Income Tax Rules inrespect of certain items.

2.2 Computation of net profits Under Section 198/349of the Companies Act, 1956

Profit before Tax 1,701.02 1,322.06

Add

– Depreciation as per books 1,029.69 953.55

– Profit on sale of fixed assets Under Section 349 - Net 4.07 17.03

– Others including Directors’ remuneration 37.23 93.02

2,772.01 2,385.66

Deduct

– Depreciation deductible 1,068.08 953.55

– Profit on sale of fixed assets as per books – Net 4.64 17.38

– Others 66.84 2.46

Net Profit 1,632.45 1,412.27

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 405.21 237.28

3.2 Contingent Liabilities

a) Guarantees 714.74 76.31

b) Partly paid Shares 0.01 0.01

c) Claims against the Company not acknowledged as debts 178.10 138.87

d) Bills discounted 3,229.72 3,490.34

e) Refer Note 8 on Sales tax matters

3.3 Interest paid / payable on

a) Debentures 531.27 571.79

b) Fixed Loans 183.95 179.75

3.4 Auditors’ Remuneration

For Financial audit 1.80 1.50

For Cost audit 0.08 0.07

For Taxation matters 0.34 0.14

For Company Law matters 0.07 0.07

For Other matters 1.66 1.14

Expenses reimbursed 0.06 0.09

3.5 Total Research and Development costs charged to the Profit andLoss Account (including amount shown under Schedule 2.5) 198.02 163.38

3.6 (a) Net exchange difference debited / (credited) to Profit and Loss Account (27.43) 12.06

(b) Charge/(income) deferred to be recognised in subsequent accountingperiods in respect of forward contracts (5.01) (2.32)


3.7 (a) In respect of following assets useful lives different from those derived from the rates specified in the Schedule XIV tothe Companies Act, 1956 have been reckoned in computing depreciation for the year.

ASSET CATEGORY YEARS

BUILDINGS

Revalued Buildings are depreciated over the balance useful life as determined by the valuers.

PLANT AND MACHINERYTechnical Know-how Fees 6Assets subjected to diminution-revised carrying amount over its remaining useful lifeFURNITURE AND FITTINGS AND OFFICE EQUIPMENT

Furniture and Fittings 8

Office Equipment 8

Data Processing System 5

VEHICLESGiven on lease 3-5

Cars and Motorcycles 3

Trucks and Buses 5

(b) Depreciation for the year computed on revalued assets over the balance useful life on straight line methodincludes a net charge of Rs. 6.44 Million (2001-02: Rs. 6.45 Million) [Rs. 0.69 Million (2001-02: Rs. 0.70 Million) inSchedule 2.5 and Rs. 5.75 Million (2001-02:Rs. 5.75 Million) in Schedule 2.6] being the excess over thedepreciation computed by the method followed by the Company prior to revaluation and the same has beentransferred from Revaluation Reserve to the Profit and Loss Account and shown as deduction from Depreciation.

(c) Consequent to the adjustment in value of certain Plant and Machinery (Refer Note 9 to the Accounts),depreciation rates for these assets were redetermined. Though this has resulted in lower depreciation charge ofRs. 59.39 Million for the year (and consequent increases in Profit before Tax), this change in method of accountinghas been done such that the revised carrying amount for these assets are depreciated over their remaining usefullife in accordance with the Accounting Policy of the Company.

31 March, 31 March,2003 2002


4. EARNINGS PER SHARE

Profit after taxation as per Profit and Loss account (A) 1,202.12 922.56Number of equity shares outstanding (B) 118,929,420 118,929,420

Earnings per share (in Rupees) (A/B) 10.11 7.76

5. DEFERRED TAXATION

a) In conformity with Accounting Standard No. 22 issued by The Institute of Chartered Accountants of India on‘Accounting for Taxes on Income’, provision for deferred tax liability of Rs.1,799.00 Million upto March 31, 2001was charged to the General Reserve in 2001-02. Pursuant to the adjustment referred to in Note 9,Rs. 299.62 Million out of the said liability determined as no longer required has been withdrawn and credited tothe General Reserve. Accordingly the provision for Deferred Taxation comprises:


– Provision for current year 56.40 92.50– Provision no longer required as referred above (299.62) –– Transferred to General Reserve 299.62 –

56.40 92.50b) Composition of Deferred Tax Liability

– On account of timing differences relating to depreciation 1,683.50 1,926.50– Others 1.49 (35.00)

1,684.99 1,891.506. SEGMENT INFORMATION

The company is principally engaged in the business of Commercial vehicles and related components. Accordingly thereare no reportable segments as per Accounting Standard No. 17 issued by The Institute of Chartered Accountants of Indiaon ‘Segment Reporting’.



31 March, 31 March,


7.1 RELATED PARTY DISCLOSURE

a) List of parties where control exists

Holding company

LRLIH Limited, United Kingdom

Machen-Iveco Holdings SA

(Holding Company of LRLIH Limited, United Kingdom)

Fellow subsidiary

Ennore Foundries Limited

b) Other related parties with whom transactions have taken place during the year

Associates

Ashley Holdings Limited

Ashley Investments Limited

Ashok Leyland Finance Limited

Ashok Leyland Project Services Limited

Automotive Coaches and Components Limited

Lanka Ashok Leyland Limited, Sri Lanka

Enterprises which have significant influence

Machen Development Corporation, Panama

Key Management Personnel

Mr R Seshasayee, Managing Director

Mr R Jagannath, Deputy Managing Director

c) Transactions with related parties

(i) Purchase of Raw materials and Components

– Fellow subsidiary 1,012.65 899.30

– Associates 197.94 82.79

(ii) Sales and Other income(including Sales under the Hire Purchase Scheme of Associates)

– Associates 1,987.19 2,490.03

(iii) Other expenditure


(iv) Interest and other charges


(v) Interest income

– Fellow subsidiary 0.58 0.62

– Associates 281.29 232.37

(vi) Dividend income


(vii) Dividend (net) paid

– Holding company (excluding GDR holdings) 167.26 176.47

(viii) Remuneration to Key Management Personnel

– Refer 2.1 of Notes to the Accounts

(ix) Redemption of debentures (Investment)




31 March, 31 March,


(x) Outstanding balances (excluding application money for Investments)

– Debtors

– Associates 2,036.81 1,549.63

– Loans and advances

– Associates 152.07 199.38

– Enterprises which have significant influence 206.71 213.52

– Key Management Personnel 0.57 0.65

– Creditors for materials and expenses


– Key Management Personnel 3.60 3.24

(xi) Financial Guarantees

– Fellow subsidiary 154.00 –


7.2 Loans to Ashok Leyland Project Services Limited (Associate Company): Rs.15.00 Million for 6 months at interest of 12%

per annum.

8. In respect of levy of Sales Tax of Rs. 149.17 Million and penalty thereon by Government of Tamil Nadu (GOTN) relating

to the assessment years 1986-1987 to 1988-1989 on sale of chassis in other States, (on which the company has paid

tax of Rs.120.35 Million in other States) Supreme Court has observed that a single sale transaction shall not suffer Sales

Tax twice. The Sales Tax Appellate Tribunal (STAT), which heard the appeals as per the direction of the Supreme Court,

modified the tax liability to Rs. 134.67 Million and cancelled the penalty. The Supreme Court stayed the collection of

tax for the above years and also for subsequent years for which pre-assessment notices have been served. GOTN has

filed petitions for restoration of penalty and withdrawal of other tax reliefs granted by STAT. Government of Rajasthan

has levied tax of Rs. 21.26 Million (and penalty/interest thereon) on sale of chassis in other States pertaining to

assessment years from 1998-1999 to 2000-2001, the recovery of which has also been stayed by the Supreme Court.

All the above issues are now pending before the Supreme Court.

9. Pursuant to the approval of Shareholders of the Company at the Extraordinary General Meeting held on January 18, 2003

and confirmation by the Honourable High Court of Madras vide its Order dated February 28, 2003, the following items

of expenditure / diminution in value have been adjusted by transfer of equal amounts from the Securities Premium

account, to the respective account as shown in the Schedules to the Profit and Loss Account.



31 March, 31 March,


Miscellaneous Expenditure (to the extent not written off)

– Compensation under Voluntary Retirement Scheme 571.91

– Debenture Issue/Loan raising expenses 4.99

– Premium on Prepayment of Borrowings 69.63

646.53

Diminution in value of

– Plant and Machinery 816.19

– Investments 116.71

Capital work-in-progress written off 19.71

Total amount utilised out of Securities Premium accountpursuant to the Order of the High Court of Madras 1,599.14

10. Extraordinary items of expenditure comprise

i) Items dealt with in 9 above 1,599.14Less Adjusted against Securities Premium account 1,599.14 —

ii) VRS compensation amortised upto September 30, 2002/March 31, 2002 86.69 29.68

86.69 29.68

11. Figures for the previous year have been regrouped/amended wherever necessary.

Signatures to Statement on Significant Accounting Policies, Schedules and Notes to the Accounts.



2 May, 2003Chennai



Balance Sheet Abstract and Company’s General Business Profile

0 0 0 1 0 5

3 1 0 3 2 0 0 3

N I L

N I L

1 8 4 5 2 1 5 6

1 1 8 9 2 9 8

5 0 4 5 6 1 9

9 3 9 8 3 8 5

N I L

3 0 8 9 2 8 8 2

1 7 0 1 0 2 2

1 0 . 1 1

8 7 0 6 0 0 4 2

+

1 8

N I L

N I L

1 8 4 5 2 1 5 6

8 4 0 5 5 6 7

2 1 2 6 6 9 4

1 5 7 5 7 5 5

N I L

2 9 1 9 1 8 6 0

1 2 0 2 1 2 2

5 0

+

+ - + -

C O M M E R C I A L V E H I C L E S

8 4 0 8 9 0 1 0

7 3 2 5 9 9 1 0

E N G I N E S

F E R R O U S C A S T I N G S

Date Month Year

7 4 7 8 0 1 6

1 6 8 4 9 7 8

I. Registration Details

Registration No. State Code

Balance Sheet Date

II. Capital Raised during the year (Amount in Rs. Thousands)

Public Issue Rights Issue

Bonus Issue Private Placement

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities Total Assets

Sources of Funds

Paid-up Capital Reserves and Surpluses

Secured Loans Unsecured Loans

Deferred Liability

Application of Funds

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands)

Turnover Total Expenditure

Profit/Loss Before Tax Profit/Loss After Tax

Earning per share in Rs. Dividend Rate%

V. Generic Names of Three Principal Products of Company

Item Code No. (ITC Code)

Product Description


Product Description


Product Description



2 May, 2003Chennai


Annexure F to the Directors’ Report


Vehicle Sales (Nos.) Engine Sales (Nos.)

45000

37500

30000

22500

15000

7500

01998-99 1999-00 2000-01 2001-02 2002-03

29741

37859

12000

10000

8000

6000

4000

2000

01998-99 1999-00 2000-01 2001-02 2002-03

7185 6004

Spare Parts & Others (Rs. Million) Foreign Exchange Earnings (Rs. Million)

6000

5000

4000

3000

2000

1000

01998-99 1999-00 2000-01 2001-02 2002-03

2145

2145

2400

2000

1600

1200

800

400

01998-99 1999-00 2000-01 2001-02 2002-03

1786

1613

Sales Value (Rs. Million) Profit (Rs. Million)

35000

30000

25000

20000

15000

10000

50001998-99 1999-00 2000-01 2001-02 2002-03

20451

25987

1800

1500

1200

900

600

300

01998-99 1999-00 2000-01 2001-02 2002-03

233

933

204

785

Profit before Tax

Profit after Tax

32475

6311

5139

1717

26067

917

29673

5258

5492

26304

1019

1322

923

1657

36444

3997

30740

1701

1202

2099

5924


Assets (Rs. Million) Financed by (Rs. Million)

30000

25000

20000

15000

10000

5000

01998-99 1999-00 2000-01 2001-02 2002-03

30000

25000

20000

15000

10000

5000

01998-99 1999-00 2000-01 2001-02 2002-03

20663 20991

Earnings Per Share (Rupees) Dividend (%)

12

10

8

6

4

2

01998-99 1999-00 2000-01 2001-02 2002-03

20663 20991

60

50

40

30

20

10

01998-99 1999-00 2000-01 2001-02 2002-03

1.71

6.60

10

35

Fixed Assets Investments Net Current Assets Reserves & Surplus Share Capital Loan Funds

7.7140

21015 21015 21096

7.7645

21096

Deferred Tax

10.11

50

18452 18452

LRLIH Ltd., UK 50.93 %

Financial Institutions(LIC, UTI, GIC etc) 18.09 %

Foreign InstitutionalInvestors 7.45 %

Public 15.02 %

Non Resident Indians 0.06 %

Bodies Corporate 1.70 %

Nationalised Banks &Mutual Funds 6.75 %

Shareholding Pattern

Apr

200

2

May

200

2

June

200

2

July

200

2

Aug

200

2

Sep

2002

Oct

200

2

Dec

200

2

Jan

2003

Feb

2003

Mar

200

3

Nov

200

2

Rs.CNXNifty

0 0

20

40

60

80

100

120

140

160

400

600

800

1000

1200

1400

1600

1800

2000

77.50

89.25 96.5586.00

90.9585.00 84.30 80.25

89.10 91.50 92.3092.75

114.00123.00

105.00 102.40 97.00 95.95100.65

107.45 109.50103.30

200

180

117.00123.00

Rs.

0

Sensex

0

20

40

60

80

100

120

140

160

180

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

BSE 79.0089.05

97.00

122.75

90.6083.00 84.30

80.2587.80 92.00 92.80 92.75

117.20122.50

86.45

104.00102.50

96.10 98.00107.60 109.50 105.00

3338.16

3125.73 3244.702987.65

3181.23 2991.362949.32

3228.82 3377.28 3250.38 3283.663048.72

101.70

Share Price Movement

NSE

115.00

1084.50 1028.80 1057.80 958.90 1010.60 963.15951.40

1050.15 1093.501041.85 1063.40

978.20

Graph page 6/30/03, 10:56 PM48

Corporate Office:19, Rajaji SalaiChennai - 600 001Tel: +91 44 25342141Fax: +91 44 25342493www.ashokleyland.com

annual report 2002 - 2003 - international training centre

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