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Directors Report of Ashok Leyland Ltd.

Mar 31, 2017

To the Members,

PERFORMANCE/OPERATIONS

The Directors have pleasure in presenting the annual report of Ashok Leyland Limited (AL/the Company), together with the audited financial statements, for the financial year ended March 31, 2017.

FINANCIAL RESULTS

Rs, in Lakhs

Standalone

Consolidated

2016-17

2015-16

2016-17

2015-16

Revenue from Operations

2,133,166.91

1,999,297.42

2,406,834.78

2,231,957.88

Other Income

13,627.01

11,762.02

13,069.22

16,362.07

Total Income

2,146,793.92

2,011,059.44

2,419,904.00

2,248,319.95

Profit before tax

133,008.62

82,653.67

183,326.25

120,874.44

Less: Tax Expense

10,700.90

43,693.82

19,611.91

49,657.14

Profit after tax

122,307.72

38,959.85

163,714.34

71,217.30

Profit/(Loss) from discontinued operations

-

-

(423.31)

-

Profit for the period

122,307.72

38,959.85

163,291.03

71,217.30

Balance profit from last year

256,853.43

222,576.92

Transfers:

- From Debenture Redemption Reserve to Statement of Profit and Loss

5,250.00

11,625.00

-

-

Profit available for appropriation

Appropriation:

Dividend paid during the year

(27,035.83)

(12,806.44)

-

-

Corporate Dividend tax thereon

(5,503.86)

(2,607.09)

-

-

Pursuant to amalgamation

(92,323.21)

-

-

Other comprehensive Income arising from re-measurement of defined benefit obligation (net of tax)

(120.78)

(894.81)

-

-

Balance profit carried to Balance Sheet

259,427.47

256,853.43

-

-

Earnings Per Share (Face value ?1/-)

- Basic and Diluted (in Rs,)

4.24

1.37

5.51

2.40

The Company has adopted "Ind AS" with effect from April 1, 2016. Financial statements for the year ended and as at March 31, 2016 have been re-stated to conform to Ind AS Note 3.1 to the consolidated financial statement provides further explanation on the transition to Ind AS.

COMPANY''S PERFORMANCE

The Commercial Vehicles segment registered a growth of 4.16 percent in the financial year 2016-17 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) grew by 0.04 percent and Light Commercial Vehicles grew by 7.41 percent during the financial year 2016-17 over the same period last year. In effect, the combined effect of economy, industry, segmental behavior, regulations and taxes pulled down medium and heavy commercial vehicle to end the current financial year at the same level as that of previous year.

Your Company witnessed an overall 3.3 percent growth in sales (including LCV) during the financial year 2016-17, with total sales of 1,45,066 units as against 1,40,457 units during the previous financial year. Sales of M&HCV increased to 1,13,296 units with a growth of 3.21 percent as compared to 109,762 units during the previous financial year. The market share in M&HCV grew from 31.3 percent to 32.5 percent. Continued slowdown in Middle East owing to depressed oil market, uncertain economic situation in Russian/Ukrainian markets and stagnant market in Srilanka had a restraining effect on Company''s Export volumes.

Sales of Light Commercial Vehicle (LCV) have grown 3.5 percent to 31,770 units in 2016-17 as against 30,695 units during the previous financial year.

The Power Solution Business witnessed a growth of 15 percent over the previous year, despite a steep reduction in Harvester requirements and demand remaining moderate for Powergen/Industrial segments. Revenue from Spare Parts saw a tremendous growth of approximately 28 percent as compared to the previous financial year, due to various initiatives undertaken to grow our retail sales.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure E to this Report.

AMALGAMATION

During the year under review, the Board of Directors of the Company at their meeting held on September 14, 2016, approved the draft scheme of amalgamation of Hinduja Foundries Limited (HFL) with the Company and their respective shareholders and creditors, under Sections 391 to 394 of the Companies Act, 1956 subject to regulatory approvals. The Appointed Date for the scheme of amalgamation was October 1, 2016. The intended amalgamation has been approved by the shareholders at the Court Convened Meeting held on January 23, 2017 and through Postal Ballot on January 25, 2017. The Hon''ble National Company Law Tribunal, Chennai Bench (NCLT) which heard the Company''s petition on April 18, 2017 sanctioned the scheme of amalgamation of HFL with the Company and their respective shareholders and creditors. The NCLT Order was filed with the Registrar of Companies, Chennai and the scheme became effective on April 28, 2017.

The Board of Directors of the Company has formed a Committee of Directors comprising of Mr. Dheeraj G Hinduja, Chairman,

Mr. Vinod K Dasari, Chief Executive Officer and Managing Director, Mr. D J Balaji Rao and Mr. Sanjay K Asher, Directors as members of the Committee and authorised the Committee to do all such acts, deeds, matters and things as may be necessary for the purpose of giving effect to the Order of NCLT on the scheme of amalgamation of HFL with the Company including but not limited to issue and allotment of the equity shares of the Company to the eligible shareholders of the Transferor Company as on the Record date.

Further to the receipt of noted letter from the designated stock exchange, the Board of Directors of the Company has fixed Wednesday, June 7, 2017 as the ''Record Date'' for determining the shareholders of Hinduja Foundries Limited (Transferor Company), entitled to receive the equity shares of Ashok Leyland Limited (Transferee Company), under the Scheme of amalgamation sanctioned by NCLT. Consequent to the above, the issued, subscribed and paid-up equity share capital will stand increased from 2,845,876,634 equity shares of ''1/- each to 2,926,534,926 equity shares of ''1/- each.

DIVIDEND

The Board of Directors of the Company had approved the Dividend Distribution Policy on January 25, 2017 in line with Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy is appended to this report and is also uploaded on the Company''s website at http://www.ashokleyland. com/sites/default/files/Listing Regulation/Dividend Distribution Policy.pdf.

In line with the policy, your Directors are pleased to recommend a dividend of ''1.56/- per equity share of ''1/- each for the financial year ended March 31, 2017. Payment of dividend is subject to the approval of shareholders at the forthcoming Annual General Meeting and would involve a cash outflow of ''5,494,799,232.15/including dividend distribution tax.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report.

TRANSFER TO RESERVES

Your Company does not propose to transfer amounts to the general reserve out of the amount available for appropriation and an amount of Rs,1223.07 Crores is proposed to be retained in the profit and loss account.

GLOBAL DEPOSITORY RECEIPTS

During the year, Global Depository Receipts (GDRs) of the Company listed in the London Stock Exchange (LSE) was de-listed. In compliance with the Listing Rules of Financial Control Authority (FCA), United Kingdom, the Company had cancelled the listing of the GDRs. The LSE and FCA have confirmed the delisting of GDRs and the same was notified in their websites on October 25, 2016. The Indian stock exchanges, where the underlying shares are listed have been simultaneously notified about delisting of GDRs.

FINANCE

During the year, your Company fully redeemed Non Convertible Debentures (NCDs) Series AL 21 of Rs,150 Crores and AL 16 of Rs,60 Crores on due dates. No fresh NCDs were issued during the year.

Your Company pre-paid Secured Rupee Term Loan of Rs,375 Crores. In addition, your Company repaid Secured Rupee Term Loan of Rs,12.50 Crores on due dates. During the year, your Company raised fresh Secured Rupee Term Loan of Rs,175 Crores from HDFC Bank.

During the year under review, your Company repaid ECB loan installments that fell due, equivalent to USD 64.33 mn on the due dates. No fresh ECB loans were availed during the year.

As at March 31, 2017, Long term borrowings stood at Rs,1,965 Crores as against Rs,2,425 Crores on March 31, 2016.

HUMAN RESOURCES

Several key initiatives on the Human Resources (HR) front were initiated during the financial year through a three pronged approach - Culture, Capability, and Capacity. The focus was on Recruiting for Excellence - a strategy for Talent Acquisition from campuses of key institutes aimed at better industry institute collaboration and building sustained relationships with them. Focus on right staffing and skilling in identified international markets was given greater emphasis in line with the goal of spreading the organizationRs,s global footprint. Your Company has put in significant focus on Leadership Development by introducing and sustaining Leadership programs to build a healthy talent pipeline who are Agile, Enabled and Empowered with global outlook.

Young Talent Program was initiated to groom functional excellence in our young workforce. Emerging Leader Program, a signature program was sustained to identify and enhance future leadership capability. Business Leader Program is now sharpened to coach and nurture leaders. Your Company started a Women Leadership Program wherein your Company hired women from exceptional educational and professional background to be groomed for business facing leadership roles. Your Company focused greatly towards building great managers to lead great teams. People Management Capability Program (Workshop followed by 90 days coaching intervention) for all People Managers was aimed to enable our managers to better impact their teams.

Employee skill and capability building across the organization through increased focus on new skills emerging out of new regulatory frameworks, emerging technologies and customer need is clearly the Company''s agenda and efforts are on in this direction. Employee Engagement gained sharper focus with initiatives such as Quarterly Leadership Meet, YOU MADE MY DAY (an initiative to enhance the spirit of Appreciation and

Comer ere); JAM -a social network site for all AL Executives for more Collaboration and Connectivity. An Organizational Health Index Survey "Expressions-16" was conducted wherein 92% of Executives participated, followed by Result dissemination and Action Planning workshop across the Organization.

To foster Diversity and Inclusion, Shristi - a women networking Forum was formed with 3 prolonged approach of Career development, Engagement and Caring for women at AL. Women friendly policies were introduced like increased maternity leave, Adoption Leave, Paternity Leave and Medical Insurance for In-laws. Your Company undertook implementation of HRM application suite - SAP Success Factor, for enabling efficient and cost effective HR systems with the objective of improving the quality of analytics available to help in enhancing the quality of decision making with regards to people and processes throughout the employee life cycle.

CORPORATE GOVERNANCE

Your Company is in compliance with the Corporate Governance guidelines, as laid out in the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,

2015 (SEBI Listing Regulations). All the Directors and the Senior Management personnel have affirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company.

The annual report of the Company contains a certificate by the Chief Executive Officer and Managing Director in terms of SEBI Listing Regulations on the compliance declarations received from the Directors and the Senior Management personnel.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to SEBI Listing Regulations and have certified the compliance, as required under SEBI Listing Regulations. The Certificate in this regard is attached as Annexure D to this Report.

The Chief Executive Officer and Managing Director/Chief Financial Officer (CEO/CFO) certification as required under SEBI Listing Regulations is attached as Annexure F to this Report.

Related Party disclosures/transactions are detailed in Note 3.8 c & d of the Notes to the financial statements.

BUSINESS RESPONSIBILITY REPORT

As per Regulation 34 of SEBI Listing Regulations, a Business Responsibility Report is attached as Annexure K to this Report.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in enclosing the Consolidated Financial Statements in addition to the standalone financial statements pursuant to Section 129(3) of the Companies Act, 2013 (Act) and SEBI Listing Regulations and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has 24 Subsidiaries, 7 Associate Companies and 2 Joint venture companies as on March 31, 2017. During the year, the Company, Ashok Leyland Nissan Vehicles Limited (subsidiary) and Nissan Ashok Leyland Powertrain Limited, Nissan Ashok Leyland Technologies Limited (joint ventures), entered into restructuring and settlement agreements with Nissan Motor Co. Ltd, Japan (NML). As a part of the restructuring and settlement agreements, the Company acquired the entire shareholdings from NML in the subsidiary and joint venture companies resulting in all the three companies becoming wholly owned subsidiaries of your Company.

During the year, Hinduja Leyland Finance Limited (HLFL) became a material subsidiary since the net worth of HLFL in the immediately preceding accounting year exceeded twenty percent of the consolidated net worth of the Company and its subsidiaries.

In compliance with the requirements of SEBI Listing Regulations, Dr. Andreas H Biagosch, Independent Director of the Company has been appointed as an Independent Director in the Board of HLFL.

Consequent to the amalgamation of Hinduja Foundries Limited with the Company, Ashok Leyland Wind Energy Limited became an associate company of the Company.

Automotive Infotronics Limited, joint venture and Ashley Airways Limited an associate of the Company are under liquidation.

The petition for voluntary winding up of Automotive Infotronics Limited was filed with the High Court of Judicature of Madras during March 2017 and the winding up process is expected to be completed during the financial year 2017-18. During the year under review Ashok Leyland (UK) Limited has initiated the process of voluntary winding up.

A report on the performance and financial position of each of the subsidiaries, associates and joint venture companies is provided in the notes to the consolidated financial statements. Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Company''s subsidiaries, Associates and Joint Ventures in Form AOC-1 is attached to the financial statements of the Company.

Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of the subsidiaries are available on the website of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. R Seshasayee, Non-Executive Vice Chairman stepped down from the Board with effect from July 28, 2016. The Board wishes to place on record its appreciation for the valuable contributions made by him to the Board and the Company during his long tenure.

In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Dheeraj G Hinduja, Chairman retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

Mr. Jose Maria Alapont was appointed as an Additional Director (Independent) on the Board with effect from January 25, 2017.

We seek your confirmation for appointment of Mr. Jose Maria Alapont as an Independent Director for a term upto five consecutive years i.e., with effect from January 25, 2017 to January 24, 2022.

The resolutions seeking approval of the members for the re-appointment of Mr. Dheeraj G Hinduja, Chairman and appointment of Mr. Jose Maria Alapont, Independent Director have been incorporated in the Notice of the Annual General Meeting of the Company along with brief details about them.

The Independent Directors of the Company have submitted a declaration under Section 149(7) of the Companies Act, 2013 that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year.

The terms and conditions of appointment of the Independent Directors are placed on the website of the Company http://www. ashokleyland.com/companies-act-2013-compliance

The Company has also disclosed the Director''s familiarization programme on its website.

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company are Mr. Vinod K Dasari, Chief Executive Officer and Managing Director, Mr. Gopal Mahadevan, Chief Financial Officer and Mr. N. Ramanathan, Company Secretary. There has been no change in the Key Managerial Personnel during the year.

AUDITORS

Messers M S Krishnaswami & Rajan, Chartered Accountants (Registration No. 01554S) and Deloitte Haskins & Sells LLP, Chartered Accountants (Registration No. 117366W/W-100018), existing Joint Statutory Auditors have been in office for more than ten years and in compliance with the provisions of the Act, the Audit Committee and the Board of Directors of the Company at their meetings held on January 24, 2017 and January 25, 2017 respectively, recommended the appointment of Messers Price Waterhouse & Co Chartered Accountants, LLP (FRN 304026E/ E300009), as the Statutory Auditors (new auditors) of the Company in place of the existing Joint Statutory Auditors to hold office from the conclusion of the forthcoming Annual General Meeting (AGM) until the conclusion of the seventy third AGM of the Company, subject to ratification by the members at every AGM. The necessary resolution is being placed before the shareholders for approval.

The new Auditors have confirmed their eligibility to the effect that their appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for appointment.

The Auditor''s report to the shareholders on the standalone and consolidated financials for the year ended March 31, 2017 does not contain any qualification, observation or adverse comment.

COST AUDITORS

Pursuant to the provisions of Section 148(3) of the Act, the Board of Directors had appointed Messers Geeyes & Co.,

(Firm Registration No.: 00044), as Cost Auditors of the Company, for conducting the audit of cost records for the financial year ended March 31, 2017. The audit is in progress and report will be filed with the Ministry of Corporate Affairs within the prescribed period. A proposal for ratification of remuneration of the Cost Auditors for the financial year 2016-17 is placed before the shareholders for ratification/approval.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company engaged the services of Ms. B Chandra (CP No. 7859), Company Secretary in Practice, Chennai to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2017. The Secretarial Audit report for the financial year March 31, 2017 in Form No. MR-3 is attached as Annexure H to this Report. The Secretarial Audit report does not contain any qualification, reservation or adverse remark.

EXTRACT OF THE ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Act, an extract of Annual Return in Form MGT-9 as on March 31, 2017 is attached as Annexure G to this Report.

OTHER LAWS

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made there under, your Company has constituted an Internal Complaints Committee (ICC). During the year, the Company received one complaint which was investigated and closed pursuant to the provisions of the aforesaid Act.

BOARD MEETINGS HELD DURING THE YEAR

During the year, six meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure C to this Report.

ADOPTION OF NEW ARTICLES OF ASSOCIATION

The Articles of Association of the Company as currently in force was originally adopted when the Company was incorporated under the Companies Act, 1913 and further amendments were adopted pursuant to the provisions under the Companies Act, 1956, from time to time, over the past several years.

The references to specific sections of the Companies Act, 1956 in the existing Articles of Association may no longer be in conformity with the Companies Act, 2013. In view of the above, it is proposed to amend the existing Articles of Association to align it with the provisions of Companies Act, 2013 including the Rules framed there under and adoption of specific sections from Table "F" to Schedule I to the Companies Act, 2013 which sets out the model articles of association for a company limited by shares. Pursuant to the provisions of Section 14 of the Companies Act, 2013, read with the Rules framed there under, amendment of Articles of Association requires approval of shareholders by way of special resolution and the resolution is placed before the shareholders at the forthcoming Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual financial statements for the year ended March 31, 2017, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b) for the financial year ended March 31, 2017, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the financial year ended March 31, 2017;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively;

f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

REMUNERATION POLICY OF THE COMPANY

The objective of the Remuneration Policy is to attract, motivate and retain qualified and expert individuals that the Company needs in order to achieve its strategic and operational objectives, whilst acknowledging the societal context around remuneration and recognising the interests of Company''s stakeholders.

The Company''s policy on directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act have been disclosed in the Corporate Governance report, which forms part of the Board''s Report.

PARTICULARS OF EMPLOYEES

Disclosure pertaining to the remuneration and other details as required under Section 197(12) of the Act, and the Rules framed there under is attached as Annexure B to the Board''s Report.

ASHOK LEYLAND EMPLOYEE STOCK OPTION PLAN 2016

At the Annual General Meeting of the Company held on July 21, 2016, the shareholders approved formulation and implementation of Ashok Leyland Employees Stock Option Plan 2016 (AL ESOP 2016) and the total number of options approved was 42,68,815 (Forty Two Lakhs Sixty Eight Thousands Eight Hundred and Fifteen). Thereafter the Company obtained the approval of the shareholders through postal ballot for increasing the number of options from 42,68,815 (Forty Two Lakhs Sixty Eight Thousand Eight Hundred and Fifteen) employee stock options to 1,42,29,383 (One Crore Forty Two Lakhs Twenty Nine Thousand Three Hundred and Eighty Three) employee stock options for the benefit of present and future employees of the Company.

During the year under review, the Nomination and Remuneration Committee at its meeting held on September 29, 2016 granted 2,845,875 options under AL ESOP 2016 to Mr. Vinod K Dasari, Chief Executive Officer and Managing Director of the Company, which can be vested as per vesting schedule. Further, the Nomination and Remuneration Committee at its meeting held on January 24, 2017 had granted 7,454,000 options (one-time) to Mr. Vinod K Dasari, Chief Executive Officer and Managing Director of the Company, which can be vested as per vesting schedule. During the year 2016-17, there has been no exercise of stock options.

Disclosures with respect to Employees Stock Option Scheme of the Company is attached as Annexure J.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The particulars of loans, guarantees and investments under Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014, for the financial year 2016-17 are given in Note 3.8 f of the Notes to the financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

The Audit Committee and the Board of Directors have approved the Related Party Transactions Policy and the same has been hosted on the Company''s website http://www.ashokleyland.com/ sites/default/files/Ashok Leyland Limited-Policy on Related Party Transactions.pdf. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

There were no materially significant transactions with Related Parties during the financial year 2016-17 which were in conflict with the interest of the Company. Suitable disclosures as required under AS-18 have been made in Note 3.8 of the Notes to the financial statements.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure I of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Board of Directors has carried out annual performance evaluation of its own performance, the Directors Individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report attached as Annexure to this report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

Pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the SEBI Listing Regulations, the Board of Directors had approved the Policy on Vigil Mechanism/Whistle Blower and the same was hosted on the website of the Company. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee.

Your Company hereby affirms that no Director/employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year. Brief details about the policy are provided in the Corporate Governance Report attached as Annexure C to this Report.

DEPOSITS

Your Company has not accepted any deposit within the meaning of provisions of Chapter V of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 for the year ended March 31, 2017.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has designed a proper and adequate internal control system to ensure, adherence to Company''s policies, assets are safeguarded, and that transactions are accurate, complete and properly authorized prior to recording. Information provided to management is reliable and timely, and statutory obligations are adhered to. Details are provided in Management Discussion and Analysis Report in Annexure E to this report.

RISK MANAGEMENT

Your Company has established a robust Enterprise Risk Management (ERM) framework embodying the principles of COSO ERM framework & ISO 31000:2009 standards to facilitate informed decision making.

ERM process is overseen by the Risk Management Committee of the Board, which is responsible to ensure that the Company has an appropriate and effective framework for managing and reporting enterprise risks.

The Steering Committee, chaired by the CEO & MD, consists of business vertical heads and is responsible for the risk management process including risk identification, impact assessment, effective implementation of risk mitigation plans, and risk reporting.

The details of Risk Management practices of the Company are provided as part of Management Discussion and Analysis Report in Annexure E to this Report.

RESEARCH AND DEVELOPMENT, CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company continues to focus on Research and Development activities with specific reference to emission conformance, fuel efficiency, vehicular performance and enhancement of safety, aesthetics and ride comfort. Further development of the engine range and cabin is also a key result area. Expenditure incurred by way of capital and revenue on these activities is shown separately.

Information as required under Section 134(3)(m) of the Act read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are furnished in Annexure A to this Report.

ACKNOWLEDGEMENT

The Directors wish to express their appreciation for the continued co-operation of the Government of India, governments of various states in India, bankers, financial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from the joint venture partners, Hinduja Automotive Limited, United Kingdom, Holding Company, the Hinduja Group and all the shareholders. The Directors also wish to thank all the employees for their contribution, support and continued commitment throughout the year.

On behalf of the Board of Directors

Chennai Dheeraj G Hinduja

May 25, 2017 Chairman


Mar 31, 2015

Dear Members,

Performance / Operations

The Directors have pleasure in presenting the Annual Report of the Company, together with the financial statements, for the year ended March 31, 2015.

Financial Results

Rs.Lakhs

2014-15 2013-14

Profit before tax 44,219.67 (9,121.89)

Less: Tax Expense 10,739.07 (12,060.00)

Profit after tax 33,480.60 2,938.11

Balance profit from last year 115,169.99 110,486.65

Transfers:

a) From Debenture Redemption

Reserve to Statement of Profit - 1,750.00 and Loss

b) From Statement of Profit and Loss to Debenture Redemption Reserve 19,625.00 -

c) Adjustment pursuant to - (4.77) amalgamation Profit available for appropriation 129,025.59 115,169.99

Appropriation:

Proposed dividend 12,806.44 - Corporate dividend tax 2,607.09 thereon -

Balance profit carried to Balance Sheet 113,612.06 115,169.99

Earnings Per Share (Face value Rs. 1/-)

- Basic and Diluted (in Rs.) 1.20 0.11

Company Performance

During the year under review, your Company witnessed a modest recovery in the Indian economy, enabling the Medium & Heavy Commercial Vehicle (M&HCV) industry to signal an uptrend after two years of down cycle. Whilst overall commercial vehicle volumes declined by 2.8% over the previous year, the M&HCV segment volumes increased by 16%. Your Company improved its market share from 26.1% to 28.6% in the M&HCV segment, facilitated by appropriate product mix in the growth segments, a sustained focus on meeting customer requirements and initiatives in network expansion. M&HCV export volumes grew by 31.7% to 11,218 units from 8,511 units last year, enabled by growth in target export markets.

In the Light Commercial Vehicle segment, the industry volumes contracted by 13.4%. However, your Company has been able to sustain the market share in the small Commercial Vehicle (2-3.5T) segment supported by sustained product improvements and variants on DOST, which is the 2nd largest player in the segment. The new PARTNER range of products has also achieved significant market share in the 6-7.5T segment, its first full year after launch.

Power Solutions Business continued to have subdued demand due to improved power availability and slowdown in Industrial / Agricultural segments. The Spare Parts volumes have bounced back due to higher demand and focused actions at improving parts availability and competitiveness.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure-D to this Report.

Dividend

The Directors recommend a dividend of 45% (Rs. 0.45 per equity share of Rs. 1/- each) for the financial year ended March 31, 2015. Payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

Fund Raising

Equity - Qualified Institutional Placement

During the year under review, your Company successfully placed 185,200,000 equity shares through the process of Qualified Institutional Placement (QIP) and raised an amount of Rs. 666.72 crore. The proceeds received through QIP were utilised for the purpose for which it was raised.

Consequent to the above, the paid up value of the equity share capital of the Company stands increased from Rs. 266.07 crore to Rs. 284.59 crore.

Debt

Secured Non-Convertible Debentures (NCD)

During the year, your Company redeemed in full NCD Series AL 14 placed in July 2010 amounting to Rs. 70 crore. No fresh NCDs were issued during the year.

Rupee Term Loans

Your Company has repaid or prepaid Secured Rupee Term Loan availed from Banks to the tune of Rs. 450 crore during the year. No fresh Term Loan was availed during the year.

External Commercial Borrowings (ECBs)

During the year under review, your Company repaid ECB loan instalments that fell due, equivalent to USD 71.66 Mn.

Your Company availed fresh ECBs for USD 20 Mn, from a Bank for an average tenor of 5 years on unsecured basis. The funds drawn under ECBs were utilised to fund capital expenditure program of the Company and other approved end uses as per extant Reserve Bank of India Guidelines and the terms of the loan.

As at March 31, 2015, long term borrowings stood at Rs. 3,325 crore as against Rs. 4,103 crore on March 31, 2014.

Corporate Matters Human Resources

People are our most valuable asset and your Company places the engagement, development and retention of talent as its highest priority, to enable achievement of organisational vision. Structure, Process and Culture are the cornerstones of our Human Resources strategy and we have made strides in each area during the last year.

Employee involvement across Indian and International locations and recognition for individual and team achievements received another fillip. Chairman''s Awards were celebrated with much fanfare with careful selection amongst highest contributing initiatives by an eminent external jury panel. IMPROVE, our signature program for cross functional teams to participate in innovation on an enterprise wide level, reached a new benchmark with more than 10,000 participants. The BLESSING scheme at Pantnagar delivered its first 133 graduates of the four year NTTF program being hosted by your Company for students from Uttarakhand. All of them qualified the rigorous technical test for absorption into the Company''s Diploma Trainee program and have been posted to functions across locations for further inputs.

Your Company sustained harmonious and healthy industrial relations in all manufacturing plants and also signed a very forward looking long term settlement at the Bhandara unit which will set the trend in employee productivity, workforce flexibility and continuous introduction of technology.

Particulars of Employees and Related disclosures In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure forming part of the Annual Report.

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure forming part of the Annual Report.

Having regard to the provisions of Section 136(1) read with its relevant provisio of the Companies Act, 2013, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management) have affirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in the Corporate Governance Report attached as Annexure-B to this Report. The Managing Director has given a certificate of compliance with the Code of Conduct, which forms part of Annexure-B, as required under Clause 49 of the Listing Agreement.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement and have certified the compliance, as required under Clause 49 of the Listing Agreement. The Certificate in this regard is attached as Annexure-C to this Report.

The Managing Director / Chief Financial Officer (CEO/CFO) certification as required under Clause 41 of the Listing Agreement is attached as Annexure-E to this Report.

Related Party disclosures/transactions are detailed in Note 3.5 of the Notes to the financial statements.

Consolidated Financial Statements In accordance with the Accounting Standard (AS)-21 on Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

Subsidiaries, Associates and Joint Ventures Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company''s Subsidiaries'', Associates'' and Joint Ventures (in Form AOC-1) is attached to the financial statements.

Directors and Key Managerial Personnel During the year under review, Mr. Anil Harish, Independent Director and Mr. Y. M. Kale, Alternate Director (to Mr. Dheeraj G. Hinduja) stepped down from the Board. The Board wishes to place on record its deep sense of appreciation for the valuable contributions made by them to the Board and the Company during their tenure as Directors.

Mr. F. Sahami, Director, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for re-appointment.

Ms. Manisha Girotra and Mr. Sudhindar Krishan Khanna were appointed as Additional Directors (Independent) on the Board with effect from September 8, 2014 and May 12, 2015 respectively. We seek your confirmation for appointment of Ms. Manisha Girotra and Mr. Sudhindar Krishan Khanna as Independent Directors for a term upto five consecutive years i.e. from June 29, 2015 to June 28, 2020 respectively, on non-rotational basis.

The Independent Directors of the Company have declared that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013 and that there is no change in their status of Independence.

At the Board Meeting held on May 22, 2014, Mr. Vinod K. Dasari, Managing Director, Mr. Gopal Mahadevan, Chief Financial Officer and Mr. N. Ramanathan, Company Secretary were designated as "Key Managerial Personnel" of the Company pursuant to Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Voluntary Delisting of Company''s Equity Shares from the Madras Stock Exchange Limited

In terms of the circular issued by the Securities Exchange Board of India (SEBI) dated May 30, 2012, the Madras Stock Exchange Limited (MSE), exercised the option of voluntary de-recognition and exit as a Stock Exchange, consequent to the turnover target not attained post issuance of the aforesaid circular.

In view of the above, the Board of Directors at their meeting held on July 25, 2014, approved the proposal for voluntary delisting of equity shares from MSE, by complying with SEBI (Delisting of Equity Shares) Regulations, 2009.

On our application, MSE Listing Committee reviewed and approved to remove the name of the Company from the list of Listed Securities of the MSE with effect from September 25, 2014. Auditors

M/s. M. S. Krishnaswami & Rajan, Chartered Accountants and M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Joint Statutory Auditors, retire at the close of this Annual General Meeting and are eligible for appointment. The Company has received confirmation from both the firms regarding their consent and eligibility under Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for appointment as the Auditors of the Company.

As required under Clause 41 of the Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Audit Committee and the Board of Directors have recommended the appointment of the Auditors for the financial year 2015-16. The necessary resolution is being placed before the shareholders for approval.

Cost Auditor

The Board had appointed M/s. Geeyes & Co., (Regn No: 00044) Cost Auditors for the financial year 2014-15 to carry out the cost audit of Company''s records in respect of motor vehicles and engineering industries (diesel engines). However, pursuant to a clarification provided by the Ministry of Corporate Affairs, the cost audit for the financial year 2014-15 was not applicable to the Company and hence for the financial year 2014-15, cost audit was not conducted.

Cost Audit Report for the financial year 2013-14 was filed on September 24, 2014 (due date- September 30, 2014).

Compliance under Companies Act, 2013

Pursuant to Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, your Company complied with the compliance requirements and the detail of compliances under Companies Act, 2013 are enumerated below:

Extract of Annual Return

An extract of Annual Return in Form MGT-9 as on March 31, 2015 is attached as Annexure-F to this Report.

Board Meetings held during the year

During the year, 6 meetings of the Board of Directors were held. The details of the meetings are furnished in the Corporate Governance Report which is attached as Annexure-B to this Report.

Directors'' Responsibility Statement

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a) in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures.

b) for the financial year ended March 31, 2015, such accounting policies as mentioned in the Notes to the financial statements have been applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company and of the Profit and Loss of the Company for the year ended March 31, 2015.

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) the annual financial statements have been prepared on a going concern basis.

e) that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively.

f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

Remuneration Policy of the Company

The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided in the Corporate Governance Report which is attached as Annexure-B to this Report.

Secretarial Audit

Pursuant to provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, your Company engaged the services of Ms. B. Chandra, Company Secretary in Practice, Chennai to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2015.

The Secretarial Audit Report (in Form MR-3) is attached as Annexure-G to this Report.

Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in Note 3.15 of the Notes to the financial statements.

Related Party Transactions

All transactions entered by the Company with Related Parties were in the Ordinary Course of Business and at Arm''s Length pricing basis. The Audit Committee granted omnibus approval for the transactions (which are repetitive in nature) and the same was reviewed by the Audit Committee and the Board of Directors. There were no materially significant transactions with Related Parties during the financial year 2014-15 which were in conflict with the interest of the Company. Suitable disclosures as required under AS-18 have been made in Note 3.5 of the Notes to the financial statements.

During the year, your Company entered into a transaction with Ashok Leyland (UAE) LLC, Associate Company, to sell its 100% stake in Avia Ashok Leyland Motors s.r.o, an overseas subsidiary (which was disclosed as "Asset held for sale" in the financial statements for the year ended March 31, 2014). Details of the transaction are provided in Form AOC-2 which is attached as Annexure-H to this Report.

The Board had approved policies on Related Party Transactions and Material Subsidiary. The policies have been uploaded on the Company''s website, under the web link:

http://www.ashokleyland.com/companies-act-2013-compliance.

Material changes and commitments affecting the financial position of the Company which have occurred between March 31, 2015 and May 12, 2015 (date of the Report)

There were no material changes and commitments affecting the financial position of the Company between the end of financial year (March 31, 2015) and the date of the Report (May 12, 2015).

Risk Management Policy

Your Company has a robust Risk Management policy. The Company through a Steering Committee oversees the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting.

Your Company has an established Enterprise Risk Management (ERM) function that engages with all the business verticals for risk assessment and ensures that the risk mitigation plans are in place and validates its status regularly.

Your Board is delighted to share that the Company has been adjudged ''Firm of the Year'' in the Auto Sector, at the first edition of the ''India Risk Management Awards'' (IRMA) organised by ICICI Lombard Insurance Company and CNBC TV18 for its benchmark practices and significantly adding to the understanding and practice of ERM.

The details of Risk Management as practiced by the Company is provided as part of Management Discussion and Analysis Report attached as Annexure-D to this Report.

Corporate Social Responsibility (CSR) initiatives

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company at the Board Meeting held on September 8, 2014 approved a Policy on CSR and the Policy was hosted on the website of the Company.

As part of CSR initiatives, your Company during the financial year 2014-15 has amongst other activities, undertaken projects in areas of promoting education, preventive health care and sanitation, environmental sustainability and measures for benefits of armed forces veterans. These projects are in accordance with Schedule VII of the Companies Act, 2013.

The report on CSR activities is attached as Annexure-I to this Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting without the participation of the Non-independent Directors and Management, considered/evaluated the Boards'' performance, Performance of the Chairman and other Non-independent Directors.

The Board have undergone a formal review which comprised Board effectiveness survey, 360 degree and review of materials. This was delivered by an external specialist and resulted in a full Board effectiveness report and Directors'' feedback. This is further supported by the Chairman''s Annual Director Performance Review.

The Board subsequently evaluated its own performance, the working of its Committees (Audit, Nomination and Remuneration and Stakeholders Relationship Committee) and Independent Directors (without participation of the relevant Director).

The criteria for performance evaluation have been detailed in the Corporate Governance Report which is attached as Annexure-B to this Report.

Vigil Mechanism/ Whistle Blower Policy

Pursuant to Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Board of Directors had approved the Policy on Vigil Mechanism/ Whistle Blower and the same was hosted on the website of the Company. This Policy inter-alia provides a direct access to the Chairman of the Audit Committee.

Your Company hereby affirms that no Director/ employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

Brief details about the policy are provided in the Corporate Governance Report attached as Annexure-B to this Report.

Names of Companies which have ceased/ become Subsidiaries/ Joint Ventures/Associates

(i) Subsidiaries

Avia Ashok Leyland Motors s.r.o

During the year, as part of restructuring of investments of the Company, your Company divested its entire stake of 100% ownership in Avia Ashok Leyland Motors s.r.o (Avia), an overseas Wholly-owned Subsidiary to Ashok Leyland (UAE) LLC (an Associate Company).

Consequently, Avia ceased to be a Wholly-owned subsidiary of the Company with effect from March 29, 2015.

Ashok Leyland Wind Energy Limited Your Company divested its stake of 48.5% ownership in Ashok Leyland Wind Energy Limited (ALWEL) as part of sale of non-core assets of the Company.

Consequent to the above, ALWEL ceased to be the Subsidiary of the Company with effect from March 30, 2015 upon completion of all relevant closing formalities as per the agreements. Your Company continues to hold 11.5% stake in the equity share capital of ALWEL.

(ii) Others

Hinduja Tech Limited (formerly Defiance Technologies Limited)

With a view to derive benefits from international markets, Hinduja Tech Limited (HTL), a Wholly-owned subsidiary of the Company, succeeded in getting Nissan International Holding B.V., (Nissan) as a strategic investor to subscribe to the equity share capital of HTL.

Consequent to the allotment of equity shares to Nissan, your Company''s holding in HTL stands reduced to 62% with effect from October 30, 2014.

Global TVS Bus Body Builders Limited (formerly Irizar TVS Limited)

Your Company acquired the residual stake of 5% held by Irizar. S. Coop in Global TVS Bus Body Builders Limited (GTVS). Consequently, the equity holding of the Company increased from 61.67% to 66.67% of the paid up equity share capital of GTVS.

Deposits

During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Significant and Material Orders Passed by the Regulators or Courts or Tribunals impacting the Going Concern status of the Company

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company. internal Control Systems and their Adequacy

Details of the same are provided in the Management Discussion and Analysis Report attached as Annexure-D to this Report.

Research and Development, Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company continues to focus on Research and Development activities with specific reference to emission conformance, fuel efficiency, vehicular performance and enhancement of safety, aesthetics and ride comfort. Further development of the engine range and cabin is also a key result area. Expenditure incurred by way of capital and revenue on these activities is shown separately.

The particulars prescribed under Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts)

Rules, 2014, relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo are furnished in Annexure-A to this Report.

Acknowledgement

The Directors wish to express their appreciation for the continued co-operation of the Central and State Governments, bankers, financial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from the joint venture partners, the major shareholders Hinduja Automotive Limited, the Hinduja Group and all the shareholders. The Directors also wish to thank all the employees for their contribution, support and continued co-operation throughout the year.

On behalf of the Board of Directors

Chennai Dheeraj G. Hinduja

May 12, 2015 Chairman


Mar 31, 2014

The Directors hereby present the Annual Report of the Company, together with the audited Financial Statements, for the year ended March 31, 2014.

FINANCIAL RESULTS

(Rs.lakhs)

2013-14 2012-13

Profi t/(Loss) before tax (9121.89) 47,070.67

Less: Tax Expense (12,060.00) 3,700.00

Profi t after tax 2,938.11 43,370.67

Balance profi t from last year 1,104,86.65 90,793.13

Transfers:

a) From Debenture

Redemption Reserve to 1,750.00

Statement of Profi t and Loss

b) From Statement of Profit and Loss to General reserve (4.77)* (5,000.00)

Profit available for appropriation 1,15,169.99 1,29,163.80

Appropriations:

Proposed dividend 15,964.06

Corporate dividend tax thereon 2,713.09

Balance profi t carried to balance sheet 1,15,169.99 110,486.65

Earnings per Share (Face valueRs.1/-)

- Basic and Diluted (in Rs.) 0.11 1.63

* Pursuant to Amalgamation (Refer Note 3.16 c to the Financial Statements)

Company Performance

The year under review saw a continued slowdown in the Indian economy with a consequent adverse impact on the commercial vehicle industry. Whilst the overall commercial vehicle volumes declined by 20.2% over previous year, the Medium & Heavy Commercial Vehicle (M&HCV) segment had a steeper decline of 25.3%. Your Company maintained its market share in the declining TIV scenario, at 26.1% in the M&HCV segment - facilitated by sustained focus on meeting customer requirements, carefully planned network expansion and new product launches.

In the Light Commercial Vehicle (LCV) segment, ''DOST'' model suff ered decline in sales volume due to aggressive discounting and unsustainable fi nance schemes off ered by the competition. However, Your Company continued its penetration in this segment with introduction of new models, such as Partner, Mitr and Stile. While improved power availability and tight fi nancial liquidity aff ected the demand in Power Solutions Business (PSB), the Spare Parts demand was aff ected by lower utilization of fl eets. M&HCV export volumes remained fl at compared to last year, despite a drop of nearly 50% in the Sri Lankan market.

Highlights of performance are discussed in detail in the Management Discussion and Analysis report attached as Annexure-D to this report.

Dividend

The Directors have not recommended any dividend for the FY 2013-14.

Research and Development, technology absorption and energy conservation.

Your Company continues to focus on Research and Development activities with specifi c reference to emission conformance, fuel effi ciency, vehicular performance and enhancement of safety, aesthetics and ride comfort. Further development of the engine range and cabin is also a key result area. Expenditure incurred by way of capital and revenue on these activities is shown separately.

The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988 relating to Conservation of Energy, Technology Absorption, Foreign Exchange are furnished in Annexure - A to this Report. Long Term Borrowings: Secured Non-Convertible Debentures

During the year, Your Company issued Secured Non-Convertible Debentures to the tune of Rs. 300 Cr (NCD Series AL 21 to the extent of Rs.150 Cr for a tenor of 3 years and NCD Series AL 22 to the extent of Rs. 150 Cr for a tenor of 5 years). During the year, NCD Series AL 13 placed in Jul''10 with UBS AG to the extent of Rs.70 Cr at an interest rate of 8.20%, was fully redeemed in Jul''13. Rupee Term Loans

Your Company availed a Secured Rupee Term Loan to the tune of Rs. 500 Cr during FY 2013-14 from a Bank for a tenor of fi ve years, repayable in equal instalments from the end of second year.

Debentures / Term Loans were utilized to fund long term working capital purposes, capex, general corporate purposes and loan repayments.

External Commercial Borrowings (ECBs)

Your Company contracted ECBs in Japanese Yen, equivalent to USD 65 Mn, during FY 2012-13 from Banks for an average tenor of 5.6 years (Door to door of 7 years) on unsecured basis and was drawn in FY 2013-14. The funds drawn under ECBs were utilized to fund capital expenditure program of the Company and other approved end uses as per extant RBI guidelines and the terms of the loan.

Your Company repaid ECB loan instalments that fell due, equivalent to USD 90 Mn during FY 2013-14. Part II - Corporate matters Human Resources

Your Company continues to place high value on Human Resources as one of the corner stones for achieving the organisational vision. In line with this, the Chairman''s Award has been instituted as the highest form of recognition for individuals and teams that have signifi cantly contributed towards Your Company''s long term profi table growth. The individuals and the teams were assessed by an eminent jury and the best achievements were recognised and honoured. Your Company''s initiative for developing internal leadership pipeline, the "Emerging Leaders Programme", has got off to a good start and the identifi ed talent are going through a structured development process.

Your Company has promoted purposive Industry-Institute collaborative initiatives creating a talent pool for industry with contemporary knowledge and skills. Shop fl oor engagement initiatives such as "Blessing", Knowledge Academy and career development for associates are continuing to get focussed attention, thus driving a collaborative work culture.

Your Company has eff ectively responded to business challenges through manpower engagement strategies involving cross functional teams, aimed at expanding the market and customer reach, Revenue Maximization initiative (R-Max), aimed at training and deploying resources from Manufacturing to Field Sales, has been a signifi cant milestone in this direction. IMPROVE, a Total Employee Involvement initiative, has made huge strides in terms of increasing employee participation, richness of actionable suggestions/ideas and has blossomed into a company-wide innovation programme. Cross-functional teams across the organisation POarticipate with enthusiasm and involvement, in contributing their ideas and take ownership for implementation, which have led to signifi cant improvements in product/process/quality/cost thus contributing to bottom line. It has become a vibrant and sustainable movement, celebrating team achievements, tapping into creative impulses of our employees. 15th edition of IMPROVE witnessed 11,000 innovative ideas, with participation of about 45% of employees, leading to bottom line impact ofRs. 264 lakhs in one-time savings and Rs. 518 lakhs in recurring savings. Your Company sustained harmonious and healthy industrial relations in all manufacturing plants. Long term settlements with focus on improved productivity and fl exibility in engagement of resources have been successfully completed and are getting implemented. The total number of employees on the rolls of the Company is 11552.

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management - of the rank of General Managers and above) have confi rmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in Annexure-B to this Report. The Managing Director has given a certifi cate of compliance with the Code of Conduct, as required by SEBI guidelines.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement, and have certifi ed the compliance, as required under SEBI guidelines. The certifi cate is reproduced as Annexure - C to this Report. The Directors'' Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure - E to this Report.

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules thereunder, is provided in Annexure forming part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the report and fi nancial statements are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining copy of the same may write to the Company Secretary. The MD / CFO certifi cation as required under the SEBI guidelines is attached - as Annexure - F to this Report. Related Party disclosures/transactions are detailed in Note 3.5 of the Notes to the Financial Statements.

Consolidated Financial Statement

In accordance with the Accounting Standard (AS) - 21 on

Consolidated Financial Statements read with AS - 23 on

Accounting for Investments in Associates and AS - 27 on

Financial Reporting of Interests in Joint Ventures, the audited

Consolidated Financial Statement is provided in the Annual

Report.

Subsidiaries

Pursuant to the provisions of section 212(8) of the Companies Act, 1956 (Act) read with General Circular no 8 of 2014 issued in No. 1/19/2013-CL-V & its General Circular No. 2/2011 dated February 8, 2011 issued by the Ministry of Corporate Aff airs vide, has granted a general exemption subject to certain conditions to holding companies from complying with the provisions of Section 212 of the Act, which requires the attaching of Balance Sheet, Profi t & Loss Account and other documents of its subsidiary companies to its Balance Sheet. Accordingly, the said documents are not being included in this Annual Report. The main fi nancial summaries of the subsidiary companies are provided under the section ''Subsidiary companies: Financial Highlights for FY 2013-14'' (Page No. 118) in the Annual Report. The Company will make available the said annual accounts and related detailed information of the subsidiary companies upon the request by any member of the company or its subsidiary companies. These accounts will also be kept open for inspection by any member at the Head Offi ce of the Company and the subsidiary companies.

Directors

During the year, Mr. Jorma Antero Halonen and

Dr. V. Sumantran stepped down from the Board. The Board wishes to place on record its appreciation for the valuable contributions made by them to the Board and the Company, during their tenure.

Mr. Dheeraj G Hinduja, Director, retires by rotation at the forthcoming Annual General Meeting, and being eligible off ers himself for re-appointment.

In terms of Sections 149, 150, 152, other applicable and related provisions of the Companies Act, 2013 read with Rules made thereunder, retirement by rotation shall not apply to Independent Directors. In order to comply with the statutory requirements, your Independent Directors, Dr. Andreas H Biagosch, Mr. Anil Harish, Mr. D. J. Balaji Rao, Mr. Jean Brunol, Mr. Sanjay K. Asher and Mr. Shardul S. Shroff are being recommended for appointment for a term upto fi ve consecutive years i.e. upto July 25, 2019, on a non-rotational basis.

Details of the proposals of appointment or re-appointment as applicable are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 in the Notice to the 65th Annual General Meeting. Necessary resolutions are being placed before the shareholders for approval.

Cost Auditors

The Government has stipulated Cost Audit of the Company''s records in respect of motor vehicles as well as engineering industries (diesel engines). M/s Geeyes & Co., (Regn. No.00044) Cost Auditors have carried out these audits. Their fi ndings have been satisfactory. The Audit Committee of the Board has recommended their re-appointment for the year 2014-15.

Cost Audit Reports for the FY 2012-13 were fi led on September 23, 2013 (due date - September 30, 2013).

Auditors

M/s M S Krishnaswami & Rajan, Chartered Accountants and M/s Deloitte Haskins & Sells LLP, Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Company has received confi rmation from both the fi rms that their appointment will be within the limits prescribed under Section 141(3) (g) of the Companies Act, 2013. The Audit Committee of the Board has recommended their re-appointment for the year 2014-15. The necessary resolution is being placed before the shareholders for approval.

Acknowledgment

The Directors wish to express their appreciation of the continued co-operation of the Central and State Governments, Bankers, Financial Institutions, Customers, Dealers and Suppliers and also the valuable assistance and advice received from the Joint Venture partners, the major shareholders Hinduja Automotive Limited, the Hinduja Group and all the shareholders. The Directors also wish to thank all the employees for their contribution, support and hard work through the year.

On behalf of the Board of Directors

Chennai Dheeraj G Hinduja

May 22, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited Financial Statements, for the year ended March 31, 2013.

FINANCIAL RESULTS

(Rs. lakhs)

2012-13 2011-12

Profit before tax 47,070.67 68,997.66

Less: Tax Expense 3,700.00 12,400.00

Profit after tax 43,370.67 56,597.66

Balance profit from last year 90,793.13 75,118.52

Transfers:

a) From Debenture Redemption Reserve to Statement of Profit and Loss - 3,750.00

b) From Statement of Profit and Loss to Debenture Redemption Reserve - (3,750.00)

c) From Statement of Profit and Loss to General Reserve (5,000.00) (10,000.00)

Profit available for appropriation 1,29,163.80 1,21,716.18

Appropriations:

Proposed dividend 15,964.06 26,606.77

Corporate dividend tax thereon 2,713.09 4,316.28

Balance profit carried to balance sheet 1,10,486.65 90,793.13

Earnings per Share (Face value Rs. 1/-)

- Basic and Diluted (in Rs.) 1.63 2.13

Dividend

The Directors recommend a dividend of 60% (Rs. 0.60 per equity share of Rs. 1/-) for the year ended March 31, 2013.

Company Performance

The year under review saw a slowdown in the Indian economy with a consequent adverse impact on the commercial vehicle industry. Whilst the overall volume declined by 2% year over year, the medium & heavy duty segment clocked a 25% drop. Despite the above, your Company increased its market share from 23.5% to 26.5% in the M&HCV segment.

In the Light Commercial Vehicle (LCV) segment, ''Dost'' continued to grow in volumes. The performance of Power Solution Business and Spares have been very encouraging. Export volumes dropped primarily due to the setback in Sri Lanka which could not be fully recouped in other geographies.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure-D to this Report.

Research and Development (R&D), technology absorption, energy conservation etc.

Your Company continues to focus on Research and Development activities with particular reference to development of competitive products with accent on performance, fuel efficiency, emission and ride comfort. Expenditure incurred by way of capital and revenue on these activities are shown separately.

The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988 relating to Conservation of Energy, Technology Absorption, Foreign Exchange are furnished in Annexure-A to this Report.

Long Term Borrowings:

Secured Non-Convertible Debentures

During the year, your Company issued Secured Non- convertible Debentures to the tune of Rs. 350 Crores for a tenor of 3 years (NCD Series AL 17 for Rs. 200 Crores and NCD Series AL 19 for Rs. 150 Crores) and Rs. 250 Crores for a tenor of 5 years (NCD Series AL 18 for Rs. 100 Crores and NCD Series AL 20 for Rs. 150 Crores) aggregating to Rs. 600 Crores for FY 2012-13. During the year, no Secured Non- Convertible Debenture had fallen due for redemption. External Commercial Borrowings (ECBs)

Your Company contracted ECBs in Japanese Yen, equivalent to USD 60 Mn, during FY 2011-12 and USD 115 Mn in 2012-13 from Banks for an average tenor of 5 to 5.6 years (Door to door of 6 to 7 years) on unsecured basis and USD 110 Mn was utilized during FY 2012-13. The funds drawn under ECBs were utilized to fund capital expenditure programme of the Company and other approved end uses as per extant RBI guidelines and the terms of the loan.

Your Company repaid ECB loan instalments that fell due, in Japanese yen, equivalent to USD 81.66 Mn and USD 16.66 Mn during FY 2012-13.

Part II - Corporate matters Human Resources

Your Company values the human resources, their contribution and potential, as one of the foundational pillars for achieving the organisational vision.

Your Company''s flagship scheme for seeding internal leadership pipeline has been re-christened as the ''Emerging Leaders Programme'' with a renewed focus to identify and nurture internal leaders.

Banner projects involving cross-functional teams have benefitted the organisation in product initiatives, process efficiency and market share improvements.

Your Company has sustained the status as the ''Most Preferred Employer'' on Premier Engineering Institutes, which has facilitated induction of a creamy layer of talent.

Your Company developed vibrant Industry-Institute collaborative initiatives, leading to creation of a talent pool, skill and capabilities enhancement.

Shop floor engagement initiatives like ''Blessing'', Knowledge Academy / career development for associates, have gained momentum, promoting a collaborative work culture.

Your Company sustained harmonious and healthy industrial relations in all manufacturing plants.

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management - of the rank of General Managers and above) have confirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in Annexure-B to this Report. The Managing Director has issued certificate of compliance with the Code of Conduct, as required by SEBI guidelines.

Many of the Corporate Governance Voluntary Guidelines 2009 issued by Ministry of Corporate Affairs are being followed by your Company.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement, and have certified the compliance, as required under SEBI guidelines. The certificate is reproduced as Annexure-C to this Report.

The Directors'' Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure-E to this Report.

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder is provided in Annexure forming part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Financial Statements are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining copy of the same may write to the Company Secretary.

The MD / CFO certification as required under the SEBI guidelines is attached as Annexure-F to this Report.

Related Party disclosures/transactions are detailed in Note 3.5 of the Notes to the Financial Statements.

Directors

Mr Anil Harish, Mr Sanjay K Asher and Mr Jean Brunol, Directors, retire at the forthcoming Annual General Meeting and are eligible for re-appointment.

Mr R Seshasayee steps down as Executive Vice Chairman at the expiry of his term as on 31.03.2013. However, he continues to be a Director and becomes eligible for retirement by rotation. He retires at the forthcoming Annual General Meeting and is eligible for reappointment.

Mr R Seshasayee was appointed as Non-Executive Vice Chairman effective 01.04.2013.

Dr Andreas H Biagosch was appointed as an Additional Director at the Board Meeting held on May 10, 2013. His term of office expires at the end of the ensuing Annual General Meeting. The Company has received Notice under Section 257 of the Companies Act proposing him for appointment as Director of the Company.

Necessary resolutions are being placed before the shareholders for approval.

Cost Auditors

The Government has stipulated Cost Audit of the Company''s records in respect of motor vehicles as well as engineering industries (diesel engines). M/s Geeyes & Co., (Regn. No. 00044) Cost Auditors have carried out these audits. Their findings have been satisfactory. The Audit Committee of the Board has recommended their re-appointment for the year 2013-14.

Cost Audit Reports for the financial year 2011-12 were filed on January 28, 2013 (due date - February 28, 2013).

Auditors

M/s M S Krishnaswami & Rajan, Chartered Accountants and M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Company has received confirmation from both the firms that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their re-appointment for the year 2013-14. The necessary resolution is being placed before the shareholders for approval.

Acknowledgement

The Directors wish to express their appreciation of the continued co-operation of the Central and State Governments, bankers, financial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from the joint venture partners, the major shareholders Hinduja Automotive Limited, the Hinduja Group and all the shareholders. The Directors also wish to thank all the employees for their contribution and continued commitment, support and co-operation through the year.

On behalf of the Board of Directors

Chennai Dheeraj G Hinduja May 10, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited Financial Statements, for the year ended March 31, 2012.

FINANCIAL RESULTS

(Rs.lakhs)

2011-2012 2010-2011

Profit before tax 68,997.66 80,179.93

Less: Provision for taxation 12,400.00 17,050.00

Profit after tax 56,597.66 63,129.93

Balance profit from last year 75,118.52 57,744.98

Transfer:

a) From Debenture redemption 3,750.00 416.66 reserve to Statement of Profit and Loss

b) From Statement of Profit and (3,750.00) (5,250.00) Loss to Debenture redemption reserve

c)From Statement of Profit and (10,000.00) (10,000.00) Loss to General reserve

Profits available for appropriation 1,21,716.18 1,06,041.57

Appropriations:

Proposed dividend 26,606.77 26,606.77

Corporate dividend tax thereon 4,316.28 4,316.28

Balance profit carried to balance sheet 90,793.13 75,118.52

Earnings Per Share (Face value Re.l/-)

- Basic and Diluted (in Rs.) [ Post 2.13 2.37

Bonus]

Dividend

The Directors recommended a dividend of 100% (Re.l/- per equity share) for the year ended March 31, 2012.

Company Performance

The year under review witnessed a lot of challenges with growing competition and changes in customers preference. Despite the challenges posed, the Company achieved a sale volume of 101,990 vehicles - highest recorded in any year so far. This was aided by the launch of 'Dost', the first variant in the Light Commercial Vehicles (LCV) category, during the year. Overall, the performance in Exports, Power, Solutions Business and Spares have also been encouraging.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure-D to this Report.

Research and development, technology absorption, energy conservation etc.

Your Company continued to focus on Research and Development activities with specific reference to green initiatives, fuel efficiency, enhancement of comforts and development of new generation engines.

Expenditure incurred by way of capital and revenue on these activities are shown separately.

The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988 relating to Conservation of Energy, Technology Absorption and Foreign Exchange are furnished vide Annexure - A to this Report.

Long Term Borrowings:

Secured Non-Convertible Debentures

During the year, your Company issued Secured Non- convertible Debentures Series AL 16 to the tune of Rs.15,000 lakhs repayable at the end of 3rd, 4th and 5th year from the date of issue and fully redeemed Secured Non-Convertible Debentures Series AL 12 of Rs. 15,000 lakhs.

External Commercial Borrowings (ECBs)

Your Company contracted ECBs to the tune of Japanese Yen equivalent to USD 150 Mn during 2011-12 from banks for an average tenor of 5 years (door to door of 6 years) on unsecured basis and drew Japanese Yen equivalent to USD 90 Mn during 2011-12. The balance of USD 60 Mn would be drawn in the ensuing financial year. The funds drawn under ECBs were utilized to fund the capital expenditure programmes of your Company as per extant RBI guidelines and as per the terms of the loan.

Your Company repaid ECB loan installments that fell due to the tune of USD 36.66 Mn during 2011-12.

Strategic Alliances

Optare pic, U.K.

In line with the vision of being among the top 5 bus manufacturers globally, significant stakes were acquired by your Company together with its investment arms in Optare pic, a leading bus manufacturer in U.K. thereby opening large opportunities for growth and development based on synergy and integration with the Company's bus business.

Part II - Corporate matters

Share Capital - Issue of Bonus Shares

With the approval of the shareholders, your Company issued 133,03,38,317 Equity Shares of Re.l/- each, fully paid-up, as Bonus Shares, in the ratio of 1 (One) Bonus Share for every existing 1 (One) Ordinary Share of Re.l/- each held on August 3, 2011, (being the Record Date fixed for the purpose) by capitalization of Securities Premium Account. The Bonus Shares were allotted on August 4,2011.

Consequently, the Issued and Subscribed Share Capital of your Company, as on March 31, 2012, stands increased to Rs. 266,08,81,309/- divided into 266,08,81,309 Ordinary Shares of Re. 1/- each and Rs. 266,06,76,634 divided into 266,06,76,634 Ordinary Shares of Re. 1/- each respectively.

Human Resources

Human Resource Development is a critical organizational priority and considered as an imperative to growth.

All the strategic HR initiatives are moving forward at a quick clip. Talent Acquisition, Management and Development initiatives are progressing in an integrated manner.

One of the flagship HR initiatives, the 3-Tier Leadership Development Programme was rolled out to ensure early identification of talent and provide them opportunities to learn, contribute and grow. This initiative would continuously seed the internal leadership pipeline.

During the year, rationalization of people processes such as IT enabled PMS, Job Evaluation and Compensation restructuring have been taken up to drive meritocracy, transparency and mutuality to reinforce your Company as a high performing organization.

The capability enhancement efforts of the organization extend to shop floor transformation. Shop floor initiatives such as MISSION GEMBA, BLESSING PLAN and KNOWLEDGE ACADEMY have been recognized as best industry practices.

Attrition rate of 10.9 % was the second lowest in the industry, an indicator of happy, engaged employees.

Your Company was successful in achieving planned labour productivity levels and the Company at all seven manufacturing units maintained cordial and healthy industrial relations.

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management - of the rank of General Managers and above) have confirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in Annexure-B to this Report. The Executive Vice Chairman has issued certificate of compliance to the Code of Conduct, as required by SEBI guidelines.

Many of the Corporate Governance Voluntary Guidelines 2009 issued by Ministry of Corporate Affairs are being followed by your Company.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement, and have certified the compliance, as required under SEBI guidelines. The certificate is reproduced as Annexure -C to this Report.

The Directors' Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure -E to this Report.

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules there under, in respect of employees is provided in the Annexure-F forming part of this Report.

The MD / CFO certification as required under the SEBI guidelines is attached - as Annexure -G to this Report.

Related Party disclosures/transactions are detailed in Note 3.5 of the Notes to the Financial Statements.

Directors

Mr Shardul S Shroff, Mr A K Das and Mr F Sahami, Directors, retire at the forthcoming Annual General Meeting and are eligible for re-appointment. Necessary resolutions are being placed before the shareholders for approval.

Cost Auditors

The Government has stipulated Cost Audit of the Company's records in respect of motor vehicles as well as engineering industries (diesel engines). M/s Geeyes & Co., (Regn. No.00044). Cost Auditors have carried out these audits. Their findings have been satisfactory. The Audit Committee of the Board has recommended their re-appointment for the year 2012-13.

Cost Audit Reports for the financial year 2010-11 were filed on September 23, 2011 (due date - September 30, 2011).

Auditors

M/s M S Krishnaswami & Rajan, Chartered Accountants and M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Company has received confirmation from both the firms that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their re-appointment for the year 2012-13. The necessary resolution is being placed before the shareholders for approval.

Acknowledgement

The Directors wish to express their appreciation of the continued co-operation of the Central Government and State Governments, bankers, financial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from the joint venture partners, the major shareholders Hinduja Automotive Limited, the Hinduja Group and all the stakeholders. The Directors also wish to thank all the employees for their contribution, support and continued co-operation throughout the year.

On behalf of the Board of Directors

Chennai Dheeraj G Hinduja

May 14, 2012 Chairman


Mar 31, 2011

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited Accounts, for the year ended March 31, 2011.

FINANCIAL RESULTS

(Rs. lakhs) 2010-2011 2009-2010

Profit before tax 80,179.93 54,477.48

Less: provision for taxation 17,050.00 12,110.00

Profit after tax 63,129.93 42,367.48

Balance profit from last year 57,744.98 48,230.19

transfer from/(to):

debenture redemption reserve 416.66 416.67

(5,250.00)

General reserve (10,000.00) (10,000.00)

Profit available for appropriation 1,06,041.57 81,014.34

Appropriation:

proposed dividend 26,606.77 19,955.07

corporate dividend tax thereon 4,316.28 3,314.29

Balance profit carried to

Balance sheet 75,118.52 57,744.98

earnings per share (face value Re.1/-)

- Basic (in Rs.) 4.75 3.18

Dividend

The Directors recommend a dividend of 200% (Rs.2/- per equity share of Re.1/-) for the year ended March 31, 2011.

Company Performance

The Indian economy is estimated to have registered a broad-based growth of about 8.6% facilitated by policy stimulus and encouraging agricultural output. The Commercial Vehicles industry witnessed strong growth on the back of adequate freight availability and higher capacity utilization.

With the above background, your Company recorded highest ever sales for the year ended March 31, 2011 supported by a record performance in exports.

Sales increased by 47% over the previous year by volume and by 53.62% in value terms.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure-D to this Report.

Research and development, technology absorption, energy conservation etc.

Your Company has continued to focus on Research and Development activities with specific reference to green initiatives, fuel efficiency, enhancement of comforts and development of New Generation engines.

Expenditure incurred by way of capital and revenue on these activities are shown separately.

The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988 relating to Conservation of Energy, Technology Absorption, Foreign Exchange are furnished in Annexure - A to this Report.

Long Term Borrowings:

During the financial year 2010-11, your Company issued Secured Non-convertible Debentures Series AL 13 to AL 15 to the tune of Rs.21000 lakhs repayable at the end of 3rd, 4th and 5th year and fully redeemed Secured Non-convertible Debentures Series AL 11 of Rs.5000 lakhs (final installment of Rs.1666.67 lakh paid during FY 2010-11).

Availment of Rupee Term Loans

Your Company availed Secured Rupee Term Loans to the tune of Rs.25000 lakhs during FY 2010-11 from a Bank for a tenor of five years.

Debentures / Term Loans were utilized to fund capital expenditure programmes of the Company as per the terms thereof.

Strategic Alliances

Optare plc, U.K.

In line with the Companys strategy, your Company acquired 26% in the equity share capital of Optare plc, U.K., a leading bus manufacturer in U.K., which will benefit the Company in its endeavour to address new markets, and to accelerate technology development.

Ashok Leyland Defence Systems Limited

In order to continue to participate in the defence business of the Company and to exploit opportunities available in the defence industry, your Company has made a strategic investment of 26% of the equity shares capital in Ashok Leyland Defence Systems Limited.

Ashok Leyland (UAE) LLC,

The state-of-the-art factory built as a venture between your Company and Ras Al Khaimah Investment Authority (RAKIA), at Ras Al Khaimah was inaugurated on December 16, 2010. This facility will cater to the needs of the African/Middle East markets and also facilitate launching of AVIA range of trucks manufactured by Avia Ashok Leyland Motors s.r.o. to these markets.

Part II - Corporate matters

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management - of the rank of General Managers and above) have confirmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in Annexure - B to this Report. The Executive Vice Chairman has given a

certificate of compliance with the Code of Conduct, as required by SEBI guidelines.

Many of the clauses of Corporate Governance Voluntary Guidelines 2009 issued by Ministry of Corporate Affairs are being followed by your Company.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement and have certified the compliance, as required under SEBI guidelines. The certificate is reproduced as Annexure - C to this Report.

The Directors Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure - E to this Report.

The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder, in respect of employees is provided in the Annexure - F forming part of this Report.

The CEO / CFO certification as required under the SEBI guidelines is attached as Annexure - G to this Report.

Related Party disclosures/transactions are detailed in Note 7 of the Notes to the Accounts.

Directors

Mr R J Shahaney resigned as Director and Chairman of the Company with effect from October 20, 2010. The Board of Directors wishes to place on record its deep appreciation of Mr Shahaneys contribution during his tenure as a member of the Board since 1978 and as Chairman since 1997.

In recognition of his outstanding contribution to your Company, the Board has honoured him with the title of Chairman Emeritus.

Your Board of Directors place on record the resignation of Mr Ramachandran R Nair and Mr Anders Spare from the directorship and wishes to record its appreciation for the valuable contributions made by them.

Mr D J Balaji Rao, Mr Dheeraj G Hinduja and Dr V Sumantran Directors, retire at the forthcoming Annual General Meeting and are eligible for re-appointment. Necessary resolutions are being placed before the shareholders for approval.

Mr Jean Brunol, Mr Sanjay K Asher and Mr Jorma Antero Halonen were appointed as Additional Directors at the Board Meetings held on October 20, 2010, December 21, 2010 and May 19, 2011 respectively. Their term of office expires at the end of the ensuing Annual General Meeting. The Company has received Notices under Section 257 of the Companies Act proposing them for appointment as Directors of the Company. Necessary resolutions relating to the same are being placed before the shareholders for approval.

The term of Mr R Seshasayee as Managing Director expired on March 31, 2011. In order to secure his leadership to realize the Companys Vision, your Board of Directors appointed him as Executive Vice Chairman with effect from April 1, 2011. The necessary resolution proposing his appointment and the remuneration payable to him is being placed before the shareholders for approval.

In line with the succession plan drawn up and in recognition of the contributions made by Mr Vinod K Dasari, your Board of Directors appointed Mr Vinod K Dasari as Managing Director with effect from April 1, 2011. The necessary resolution proposing his appointment and the remuneration payable to him is being placed before the shareholders for approval.

Cost Auditors

The Government has stipulated Cost Audit of the Companys records in respect of motor vehicles as well as engineering industries(diesel engines). M/s Geeyes &

Co., Cost Auditors have carried out these audits. Their findings have been satisfactory.

Secretarial Audit

Secretarial Audit is being carried out by a practising professional on voluntary basis. The findings of the Secretarial Audit have been satisfactory.

Auditors

M/s M S Krishnaswami & Rajan, Chartered Accountants and M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Company has received confirmation from both the firms that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their re-appointment. The necessary resolution is being placed before the shareholders for approval.

Acknowledgement

The Directors wish to express their appreciation of the continued co-operation of the Central and State Governments, bankers, financial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from the joint venture partners, the major shareholders Hinduja Automotive Limited, the Hinduja Group and all the shareholders. The Directors also wish to thank all the employees for their contribution, support and continued co-operation through the year.



On behalf of the Board of Directors

Dheeraj G Hinduja Chairman

Chennai May 19, 2011


Mar 31, 2010

The Directors have pleasure in presenting the Annual Report of the Company, together with the audited Accounts, for the year ended March 31, 2010.

FINANCIAL RESULTS

(Rs.Lakhs) 2009-2010 2008-2009

profit before tax 54,477.48 20,844.63

Less: Provision for taxation 12,110.00 1,845.00

profit after tax 42,367.48 18,999.63

Excess provision written back

– Dividend - 22.05

– Corporate dividend tax thereon - 3.75

Balance profit from last year 48,230.19 50,227.38

Transfer from/(to):

Debenture redemption reserve 416.67 (2,958.33)

General reserve (10,000.00) (2,500.00)

profit available for appropriation 81,014.34 63,794.48

Appropriation:

Proposed dividend 19,955.07 13,303.38

Corporate dividend tax thereon 3,314.29 2,260.91

Balance profit carried to balance sheet 57,744.98 48,230.19

Earnings per Share (face value Re.1/-)

– Basic (in Rs.) 3.18 1.43

Dividend

The Directors recommend a dividend of 150% (Rs.1.50 per equity share of Re.1/-) for the year ended March 31, 2010.

Business operations

The commercial vehicle industry which was severely impacted during the previous year, as a result of the economic slowdown, continued to be sluggish in the frst half of the year. However, thanks to the stimuli provided by the Government, primarily in the form of excise duty reduction and improved availability of bank fnance, the market witnessed a robust revival of demand during the second half of the year. A number of supply constraints came in the way of fully exploiting the new available opportunities. Overall, during the year, with a focus on marketing efforts, cost control, and effective working capital management, the Company considerably improved profitability.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure-D to this Report.

Borrowings

During the year, your Company continued to make investments for capacity expansion and for strategic purposes, both within the Company and through associate companies. In order to fund such programs, besides using internal accruals, your Company focused on liquidating non-core investments and augmenting resources through cost-effective borrowings. Accordingly, during the year, your Company disposed off investments in long-term bonds and raised Rs.112 crores besides availing term loans of Rs.500 crores. The total long-term borrowings of the Company in the form of external commercial borrowings, debentures and term loans, outstanding at the end of the year, aggregated to Rs.2,204 crores.

Research and development, technology absorption, energy conservation, etc.

Despite the diffcult business conditions, investment in Research and Development activities has continued to receive high priority from the Company. Several programmes are under execution to provide more value to customers and to remain competitive.

The capital and revenue expenditure incurred on Research and Development activities is shown separately.

The particulars prescribed by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988 relating to Conservation of Energy, Technology Absorption, Foreign Exchange are furnished in Annexure - A to this Report.

Pantnagar Plant, Uttarakhand

With the commissioning of the modern, fully integrated plant at Pantnagar (Uttarakhand) in March 2010, additional capacity for 75,000 vehicles/year has been created. Overall annual capacity for the Company is now 1,50,500 vehicles (on a two-shift basis).

Other Key Ventures

Ashley Alteams India Limited

The state-of-the-art manufacturing facility at Cheyyar, near Kanchipuram (Tamil Nadu) was inaugurated during the year. The Company has begun supplies meeting the stringent requirements of customers in the Automotive and Telecommunication Sectors.

Albonair (India) Private Limited

During 2007, your Company established Albonair GmbH for development of vehicle emission treatment / control systems and products. In order to cater to the emerging markets in China and India, Albonair (India) Private Limited was incorporated during the year.

Defance Technologies Limited

With the experience of the management team in providing manufacturing services to global customers integrating Process,

IT and Operations backed by the manufacturing services capability available, your Company is expected to exploit the opportunity in providing services through Defance Technologies Limited, promoted by it during the year. Considering the synergy between the activities of Ashley Design and Engineering Services (ADES), a Division of Ashok Leyland Limited (subsequently rechristened as Defance Technologies Division) engaged in engineering services and the activities of Defance Technologies Limited, Defance Technologies Division was, through a slump sale, integrated with Defance Technologies Limited during the year.

Part II - Corporate Matters

Corporate Governance

Your Company is fully compliant with the Corporate Governance guidelines, as laid out in Clause 49 of the Listing Agreement. All the Directors (and also the members of the Senior Management – of the rank of General Managers and above) have confrmed in writing their compliance with and adherence to the Code of Conduct adopted by the Company. The details of the Code of Conduct are furnished in Annexure-B to this Report. The Managing Director has given a certifcate of compliance with the Code of Conduct, as required by SEBI guidelines.

Many of the clauses of Corporate Governance Voluntary Guidelines 2009 issued by Ministry of Corporate Affairs are being followed by your Company.

The Statutory Auditors of the Company have examined the requirements of Corporate Governance with reference to Clause 49 of the Listing Agreement, and have certifed the compliance, as required under SEBI guidelines. The certifcate is reproduced as Annexure - C to this Report.

The Directors Responsibility Statement as required under Section 217(2AA) of the Companies Act, 1956 is furnished in Annexure - E to this Report.

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

The CEO / CFO certifcation as required under the SEBI guidelines is attached - as Annexure - G to this Report.

Related Party disclosures/transactions are detailed in Note 7 of the Notes to the Accounts.

Directors

During the year, Mr P N Ghatalia, Chairman of the Audit Committee passed away on August 12, 2009. Your Board of Directors wishes to place on record its appreciation for the contributions made by late Mr P N Ghatalia during his tenure as Director and Chairman of the Audit Committee of the Board of the Company.

At the Board Meeting held on October 30, 2009, Mr Anil Harish, was appointed as an Independent Director, in the casual vacancy caused by the demise of Mr P N Ghatalia. His term of offce expires at the end of the ensuing Annual General Meeting. The Company has received a Notice under Section 257 of the Companies Act relating to his appointment at the ensuing Annual General Meeting. The necessary resolution for his appointment is being placed before the shareholders for approval.

Apart from Mr Anil Harish, Mr A K Das, Mr F Sahami and Mr Anders Spare, Directors, retire at the forthcoming Annual General Meeting and are eligible for re-appointment.

Necessary resolutions are being placed before the shareholders for approval.

Cost Auditors

The Government has stipulated Cost Audit of the Companys records in respect of motor vehicles as well as engineering industries (diesel engines). M/s Geeyes & Co., Cost Auditors have carried out these audits. Their fndings have been satisfactory.

Secretarial Audit

As directed by Securities and Exchange Board of India (SEBI), Secretarial Audit is being carried out at the specifed periodicity by a Practising Company Secretary. The fndings of the Secretarial Audit have been satisfactory.

Auditors

M/s M S Krishnaswami & Rajan, Chartered Accountants and M/s Deloitte Haskins & Sells, Chartered Accountants, retire at the close of this Annual General Meeting and are eligible for re-appointment. The Company has received confrmation from both the frms that their appointment will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The Audit Committee of the Board has recommended their re-appointment. The necessary resolution is being placed before the shareholders for approval.

Acknowledgement

The Directors wish to express their appreciation of the continued co-operation of the Central and State Governments, bankers, fnancial institutions, customers, dealers and suppliers and also the valuable assistance and advice received from the joint venture partners, the major shareholders, Hinduja Automotive Limited, the Hinduja Group and all the shareholders. The Directors also wish to thank all the employees for their contribution, support and continued co-operation through the year.

On behalf of the Board of Directors

Chennai R J SHAHANEY

April 29, 2010 Chairman

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