Ashok Leyland Ltd Management Discussions

A. MARKET TRENDS Economy - India

As per the second advance estimates released by the National Statistical Office (NSO), Indias GDP is expected to grow by 7.6% in FY24, marking the third successive year of growth above 7% led by strong investment activity. On the supply side, gross value added (GVA) is expected to expand by 6.9% with manufacturing and services sectors as the key drivers. Agricultural activity held up well despite lower rainfall, lower reservoir levels and delayed sowing. Industrial activity gained steam on the back of improving performance of manufacturing. Services sector activity remained resilient on the back of strong domestic demand and stable global prospects. The buoyant demand for residential housing, coupled with increased thrust on government capex, propelled construction activity in the country. On the demand side, improving employment conditions and moderating inflation, pushed up household consumption. Rural demand continued to gather pace. Urban consumption remained strong on the back of improved income levels. Investment cycle gained steam, aided by sustained thrust on government capex; increasing capacity utilization; rising flow of resources to the commercial sector; and policy support from schemes such as production linked incentive. Revival in private corporate investment took shape and RBIs survey suggests that investments from private corporates remained upbeat with both services and infrastructure firms optimistic about overall business conditions. Net external demand also improved with narrowing merchandise trade deficit.

Going into FY25, normal south-west monsoon should support agricultural activity. Manufacturing is expected to maintain its momentum on the back of sustained profitability. Services activity is likely to grow above the pre-pandemic trend. Private consumption should gain steam with further pick-up in rural activity and steady urban demand. A rise in discretionary spending expected by urban households, as per RBIs consumer survey, and improving income levels augur well for the strengthening of private consumption. The prospects of fixed investment remain bright with business optimism, healthy corporate and bank balance sheets, robust government capital expenditure and signs of upturn in the private capex cycle. Headwinds from geopolitical tensions, volatility in international financial markets, supply chain disruptions, and extreme weather events, however, pose risks to the outlook. Taking all these factors into consideration, RBI has forecasted Indias real GDP growth for FY25 at 7.0%.

Food price uncertainties would continue to weigh on the inflation outlook. Early indications of normal monsoon augur well for the kharif season. On the other hand, the increasing incidence of climate shocks remains a key upside risk to food prices. Fuel price deflation is likely to deepen in the near term. The recent firming up of international crude oil prices warrants close monitoring. Geo-political tensions and volatility in financial markets also pose risks to the inflation outlook. Taking into account these factors and assuming a normal monsoon, RBI expects CPI inflation for 2024-25 at 4.5%.

Steel prices are expected to trend downward in FY25. Domestic demand is expected to lag steel mill production (new capacity coming on-board) and mill inventory expected to stay at historic levels. As per CRU (commodity analysts) steel spot prices are expected move to ?54/kg by end FY25 from current levels of ?55-56/kg. On the other hand, Chinas economic growth outlook of around 5.0% for CY24 has failed to boost confidence, with the economy facing multiple headwinds, including a prolonged property slump, weakened sentiment and tensions with the

West. This does not bode well for demand of infrastructure-led commodities, such as iron ore, coal, cement and base metals. OPEC+ is expected to continue with oil production cuts to keep prices at current levels in response to weakening global oil demand. Brent crude oil price is projected to average at $82/ barrel in CY24. Overall globally commodity costs are expected to stay in a range barring any escalation in geo-political tensions.

(Source: RBI MPC Apr24, Brokerage reports)

Economy - World

The global economy has been surprisingly resilient through the global disinflation of 2022-23. As global inflation declined from the peak, economic activity grew steadily, defying warnings of stagflation and global recession. Growth in employment and incomes held steady, reflecting supportive demand developments including greater-than-expected government spending, household consumption and a supply-side expansion. The unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households to draw on substantial savings accumulated during the pandemic. As inflation converges toward target levels and central banks pivot toward policy easing in many economies, tightening of fiscal policies aimed at curbing high government debt, with higher taxes and lower government spending, is expected to weigh on growth. Artificial intelligence and stronger structural reforms than anticipated could spur global productivity. Global growth, estimated at 3.2% in 2023, is projected to continue at the same pace in 2024 and 2025. Global headline inflation is expected to fall from an annual average of 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025. Risks to the global outlook are broadly balanced. On the downside, new price spikes stemming from geopolitical tensions, along with persistent core inflation where labor markets are still tight, raise interest rate expectations and reduce asset prices. A divergence in disinflation speeds among major economies could also cause currency movements that puts financial sectors under pressure. (Source: IMF WEO, Apr 2024)

Commercial Vehicle Market

The Commercial vehicle market (MHCV and LCV) in India posted a growth of 0.6% YoY in total industry volumes (TIV), with M&HCV segment growing by 3.9% and LCV segment registering a degrowth of 1.5%.

FY24 started on modest note after a strong FY23. Urban demand remained robust, with domestic air passenger traffic and household credit exhibiting sustained double digit growth. In the case of rural demand, tractor sales improved in while two-wheeler sales moderated. Cement production and steel consumption recorded robust growth. Import and production of capital goods continued in expansion mode. Services exports posted subdued growth amidst slowing external demand. In Q1FY24, CV Demand was marginally higher compared to Q1FY23 primarily driven by MHCV Buses & Trucks and LCV segment lagging.

In Q2FY24, purchasing managers indices (PMIs), other high frequency indicators of the services sector and IIP exhibited healthy expansion in August-September. Urban consumption remained buoyant while rural demand showed signs of revival. Investment activity was benefitted from public sector capex. Strong growth was seen in steel consumption, cement production as well as in imports and production of capital goods. This was evident from growth seen in Tractors & Tipper segments.

Merchandise exports and non-oil non-gold imports remained in contraction in although the pace of decline eased. Demand for MHCVs continued to increase compared to previous year and quarter with LCVs still lagging.

In Q3FY24, manufacturing sector gained strength with easing input cost pressures and pickup in demand conditions. Core industries recorded healthy growth. The services sector buoyancy remained intact as was reflected in high frequency indicators. GST collections were buoyant. On the demand side, festival related demand also spurred households consumption and a gradual turnaround was seen in rural demand as reflected in sales of fast moving consumer goods (FMCG) and other indicators. Investment activity continued to be aided by buoyancy in public sector capex. Capacity utilisation in the manufacturing sector continued to remain above the long term average. TIV migration was seen from MAVs to higher GVW Tractors and TIV of tippers continued to grow. ICV Trucks saw marginal contraction in TIV compared to year ago.

In Q4FY24, economic activity continued to remain resilient. High frequency indicators of urban demand exhibited sustained expansion. Domestic air passenger traffic, passenger vehicle sales and household credit posted robust growth. Consumer durables expanded at a modest pace. Rural demand gained pace gradually, although it lagged urban demand. Motorcycle sales expanded at a rapid pace in H2FY24, while sales of tractors and fertilisers remained subdued. Steel consumption registered robust growth and cement production also grew at a healthy pace. Strong demand for residential housing and elevated public infrastructure spending also propelled construction activity. Demand for MHCVs moderated compared to a year ago (Q4FY23 saw strong growth) but still expanded on a quarterly basis. LCVs outperformed MHCVs by registering a marginal dip in TIV.

The LCV Bus segment grew by 16.8% while LCV Trucks (0-7.5T Segment) degrew by 2.9% CV exports degrew by 16.3% over last year primarily led by 17.4% drop in MHCV Trucks and 15.9% drop in LCV Trucks because of slowdown in growth and currency weakness in key Indian export markets.

Segment	Domestic			Exports
	2023-24	2022-23	Change	2023-24	2022-23	Change
M&HCV Buses	52,472	37,841	38.7%	10,014	10,543	-5.0%
M&HCV Trucks	3,20,058	3,20,593	-0.2%	8,211	11,524	-28.7%
M&HCV Total	3,72,530	3,58,434	3.9%	18,225	22,067	-17.4%
LCV Buses	51,750	44,315	16.8%	3,631	1,799	101.8%
LCV Trucks	5,42,934	5,59,150	-2.9%	43,960	54,779	-19.8%
LCV Total	5,94,684	6,03,465	-1.5%	47,591	56,578	-15.9%
CV Total	9,67,214	9,61,899	0.6%	65,816	78,645	-16.3%

Source: SIAM Flash Report March 2024

B. ASHOK LEYLAND - THE YEAR (2023-24) IN BRIEF

Your Company sold 1,16,069 M&HCVs in the domestic market (17,956 M&HCV Buses and 98,113 M&HCV Trucks including Defence vehicles), registering a growth of 1.6% over last year. LCV with sales of 66,633 vehicles was flat compared to the previous year. Your Company was able to achieve market share of 31.1% in M&HCV Bus and Truck segment, a slight decrease of 0.7% over last year.

M&HCV Truck segment

Industry sales of commercial vehicles registered moderate growth in FY24 (over steep growth seen in FY23) on the back of continued strong economic activity supported by governments impetus on infrastructure in the country. Your companys sale in M&HCV Trucks segment (excluding Defence vehicles) in India degrew by 5.6% to 96,995 units in FY24, compared to 102,753 units in FY23. TIV migration was seen from MAVs to higher GVW Tractors in cement, coal and iron ore industries, with the TIV of tippers and tractor trailer growing primarily driven by the movement of bulk goods & construction materials. The key product launches done in FY24 for MHCV - Trucks (Domestic) include Ecomet Star 1915, 2820 G45 FES, N2825 EDPTO Transit Mixer. These products will help consolidate market position in respective segments.

M&HCV Bus segment

Industry sales of M&HCV Bus (excluding Defence vehicles) segment continued to witness strong growth of 38.7% (over multifold growth in FY23) driven by high volumes of old buses replaced by STUs and post-covid revival in inter-city & mofussil segments. Your companys sale in M&HCV Bus segment (excluding Defence vehicles) in India grew by 67% to 17,956 units in FY24, as compared to 10,764 units in FY23 driven by high volumes of old buses replaced by STUs and post-Covid revival in inter-city & mofussil segments. The key product launches done in FY24 for MHCV - Bus (Domestic) include Lynx Smart AC & Rear Air Suspension, Oyster Lite Chassis, Viking with H6 NA CNG, Lynx Max.

International Operations

In FY24, due to the ongoing geo-political conflicts, there was huge pressure on forex in our anchor markets. Bangladesh in particular, witnessed significant drop in TIV due to political unrest, currency depreciation & acute shortages of forex. In Nepal & Sri Lanka, import restrictions were imposed. On the other hand, GCC TIV grew by 33% supported by prebuy, which made GCC stand out as the bright spot and contributed to 50% of IO volumes. We made significant strides in Africa with distributor appointment in 8 new territories. Despite all the challenges, your company sold 11,853 units in IO markets, an increase of 5.0% over previous year while overall industry exports dropped 16.3% over FY23.

LCV segment

In FY24 overall LCV TIV degrew by 1.5% over FY23. Your company achieved sales of 66,633 nos. (including all models) almost similar compared to last year. During the year, your company become the #2 player in the 2-3.5T segment overtaking Tata Motors. Your company continues to remain profitable, while delivering best-inindustry SSI/CSI, lowest defects per vehicle, best-in-class warranty costs and service retention. FY24 saw launch of several new initiatives like Entrepreneur dealerships, Hyperlocal marketing, and support for focus states, all of which will help your company in the medium to long term in increasing penetration. 27 new dealerships and 118 new secondary outlets were added taking the network coverage to a total of 148 primary & 582 secondary outlets. Your company launched two new products under the Bada Dost platform - Bada Dost CNG (2.8T) & Bada Dost special anniversary edition (3.5T) & one product under the Dost Family - Dost+ CNG which helped in achieving market share of 20.4% a slight increase of 0.8% over last year.

Power Solutions Business

Robust infrastructure development and industry activities aided significant market opportunities for Power Solutions Business. Coupled with market growth, your companys expansion in industrial applications with equipment manufacturers has fueled further growth prospects. It has been a year of fortune in agricultural segment that saw transition to TREM4 in early part of the fiscal, good monsoon backed by on-going farm mechanization measures helped in the second half. This was further complemented by ease of financing, thrust on govt subsidies for purchasing harvester combines yielded us significant volumes, where our market leadership continues. Overall, your company achieved 41% volume growth and 59% revenue growth surpassing the 1,000 Cr mark, which is a significant accomplishment for PSB.

Defence

In FY24, your company supplied 1,116 units of completely built up units (CBUs) and 818 VFJ kits. Some highlights include Green channel certifications for 6 variants, order receipt for 1,128 nos FAT 4x4 (Field Artillery Tractor) & 252 nos GTV 6x6 (Gun Towing Vehicle) under emergency procurement.

Aftermarket

In FY24, your company improved to 2nd place in Sales & Service satisfaction and is actively focused on serving the needs of customers throughout the product life-cycle through its Aftermarket offerings. The Aftermarket business grew by 26.0% over last year and added to the overall profitability of the Company. Your Company ensured continuous availability of its extended range of parts through seamless operations at Spare Parts Warehouses, Supplier partners and Channel Partners. Targeted engagement with suppliers and logistics partners ensured that margins of Spare Parts Business were sustained, despite volatility in commodity prices. Aftermarket channel continues to see record participation from independent garages and added 114 exclusive retail parts stores increasing the count to 689 stores. Leykart, the online fulfillment mobile app for Ashok Leyland Genuine Spares, delivered growth in order fulfillment and user-participation for the fifth year in a row. Building capability of Channel partners by way of multi-modal training curriculum continues to be on priority. AL Care app continues to serve as a one-stop solution to address service needs of our customers with 2.5 lakh+ registered users.

Network

Your Company continued to expand its primary network to enhance accessibility of service across cities in India. Your Company added 134 new outlets and 1,000+ bays during the year, increasing the total count to 943 primary touch-points. To keep up with the rising commercial vehicle operations in Northern and Eastern regions of India, and the booming mining pockets in Central regions of India, your Company opened more than half of the new outlets in these regions and ~15% of sales volume came from these new outlets.

Foundry Division

The Foundry Division of your Company is mainly catering to the automotive industry in product segments of Cylinder Block, Head and Tractor Housings. For the year FY24 the Foundry division achieved the production of 94,317 MT (decrease of 3.9% over last year) and sales of 88,311 MT (decrease of 7.0% over last year).

Overall Summary

In summary, during FY24, your Company recorded total vehicle sales of 182,830 units in the domestic market and 11,853 units in the export market. Your Company continues to work as one team to overcome challenges and ramp up operations with single-minded focus and agility to fulfill the demand. Your Company continues its ambitious mission path of transformative performance, across all business segments, set in the previous years. Your Company is committed more than ever to industryleading standards of quality, environment, safety, and health.

C. OPPORTUNITIES AND THREATS

The Indian commercial vehicle industry is cautiously optimistic about growth prospects for FY25 primarily because of the sharp growth witnessed over the last 3 years and slowdown in e-commerce. TIV growth is expected to be led by replacement demand, mandatory scrapping of older government vehicles and steady macro-economic growth. The increased allocation for capital spending in the in the Interim Union Budget 2024-25 is expected to lead to infrastructure development in segments like roads, metros, railways etc. which would in turn drive volumes for the CV industry. Furthermore, the increased focus on replacement of old vehicles and on green mobility also augurs well for the sector. Capex driven economic growth led by construction should aid growth in tippers. Development of 35 Multimodal logistics parks coupled with the digital ULIP platform (both as part of NLP) aims to improve the competitiveness of Indian logistics sector by enabling smooth movement of goods across the country. This is expected to give a fillip to hub and spoke transportation, with higher tonnage trucks being used for hub transportation and electric ICVs & LCVs being used for first and last mile transportation to the hubs. Government regulations aimed at curbing pollution are likely to incentivize the adoption of cleaner fuel options like LNG for long haulage applications. The Western & Eastern Dedicated Freight Corridor (WDFC & EDFC) are expected to be fully operational in FY25. Customers view long haul trucking could have impact from DFC by FY26/ FY27. For LCV segment growth is expected to be dragged by high base effect, slowdown in ecommerce and cannibalization from e3Ws. Meanwhile steady economic environment, declining rural inflation and interest rates should remain supportive of LCV TIV growth. On the other hand, downside risks for FY25 growth could emerge from interest rates staying higher on the back of persisting inflation, commodity costs rising on the back of escalating geo-political tensions and volatile financial market conditions.

D. RISK MANAGEMENT

During the year, the overall CV industry remained steadfast spurred by Infrastructure investments across roads, railways, metro, ports and airports. While several economies across the Globe witnessed slowdown and some of them entered into recession, India continued its growth story and has set sights on becoming $5 Trillion economy and in the process become the 3rd largest economy of the world (Currently 5th)

Your company showed growth across all business verticals namely M&HCV, LCV, IO, Defence, PSB and Aftermarket. Your company proactively managed risks in several domains viz., Supply chain risk, Geo-political risks, Competitive pressures, financial risks, product gaps, alternate fuel strategies, third party risks amongst other things.

Your Company has also converted risks to Opportunities and showcased its readiness in most of the alternative fuel product strategies with several products undergoing trails. The Company has also set itself very aggressive ESG goals in terms of carbon neutrality, 100% renewable energy, zero discharge to landfill etc. clearly aligning with the overall Vision of the Country albeit in much shorter time. The all-round efforts have enabled your company to remain agile and resilient in the increasingly competitive business environment while ensuring enhancement of stakeholder value.

Your Companys well-established Enterprise Risk Management (ERM) framework has further been enhanced through the process of benchmarking. The enhancement brings wider coverage improved processes and enlarged risk categorization which will keep the organization in good state and future ready.

The risk management process encompasses Risk Identification, analysis, evaluation, prioritization, treatment, monitoring and reporting. The significant risks identified were tabled to the Risk Management Committee ("RMC") of the Board along with a mitigation plan during the course of the year.

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Given the nature of business, size and complexity of operations, your Company has designed an adequate internal control system to ensure:

a. Transactions recorded are accurate, complete, and authorised;

b. Adherence to accounting standards, complying with applicable statutes and conforming to Company policies and procedures;

c. Effective use of resources and safeguarding assets.

Your Company has complied with the specific requirements laid out under Section 134(5)(e) of the Companies Act, 2013 which calls for establishment and implementation of an Internal Financial Control framework that supports compliance to the Act in relation to the Directors Responsibility Statement.

Your Company follows the COSO (Committee of Sponsoring Organizations of the Treadway Commission) Internal Control Framework, 2013 and The Institute of Chartered Accountants of Indias Guidance Note on Audit of Internal Financial Controls Over Financial Reporting that supports in evaluating the design and operating effectiveness of internal controls in a consistent manner.

Further, your Company, through its inhouse independent and multi-disciplinary Internal Audit function with support of external experts where appropriate, carries out risk based Internal audit reviews, based on the annual Internal Audit plan as approved by the Audit Committee of the Board. The Internal Audit function reviews compliance with established design of the Internal control, while ensuring the efficiency and effectiveness of operations.

Significant deficiencies in Internal control identified if any, are tracked for closure and validated.

The summary of the Internal Audit findings and status of implementation of action plans for risk mitigation, are submitted to the Audit Committee every quarter for review, and concerns around residual risks if any, are presented to the Board.

The Companys upgraded whistle-blower policy/ vigil mechanism facilitates all employees, vendors, dealers and other stakeholders to report fraud and wrongdoings without fear of consequences.

F. INFORMATION SECURITY

Information is an invaluable asset and your organization is very committed in safeguarding the same from internal & external threats, through adoption of best practices in Information Security.

Your Organization has been certified for ISO27001:2022 which is the collection of best practices in Information Security. Your Organization has also undertaken Cyber security & Cyber maturity assessments during the FY 23-24 to identify gaps and mitigate the same.

Your Organization also has a security operations center which continuously monitors and protects the organization from cyberattacks. Your Organization has also invested in various security tools and adopted best practices to ensure the confidentiality, integrity and availability of Information remains unscathed.

G. FINANCIAL REVIEW

Summary of Profit and Loss account is given below:

Crores

Particulars	2023-24	2022-23	Inc/ (Dec) %
Sales	38,367.03	36,144.14	6.2
Other income	246.57	116.14	112.3
Total	38613.60	36,260.28	6.5
Expenditure
Material Cost	27,912.01	27,849.15	0.2
Employee benefits expenses	2,233.38	2,113.86	5.7
Finance cost	249.44	289.09	(13.7)
Depreciation and amortization	717.81	731.96	(1.9)
Other expenses	3,615.06	3,250.43	11.2
Total	34,727.70	34,234.49	1.4
Profit before exceptional items and tax	3,885.90	2,025.79	91.8
Exceptional items	(93.72)	84.61	(210.8)
Profit before tax	3,792.18	2,110.40	79.7
Tax expense	1,174.31	730.29	60.8
Profit after tax	2,617.87	1,380.11	89.7
Basic earnings per share (in )	8.92	4.70	89.8

FY24 has been a year of records wherein new business and financial records have been created by your Company. Your companys revenue touched a lifetime high of 38,367 Crores which is 6% higher than the previous year ( 36,144 Crores). Your Company also made a record profit (PAT) of 2,617 Crores, which is the highest so far (previous high was 1,983 Crores in FY19) with a 90% growth over the previous year. The earnings per share (EPS) have grown by 90% to 8.92 per share.

MHCV truck volumes during the year were lower by 5%. However better price recovery and higher tonnage in mix during the year has offset the impact of volume reduction in revenue by ~ 1.5%.

Your Companys domestic truck market share is lower at 30.7% (32.3% in FY 23).

Industry volume in the MHCV Bus segment has witnessed a 38% growth in the current financial year and however your Companys bus volumes have recorded a 67% growth. Consequent to this better performance in the segment, your Companys market share has improved by 5.8% in FY 24 (from 28.0% in FY23 to 33.8% in FY24). Due to this better performance, Your Company has regained the market leader position in Bus segment. Price increases during the year fetched ~ 2.9% (point to point) in domestic MHCV buses.

Despite the domestic MHCV truck volumes being marginally lower, your companys overall MHCV volumes (Including defense) have grown by ~ 2.0% over FY23. However, MHCV market share was lower by 0.7% in FY24 (31.1%) over the previous year (31.8%).

Your Companys domestic LCV volumes were flat i.e. 66633 nos. in FY24 vs 66617 nos. in FY 23. Your Company could recover ~4% during the year through price increases.

International Operations (IO) volumes for FY 24 was at 11853 nos. which is 5% higher than the previous year (11289 nos).

Your Company sold 1,94,555 Commercial vehicles (CVs) during the year, which is the second highest so far and is also 1% higher than last years volumes (1,92,205 nos).

Domestic spare parts revenue (including service products) grew by 28% from 2,311 Cr in FY 23 to 2,958 Cr which is again an all-time high.

Power solutions (engines) volume grew to an all-time high of 32374 units in FY 24 representing a growth of 41% over FY23 (22925 nos).

Consequent to the volume increase as well as the price recoveries, Your Companys revenues grew by 6% to 38,367 Cr over the previous year ( 36,144 Cr).

Costs:

Material Cost: Prices of commodities covering flat, proprietary steel, forging and aluminum went up in Q1 only to end up with a marginal increase in flat, proprietary steel & aluminum but reduction in spring steel, casting and forgings in Q2, Q3 & Q4 of FY 24. Tyre prices have been flat throughout the year. Precious metal prices during the year were also constant throughout the year.

Through various internal initiatives covering price negotiation, value engineering, turnover discounts and business share optimization, your Company managed to secure a reduction of about 1.5% in material costs during the year.

Staff Costs: Staff costs went up by 6% during FY 24 due to the associate bonus, executives increments and promotions offered during the year.

Finance Costs were substantially lower by about 14% primarily due to better management of cash and working capital during the year. No fresh long-term loans were availed during the year. Cash generated from the business was used to repay the long term and short-term loans.

Depreciation for the year is at 717.81 crores which is marginally lower than last year.

Other expenses at 3,615 crores are higher than last year by 11% reflecting the increase in volume and activity levels in non-cv businesses. All expenses covering delivery charges, production overheads, sales and administration overheads recorded an increase over last year in line with the activity increase.

Total Capital Employed by your Company increased by about 5% from 22,592 crores in FY 2022-23 to 23,612 Crores in FY 2023-24.

Total shareholders funds as at March 31, 2024 stood at 8,810 crores, reflecting an increase of 385 Crores primarily reflecting the profit for the year 2,618 crores as reduced by dividend payout of 2217 Crores ( 1,453 Crores for FY24 & 763 Crores for FY23), other comprehensive Income - 6 Crores, other reserves reduction 10 cr.

Summary of the Balance sheet is given below:

in Crores

Sources of Funds	March 31, 2024	March 31, 2023	Inc / (Dec) %
Shareholders funds	8,810.37	8,425.80	4.6
Non-Current liabilities	2,746.18	3,093.03	(11.2)
Current liabilities	12,038.37	11,061.93	8.8
Liabilities directly associated with assets classified as held for sale	16.83	10.87	54.8
Total	23,611.75	22,591.63	4.5
Application of Funds
Fixed Assets	4,597.75	4,796.80	(4.1)
Right of use asset	235.30	236.98	(0.7)
Intangible Assets	1,320.28	1,402.89	(5.9)
Investments	5,310.71	3,892.18	36.4
Loans and other non-current assets	484.62	559.16	(13.3)
Current assets	11,597.07	11,631.70	(0.3)
Assets classified as held for sale	66.02	71.92	(8.2)
Total	23,611.75	22,591.63	4.5

Capital expenditure and investments

During the year, your Company incurred 481 Crores towards capital expenditure predominantly towards:

a) Meeting regulatory norms towards OBD II for MHCV & LCV, CEV V & CPCB 4 norms for PSB

b) Development of new products including Green Energy vehicle models (BEV, H2 IC Engine, Fuel Cell EV) and conventional fuel models like Dost 2.2T, Project Vayu (CNG), Multi Axle Coach, ICV bus, etc.,

c) Improving manufacturing capacity and capability covering Foundry division, Frame side member, LCV & MHCV Engines

d) Procurement of staff bus and related infrastructure

e) Safety and Sustenance related improvements.

f) Creation of new manufacturing facility in Lucknow.

g) Improvement and capacity enhancement of Sales yards.

During the year, Your Company has invested 1,198 Crores in Optare & 300 Crores in OHM, 25 Crores in TVS Trucks & Buses, 15 Crores Gro Digital, 3 Crores in Vishwa Bus and Coaches Limited and 21 in others. Thus, in all your Company has invested 1,567 Crores in cash in subsidiaries during the year.

Your Company has considered impairment of its equity investment in Hinduja Energy (India) Limited for 125 Crores & Ashley Aviation for 4 Crores. There had also been other fair value changes of 2 Crores (favorable) during FY 2023-24.

Current assets as at March 31, 2024, were at 11,597 Crores when compared to the previous years level of 11,632 Crores. The decrease of 35 Crores was due to a decrease in investment in mutual fund units by 2521 Crores, decrease in receivables by 492 Crores; decrease in other financial assets & other current assets by 340 crores & 129 crores respectively. With the increase coming in inventory by 416 Crores (Finished goods inventory 424 Cr but decrease in raw material and components by 7 Crores), increase in bank balances, cash & cash equivalents 2,937 Crores (mainly due to proceeds from sale of current investments 2600 Crores and ICD paid back by subsidiary 105 Cores (net) during the year) and increase in Loans by 95 Crores. Liquidity

Your company could generate cash during the year primarily due to better profits. Internal accruals enabled your company to meet capital expenditure, dividend commitment, long-term loan repayments as

well as working capital requirements. No fresh long-term loan was borrowed during the year. Your Company manages its liquidity through rigorous weekly monitoring of cash flows Details of significant changes in key financial ratios:

Ratios	Formula used	FY 2024	FY 2023
Debtors turnover	Revenue from operations / average debtors	10.05	10.10
Inventory turnover	COGS / average inventory	9.36	11.48
Interest coverage ratio	Earnings before interest and tax / interest expense	24.43	11.18
Current ratio	Current assets / current liabilities	0.96	1.05
Debt equity ratio- Net	Net Debt / equity	0.01	-
Operating profit margin (%)	EBITDA / Revenue from operations	12.01	8.11
Net profit margin (%)	PAT without exceptional items / revenue from operations	7.07	3.58
Return on net worth (%)	PAT without exceptional items / total equity	30.8	15.4

The reason for change in ratios by more than 25% is mainly due to higher volumes, better price increase and consequential profitability achieved during the year ended March 31, 2024 in comparison with year ended March 31, 2023.

Profitability

Domestic MHCV volumes have maintained a steady upward momentum quarter on quarter in FY 2023-24. Commodity costs primarily steel prices which went up in Q1 and started reducing in subsequent quarters. Further your Company could improve the price recovery on domestic MHCV in both the first & second half of the year and on domestic LCV your Company could improve price recovery quarter on quarter with a little pause in the second quarter. Various initiatives covering product cost reductions, value engineering, and overhead cost reduction actions which were initiated in the earlier years were carried out during the year. Performance of other businesses covering defence, spare parts and power solutions (engines) was also good and supported your Companys performance throughout the year. All these augured well from the profitability point of view. All the above actions enabled Your Company to post consistent improvement in operating profit (EBITDA) quarter on quarter. The operating profit went up from 10.0% of net sale revenue in Q1 to 11.2% in Q2, to 12.0% in Q3 to 14.1% in Q4. (Full year 12.0%)

The financial ratings of long-term and short-term facilities / commercial paper as given by rating agencies viz., CARE and ICRA in FY 24 are given below. During Oct/Nov 23 both the rating agencies have maintained the outlook is Stable.

Agency	Long Term	Short Term Facilities / Commercial Paper
CARE	CARE AA; Stable Outlook	CARE A1+
ICRA	ICRA AA; Stable Outlook	ICRA A1+

Your Company has serviced all its debt obligations on time.

Results of Operations

Your Company generated an after-tax profit from operations of 4026 Crores in FY 2023-24 which is 57% higher than 2,563 Crores recorded in FY 2022-23. For the third consecutive year, demand for Medium and heavy commercial vehicles was positive and your company saw a steady movement of sale volume on quarter on quarter from 41329 nos in Q1 to 56139 nos in Q4. Consequently, the working capital

requirement was marginally higher at the end of the year to meet the little improvement in demand. Inventory was higher by 416 Crores and trade payables reduced by 868 Crores offset by reduction in trade receivables due to good collection efforts by 495 Crores, reduction in non-current and current financial and other assets by 166 Crores, increase in non-current and current financial liabilities by 123 crores, increase in contract liabilities by 147 Crores, increase in non-current and current provisions net of reduction in other current liabilities by 273 Crores and others 11 Crores. In addition, we have remitted Interim dividend of 1,453 Crores to designated bank account leading to increase in working capital by 1,523 Crores.

Cash outflow for acquisition of fixed assets for FY 2023-24 was at 481 crores as against 488 Crores last year. Your Company also Invested 1,567 Crores in Subsidiaries and Corporate deposits (net) 100 crores met through sale proceeds of non-current investments 2,602 crores, realization from Inter corporate deposits (net) 105 crores, proceeds from bank deposits 200 crores as well as Interest & Dividend received 65 Crores & 78 Crores respectively. All this generated 902 crores from Investing activities.

Cash outflow of 1,917 crores from finance activities primarily reflect the repayment of non-current borrowings 1,105 Crores, interest & other payments of 266 Crores, dividend payment (FY 23 related) of 763 Crores offset by proceeds from current borrowings (net) 215 Crores and sale of equity shares 2 Crores.

Dividend

The Directors have recommended an interim dividend of 4.95 per share per equity share of 1/- each for the financial year ended Mar 24. No other dividend has been recommended by the Board for the financial year 2023-24.

Cash flow statement

in Crores

Particulars	31.03.2024	31.03.2023
Profit from operations after tax	4,026.01	2,562.55
(inc)/Dec in Net working capital	(1,522.89)	(426.54)
Net cash (outflow) / inflow from operating activities	2,503.12	2,136.01
Payment for acquisition of assets - net	(481.46)	(488.35)
Cash inflow / (outflow) for investing activities	1,383.59	(1,246.18)
Cash inflow (outflow) from financing activities	(1,917.47)	(940.17)
Net cash inflow / (outflow)	1,487.78	(538.69)

The year ahead

net profit, your Company has achieved all-time high numbers. Coming in a year when your company is celebrating its 75^th year of existence makes it even more special. While revenue grew by 6% YOY, net profit almost doubled to 2618 Cr (FY 23 1380 Cr).

EBITDA margin has touched 12.0% in FY 2023-24 as against 8.1% in FY 2022-23 reflecting our focus on better price realization, efficiency in sourcing and operations coupled with softened steel prices. Revenue mix was more beneficial with the increase of volumes in high margin businesses covering spare parts, defense and power solutions.

Your Companys net debt at the end of FY 2023-24 is close to Zero thus giving the ability to invest in future growth. Market has also shown confidence in your Companys ability to grow in the future. Your Companys share price has crossed 200 per share which is ~50% appreciation from year opening levels (April 23).

There was widespread anxiety that CV industry during Q1 and Q2 would degrow because of the general election and other factors. April

sale numbers have proven this wrong. The pulse on the ground is very positive. Most macroeconomic parameters are favorable. Monsoon is also expected to be normal. The country is poised to grow at a fast pace in the foreseeable future. All this augurs well for the future of CV industry.

We wish to remain cautiously optimistic for CV industry both in H1 and FY 2024-25. Your Companys product portfolio is very robust, and the future pipeline is strong. Your Company would further strengthen its mainstays of reliability and fuel economy. Your Company is confident of increasing its market share in both the trucks and bus segment in MHCV. Its medium-term goal of achieving 35% market share remains intact.

Your Companys LCV business is also gaining strength. LCVs market share in 2-3.5Tonne segment has now crossed 20% which makes your Company number two player in the segment. FY 2024-25 should see a further boost in LCV market share as your Company has plans to launch one new product every alternate month. Currently your Company is addressing about half of the LCV segment and is now looking for expansion of the product portfolio to improve its coverage to 70-80% in the next few years. The LCV segment presents a huge potential to grow your Companys volumes in future.

Your Companys market share in exports has improved significantly in the last couple of years. Many of the markets around the world, especially SAARC and some parts of Africa, have been subdued due to local and global economic conditions. Your Company was the only player in FY 2023-24 to have grown its exports volumes. This reflects the fact that its strategy for local market presence, focused product development for international markets and strong distribution relationships in key markets are working well.

Spare parts, power solutions and defence revenues have grown considerably in the current financial year and have significantly contributed to the bottom line of your company. These businesses are expected to continue to do well.

Your Companys focus on profitability remains. Your Company is not going to resort to discounting to improve market share. Your company is confident that its product superiority and expanding reach will enable it to achieve 35% market share while beefing up its margin at the same time. Your Company has recently launched its first ever Boss electric ICV truck and is in advanced stage of launching a fully electric 55T-tractor trailer. Customer pilots are going on with reliance on H2 ICE trucks and your Company is ready to deliver to NTPC its first set of Fuel Cell Buses. Your Companys first LNG trucks were delivered earlier to MGL and are delivering robust performance. Your Company now has a complete portfolio of alternate fuel vehicles on the market.

Switch and Ohm are progressing well, and Switch has just started delivering its first e-LCVs to the market. Already more than 900 electric buses are plying on the roads and have covered more than 1 million green kilometers through the electric vehicles. The Second offering in the e-LCV space is planned for launch in the next few months. Both these vehicles should be segment first and have the potential to transform the last mile mobility in the Country. Switch would continue to focus on developing a wide range of electric products in the Bus and LCV segments with a goal to achieve leadership backed up by best-in-class product performance and efficiency. Ohm our e-Maas Company has now been fully active and are now managing electric bus operations in Bangalore, Ahmedabad, Bihar and Chandigarh.

H. HUMAN RESOURCES

During the year under review, the total number of people on the rolls of the Company is 9,607. Material developments in the Human Resource / Industrial Relations front have been detailed under the head “Human Resource" in the Boards Report.