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September 15th, 2010

Ashok Leyland

For five decades, Ashok Leyland has been a major presence in India's commercial vehicle
industry. These decades have been punctuated by a number of technological innovations by
Ashok Leyland that went on to become industry norms. Ashok Leyland was the first to
introduce full-air brakes, multi-axled trucks and a host of innovations in buses.

Ashok Leyland's range of dedicated buses answer the special needs of urban mass
transportation. No wonder then that four out of five STU buses in the Indian metros come
from Ashok Leyland. At 60 million passengers a day, Ashok Leyland buses carry more
people than the Indian rail network.

In 1948, when independent India was one year old, Ashok Leyland was born. Ashok Motors
then, assembling Austin cars at the first plant, at Ennore near Chennai. In 1950 started
assembly of Leyland commercial vehicles and soon local manufacturing under license from
British Leyland.

With British Leyland participation in the equity capital, in 1954, the Company was
rechristened Ashok Leyland. In 1987, the overseas holding by LRLIH (Land Rover Leyland
International Holdings Limited) was taken over by a joint venture between the Hinduja
Group, the Non-Resident Indian transnational group and IVECO Fiat SpA, part of the Fiat
Group and Europe's leading truck manufacturer.

Ashok Leyland embarked on a major product and process technology upgradation to world-
class standards of technology.

Since then Ashok Leyland has been a major presence in India's commercial vehicle industry.
These years have been punctuated by a number of technological innovations which went on
to become industry standards.

This tradition of technological leadership was achieved through tie-ups with international
technology leaders and through vigorous in-house R&D.1994 was also the year, when
international technology changed the way India perceived trucks. The year when a new breed
of world class trucks - technologically superior and eco-friendly - rolled out on Indian roads.

Ashok Leyland vehicles have built a reputation for reliability and ruggedness. The 375,000
vehicles we have put on the roads have shared the additional pressure placed on road
transportation in independent India. The share of goods movement by road rose from 12% in
1950 to 60% in 1995.

In passenger transportation, the jump is equally dramatic: from 25% to 80%. At 60 million
passengers a day, Ashok Leyland buses carry more people than the entire Indian rail network.

In the populous Indian metros, four out of the five State Transport Undertakings (STU¶s)
buses come from Ashok Leyland. Some of them like double-decker and vestibuled buses are
unique models from Ashok Leyland, tailor-made for high-density routes. From our state-of-
the-art manufacturing Plant at Hosur, near Bangalore.
They carried the name Cargo. Cargo brought with it, a new set of values and an unmatched
basket of benefits, ushering in a change Cargo and the state-of-the-art Rs. 6 billion factory at
Hosur were built with IVECO'S global plan in mind. The Hosur plant servers as a world-class
manufacturing base for IVECO supporting its extra-European markets. To Ashok Leyland, it
meant retaining its technological edge against potential global competition.

The Cargo range of trucks meets contemporary emission norms and have gained acceptance
internationally. Besides fully built vehicles exported to many markets, Cargo is locally
assembled in South Africa, East Africa and Egypt from SKD/CKD packs exported from

A recognized trading house, Ashok Leyland exports to over 40 countries. Ashok Leyland's
export turnover touched Rs.1.5 billion in 1997-98.

Committed to Total Quality Management, Ashok Leyland is the country's first automotive
manufacturer to obtain the coveted ISO 9002 certificate followed by the more comprehensive
ISO 9001: 1994 certification and in late 1998, the latest version of QS 9000.

These are major milestones in the company's TQM journey.

In the journey towards global standards of quality, Ashok Leyland reached a milestone in
1993 when it became the first in India's automobile industry to win the ISO 9002

The more comprehensive ISO 9001 certification came in 1994 and ISO 14001 certification
for all vehicle manufacturing units in 2002.

Group Companies

 Automotive Coaches & Components Ltd (ACCL)

 Lanka Ashok Leyland

 Ashok Leyland Finance

 Ashok Leyland Project Services Limited

 Ennore Foundries


 Viking / Cheetah


 Vestibuled Bus

 Cargo 1512
 Comet (4x4)

 Tusker Super

 Taurus 2516 (6x4)

 Beaver Haulage

 Comet Tractor

 Beaver Tractor

 Hippo Turbo Tractor

 Alrd 20 Rear Dumper

 Comet Tipper

 Cargo 1614

 Taurus Tipper

 Cargo 909

 Cargo 759 Tipper

 Cargo 709



 August 19th, 2006

Based on the above Key areas of supplier development identified, an attempt has been made
in this study to understand the supplier development program followed in a Professional
Organisation in real times. It has been found that the Automobile Giant Ashok Leyland Ltd,
Chennai, has got one of the very successful Supplier development Program as part of its
World-Class Supply Chain Management.

Mission Statement of the Company: "Our Vendors are our valued partners in our business
development and we shall work with them in a spirit of mutual co-operation to meet our
business objectives."

* Vendor Development and Strategic Sourcing are handled by Corporate Materials

Department (CMD).

- CMD identifies the vendors, rates the vendors based on feedback received from Supplier
Quality Assurance Cell, sends drawings / specifications, calls for quotes with detailed break-
up of operation-wise costs, and negotiates the price at which the parts will be supplied.
- In addition to CMD at Ennore, and the two Units at Hosur, there are Materials Management
Departments (MMDs) for scheduling based on unit production plan.

* Vendor Development of Strategic Sources

- Strategic Sourcing is central to the integrated Materials Management function. Ashok

Leyland's policy is to develop a vendor base committed to continuous improvement to meet
quality, cost and delivery standards.

- Ashok Leyland considers its vendors as partners in progress and believes in establishing
mutually beneficial relationships. Ashok Leyland provides necessary technical assistance in
the form of Project and Production Engineering, to maintain quality levels. In addition, where
required, Ashok Leyland also helps vendors financially.

* Becoming a Vendor to Ashok Leyland is easy, involving just four steps

- Fill the Questionnaire. As this provides the basic inputs required for preliminary study,
applicants need to provide as much information as possible.

- If Ashok Leyland needs the item you would like to supply, CMD will inform Ashok
Leyland's Supplier Quality Assurance Cell (SQA) for an on-site assessment. Otherwise, the
Vendor information is stored for future reference.

- If SQA approves the vendor, then CMD will send the drawings for SQA cleared
components to the Vendor for obtaining a quotation. If, instead of approving the vendor,
SQA recommends improvements to facilities, the Vendor is given adequate feedback and a
re-survey is undertaken at a mutually agreed future date.

- If the Vendor matches Ashok Leyland's expectations in terms of price, quality and delivery,
then CMD places a trial order with the Vendor. Both on-line and off-line inspection may be
carried out at the time of processing the trial order. Based on the outcome of the trial order,
CMD may place the Vendor in the Approved Vendor List.

* Some of the relevant points to note

- Ashok Leyland's Purchasing Philosophy is to maximize bought-out parts. Over 90% of the
parts are bought-out.

- Ashok Leyland believes in global sourcing. Consistent with its operational needs, AL would
consider both domestic (Indian) as well as international vendors. Global sourcing is normally
resorted to overcome local constraints - in the form of technology, quality, capacity or cost

- Ashok Leyland would consider new suppliers for required components, based on Vendors'
ability to meet our specification, price and delivery schedules.

- Vendors are required to have a strong manufacturing base with adequate engineering
support for their own product development activities, as needed by the category of product,
viz Proprietary, Bought Out Finished (BOF), Bought Out Rough (BOR) and Sheet Metal
items. Castings and forgings are to be received in fully finished/machined condition,
progressively. Ashok Leyland could make available to the vendors necessary technical
expertise, wherever possible and needed, particularly with regard to developing the
manufacturing process.

- As QS 9000 certified company, Ashok Leyland's Vendors are expected to have a good
quality system, meeting ISO 9000 requirements. Ashok Leyland would be willing to help
Vendors in the preparation for ISO certification by offering necessary technical guidance.

- Vendors' quality system should encompass, at the minimum Cost effective process, Assured
process capability, Continuous improvements based on customer feedback, Compliance of all
statutory /legal/ commercial requirements of Ashok Leyland.

- A stage of development where the Vendor can come under Ashok Leyland's self-
certification system tractability - first-in first-out basis and Ashok Leyland has established a
transparent periodically audited Vendor Rating System. Ashok Leyland places emphasis on
optimizing the inventory and Vendors are required to progressively meet "Just-in-Time"
requirements. Delivery modes as well as packaging are required to minimize the
handling/loading and unloading time.

- Though not a must, Ashok Leyland would prefer a manufacturing / assembly / support base
at close proximity to the production units. Ashok Leyland encourages its vendors to
participate in their e-servicing project starting fiscal year 2004-05