Financial Statement Analysis of Ashok Leyland Limited, India

Abstract

The Indian auto industry is one of the largest in the world. The industry accounts for 7.1 per cent of the country's Gross Domestic Product (GDP). As of Financial Year 2014-2015, around 31 per cent of small cars sold globally were manufactured in India. The Two Wheelers segment with 81 per cent market share is the leader of the Indian Automobile market owing to a growing middle class and a young population.

                    Moreover, the growing interest of the companies in exploring the rural markets further aided the growth of the sector. India is also a prominent auto exporter and has strong export growth expectations for the near future. In April-January 2016, exports of Commercial Vehicles registered a growth of 18.36 per cent over April-January 2015. In addition, several initiatives by the Government of India and the major automobile players in the Indian market were expected to make India a leader in the Two Wheeler (2W) and Four Wheeler (4W) market in the world by 2020.

 India’s second largest commercial vehicle maker Ashok Leyland has shown a declining trend in the total sales during August 2016 by 6 per cent due to lower growth in Medium and Heavy Vehicle segment. The company sold ten thousand eight hundred and ninety-seven (10,897) vehicles in the month gone by, compared with 11,544 units sold in the same month last year. Medium & Heavy commercial vehicle sales during the month declined 8 percent to 8201 units while light commercial vehicle sales grew by 2 percent to 2696 units on yearly basis. The contribution of Ashok Leyland in the growth of the automobile industry is very high. Hence an attempt is made to analyse the financial statement of Ashok Leyland.