DHEERAJ HINDUJA, executive chairman of Ashok Leyland — India’s second-largest commercial vehicle maker and the fourth-largest bus manufacturer in the world — is unperturbed by the global disruptions in the world of mobility, especially commercial vehicles.

“Ashok Leyland has been at the forefront of bringing in innovative technologies and pioneering products in our 77-year-old history. We are one of the earliest to work on electric commercial vehicles and alternate fuel technologies,” a confident Hinduja tells Fortune India from his London office. He points to the new ‘iconic’ air-conditioned double-decker electric buses plying in Mumbai and in the U.K., made by subsidiary Switch Mobility. After detailed studies with consultants for years, Ashok Leyland bought U.K.-based bus builder Optare and renamed it Switch Mobility in November 2020.

In Chennai, the home of Ashok Leyland, MD & CEO Shenu Agarwal is thrilled to take on challenges. “We have created a very strong base and foundation for Ashok Leyland. Now is the time to invest in the future and be ready for it,” he says. Agarwal joined Ashok Leyland in December 2022 from Escorts Kubota to drive technology development, growth, and strategy, with a vision to be among the Top 10 commercial vehicle players globally. The core philosophy behind the vehicle major is to build a solid foundation, maintain strong operational discipline, implement effective pricing strategies, offer superior products, and deliver excellent customer service to achieve improved results.

At the Hinduja headquarters in Mumbai, Amit Saharia, group president, strategy, Hinduja Group, says the conglomerate has invested heavily in mobility in recent years. “We are investing in plants, technology, digital platforms, charging infrastructure and other critical areas to create an ecosystem for future mass mobility.”

The past five years have been a roller-coaster for Ashok Leyland, which is gearing up for the future with an expanded next-generation products basket with various fuel options and services across all its focus areas. “We planned for this future of alternate fuels long ago, and our new platforms are designed to easily adapt to LNG, CNG, and hydrogen. As the market develops, our products are ready,” says Hinduja.

The core business of medium-, heavy-, and light commercial vehicles remains the focus area, aided by new and innovative products. “Ashok Leyland wants to make sure that we are present in all segments of the commercial vehicle side and are identifying the gaps to fill,” says the chairman. As part of that strategy, the auto major recently unveiled three innovative products — SAATHI, an entry-level light commercial vehicle (LCV); GARUD 15, India’s first multi-axle, front-engine 15-metre premium bus; and eTIRAN, the country’s first electric port terminal tractor. In the electric segment, it launched two new LCV models, introduced Intelligent Vehicle Acceleration Control (IVAC) for medium and heavy commercial vehicles (MHCVs), and rolled out fully built CNG buses along with a 19-tonne (19T) electric truck and a 55-tonne (55T) electric tractor. A dedicated EV Centre of Excellence is also operational, focussing on core components such as batteries and motors. More are on their way, in buses, trucks and LCVs, in electric, alternative fuels, and conventional fuels.

One such revolutionary product will be a new platform of engines and powertrains with almost double the horsepower to help vehicles gain better speed and efficiency. “The belly of the market used to be 150-200 horsepower (hp). About five to six years ago, it moved to 200-250hp, and is now eyeing 300hp-plus. We are targeting 360 or even 400 in the future, and this platform will cover all product segments such as tipper, tractor trailers, and also multi-axial vehicles,” says Agarwal. Plans are afoot to launch the platform by Q3 or Q4 of FY26. With India’s roads getting better every day, the new platform “will be the future“, as customers will be able to save time and increase the number of trips to earn more, he adds.

After two years of a slowdown in FY21 and FY22, because of the pandemic and the subsequent lockdowns, Ashok Leyland is now showing big business growth. Net revenue from operations were at a record ₹48,535 crore in FY25, with a profit after tax (PAT) of ₹3,383 crore. While revenue from operations grew 6.20% YoY, net cash position rose to ₹4,242 crore, compared to net debt of ₹89 crore in FY24. While MHCV buses recorded the highest volume of 21,249 units in FY25, overall CV volumes were 1,95,097 units, close to the previous high of 1,97,366.

“Profit helps generate cash so that we can invest in new technologies, and not just set Indian benchmarks, but also some global ones,” says Agarwal. Ebitda has grown more than threefold to 12.7% in FY25, from 4.1% two-and-a-half years ago. The goal is to raise it to the mid-teens to become one of the most profitable CV companies in the world.

Ashok Leyland is steadily increasing its market share across the segments it operates in, placing strong confidence in India’s growth trajectory. In the MHCV segment, it has maintained a market share of above 30% in FY25, while in the LCV segment, its market share stands at 18.6%. “AL maintains its target of achieving a 35% market share in the domestic MHCV segment. In the LCV segment, its market share stood at 18.6% in FY25 [vs 19.3% in FY24]. However, with continued product innovation and new launches, the company aims to increase its market share to 20-25% in the short/medium term,” say analysts Saksham Kausha and Sahil Malik of JM Financial.

In electric vehicles, the share is around 10% and with the kind of orders in hand, it may soon increase to over 20%. Switch Mobility has so far sold around 1,100-plus electric buses and 1,000-plus electric LCVs in Mumbai, Chandigarh, Bengaluru, and Lucknow, covering over 100 million green miles. It is also sitting on an order book of over 1,800 buses. However, the focus remains on core businesses, as Switch Mobility and related investments are seen as ‘startup businesses for the future’, says Hinduja. “Over the years, we have been gradually growing, and we have also said we don’t want to buy market share. We want to achieve these market share targets with better products and exceptional services so that the customer is inclined to buy an Ashok Leyland vehicle.” In the past 10–15 years, despite new competitors entering India, Ashok Leyland has only gained market share, whether in trucks or in buses, adds Hinduja.

“We are building in 8% MHCV volume CAGR over FY25-27E, contingent upon favourable macros, government spending on infra and underlying growth of the core industries. AL’s de-risking strategy will help, as it reduces domestic MHCV exposure by adding new revenue pools such as LCVs (11-12%) and non-vehicle revenues (20%),” observes Deep Shah, lead analyst, YES Securities.

Ashok Leyland has also been a key logistics supplier to the Indian defence forces, delivering over 90,000 vehicles to date. With the government’s push to modernise the military, a strong growth opportunity is emerging. Analysts expect defence revenues to double in two to three years. In FY25, revenues crossed ₹1,000 crore, backed by a robust order book. “We have an over ₹1,000-crore order book and is L1 (first) in another ₹2,000-crore tender,” says Agarwal.

In February 2024, Ashok Leyland reached a new milestone — it rolled out its 3 millionth vehicle from its Pantnagar plant in Uttarakhand. The journey started in 1948 as Ashok Motors, by building a plant setup at Ennore in Chennai as an assembly unit for Austin cars. In 1955, the U.K.’s Leyland Motors came in as an equity partner, and Ashok Leyland was born. In 1987, the Hinduja Group acquired Ashok Leyland. Initially, the Hinduja Group and IVECO jointly owned the company, and in 2007, the Hinduja Group bought out IVECO’s stake, becoming the sole owner.

Ashok Leyland’s Ennore plant, now modernised, produces 120 vehicles a day. Over time, the company has expanded with nine additional facilities, including three in Hosur (Tamil Nadu), and others in Bhandara (Maharashtra), Pantnagar (Uttarakhand), Alwar and VBCL (Rajasthan), and Vijayawada (Andhra Pradesh). The Vijayawada plant can produce 4,800 buses annually and houses Nalanda — a modern learning and service training centre.

Globally, Ashok Leyland set up a plant in Ras Al Khaimah (the U.A.E.) in 2009 to serve the Gulf and Middle East markets. Meanwhile, Switch Mobility is shutting its U.K. facility in Sherburn due to weak demand and high costs in Europe.

Back home, the company is investing over ₹1,000 crore in a new 70-acre multipurpose plant in Lucknow, Uttar Pradesh. The facility, focussed on electric buses and alternative-fuel vehicles, will have an initial capacity of 2,500 units annually, expandable to 5,000 in a decade. It is set to become operational this year. “The two new plants will help us to meet demand. We are also de-bottlenecking other facilities,” says Hinduja.

Ashok Leyland is aligning with evolving mobility needs by supporting customers and state transport utilities with innovative solutions. To drive EV mass mobility, it launched OHM Global Mobility, a subsidiary offering OPEX-based, pay-per-km electric bus services. Under this light-asset model, OHM owns and operates e-buses for transport corporations on contract, with financing support from group NBFCs (non-banking financial companies). Currently, electric mobility as a service (e-MaaS) subsidiary OHM runs 650-plus e-buses with over 98% fleet availability, and plans for 1,700 more in FY26.

“In electric mobility, one has to look at the total cost of operations. Right now, the EV vehicle will cost about three times the price of a diesel vehicle. Roughly, we can say operational cost is 1 kilowatt-hour per km, costing about ₹10, whereas a diesel truck costs ₹30 for running 1 km,” says Agarwal. To reduce costs, production has to be localised and import dependence reduced. In line with this, Ashok Leyland is asking global suppliers to set up manufacturing units in India. One such example is NIDEC, a Japanese maker of freight motors, selling to global OEMs (original equipment manufacturers). “We were buying from them for many years and now they are setting up a unit in Karnataka, which will help reduce prices,” says Agarwal.

Setting up charging infrastructure is equally important. Saharia says group company Gulf Oil Lubricants India and Gulf Oil International have together invested $50 million into the EV charging infrastructure space by taking a majority stake in Tirex (an India-based fast-charger OEM) and Indra (a slow charger OEM with vehicle-to-grid capabilities that is based in the U.K.).

The company’s other businesses are also growing. Engine revenues grew 18% and the spare parts business 15% in FY25. Exports are also gaining momentum. In FY25, export volumes rose 29% YoY to 15,255 units. The company is now looking at newer markets such as the ASEAN countries, beyond traditional ones such as GCC, SAARC and Africa. “Other than home leadership, we also want a very strong brand outside India in our chosen markets. We don’t want to go everywhere,” says Agarwal. It is now launching new models across geographies, including the Switch E1 in Europe and the GCC region, and the Switch EiV12 in India. The company also expanded its nationwide footprint, adding 214 new MHCV and LCV outlets in FY25, taking its total touchpoints across India to 1,889.

With that kind of strong focus on new products, technology, and market strategy, Ashok Leyland is ready to face disruption. “We will continue to grow in trucks and buses, with all alternate fuel options that customers require, and will provide the best customer service with robust quality. International business, defence, power solutions, aftermarket, and light vehicles will continue to grow alongside our core business,’’ says Hinduja.