I have been inviting R Seshasayee,managing director of Ashok Leyland,for lunch for several weeks now. He agrees to meet me,but asks me to have lunch with him in his office. He is always rushed and cannot find time to go out for lunch. We go up to the companys executive lunch room. We settle down and start with tomato soup. Seshasayee will be taking over as executive vice-chairman of the Ashok Leyland group in April. I have spent 35 years in Ashok Leyland. Thats more than half the life time of the company and nearly 90% of my 40 year career, he smiles. He joined Ashok Leyland in 1976. Appointed executive director in 1983,he was elevated to deputy managing director in 1993 and has been the managing director since April 1,1998. But I have tried my best to remain contemporary and open to new ideas. I have dedicated myself to get this organisation ready for the future.
He says that there are several mega trends that are apparent today to which a company has to adapt itself if it is to remain successful. The most important one is Asia emerging as the prime mover in the global economic growth. It makes sense for India to hitch its wagon to a high-growth region. Government has been talking about its Look East policy but this has to be made tangible. India has to wrestle its way to be in the centre of Asia,along with a 1,000-pound gorilla called China,politically and economically. And part of this initiative has to come from industry.
Ashok Leyland has a very strong presence in South Asian countries and an office in China,essentially for sourcing. In the coming years,we are planning to penetrate the Southeast Asian markets. Of course,we need to do more in China but that has to be enabled by bilateral policy formulation that will pry open the somewhat closed markets in China. But our global focus is pretty much on what we call the second hemisphere,a lot of which is in Asia.
After soup,we are served salad and fried rice,with an assortment of vegetables. Almost all the people I have lunch with in Chennai are vegetarians. I comment about the number of young women I see as I am coming up to see him. There are an enormous number of changes taking place in our social fabric, he says. Twenty years ago we used to worry about inadequate employment opportunities. Now we face skill shortages. Industry is no longer talking about labour law reforms. Every industry is in an expansionist mode. There is no redundancy and nobody is really downsizing. This has even led to better gender equality,even on the shop floor. Women will enter the job market in even larger numbers because of the rising literacy as well as the skills shortage.
In our Pantnagar facility in Uttarakhand,we have undertaken an interesting experiment. We have tied up with a technical training institute (NTTF) whose students are sent to work on our shop floor. They learn on the job 5 days a week and attend classroom training on the 6th day. Our managers help them pass their exams. Once they finish their course,they have the option of either working for us or going elsewhere. If they join us,we put them through engineering college and then they could seamlessly move up as managers. Girls account for 15% of the trainees and some of them come from under-privileged families. They are doing very well. They were put on an assembly line and they recorded the highest productivity!
Another mega trend he sees is in technology development. Until about a decade ago,almost 98% of the patents were filed by western countries. Asian countries were at best considered the shop floor of the world. India has traditionally been competing through low-cost labour. Till recently,the bulk of Indian industry was producing products according to western design. There is a major change taking place now. Indian companies are not only fast building design capabilities,they are also challenging MNCs with disruptive products being produced to a new price-performance point. We are no longer only producing for the bottom of the pyramid,but now also for the developed market. Our frugal engineering skills were first noticed and highlighted by Carlos Ghosn,chief of Renault Nissan. Ashok Leyland has a joint venture with Nissan,which is focused on this very principle. Frugality is in the Indian DNA. We can become world leaders at least in some industries,with this rare skill.
We set up a greenfield site in Dortmund in Germany 3 years ago and hired German engineers who are patent holders. They have been working on emission control systems for engine management. They have developed and delivered products at a new price-performance point. With the communication revolution,our ability to compete in the world has zoomed up. Products can be designed here and sent anywhere through powerful delivery systems. The Ashok Leyland Group has chosen to work on engineering services and we are confident of delivering competitive products across the world. We see a bright future in this area. With the communication revolution,our ability to compete in the world has been really enhanced.
Seshasayee says the change taking place in the management culture is making a great difference. Two decades ago,there was a paternalistic approach between management and labour,between senior manager and junior.
Relationships are more on equal terms now. There is such a shortage of managerial resources that it is natural that youth takes over. Changes are happening so fast that companies have to run faster than ever. So,one needs younger people. The age of top drawer manager is steadily falling. My successor is 43 years old. I was 49 when I took over. Today Ashok Leyland is a young place. The office reflects this. We have a gym,cafeteria,music playing in the office and so on. When changes are happening at breakneck speed,we need to empower youth and allow them to run.
As we have good hot South Indian coffee,I quiz Seshasayee about Ashok Leyland always being the number two commercial vehicle manufacturer behind Tata Motors. Today we have a world-class R&D set up,with nearly 1,000 talented engineers. We have new engine and contemporary vehicle platforms. Nearly 65% of our factory assets are less than 10 years old. We have competitive products coming from modern production facilities.
We have contemporary management process. We are also putting in a lot of resources to build a stronger marketing network. More than anything,we have a strong balance sheet. I remain absolutely confident that this company has a bright future and will always be a strong number two, he says firmly.
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