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When Hinduja Boarded the Leyland Bus
Ranganathan V 14 November 2025
Economy & Nation
In 1983, Swraj Paul, in the status of a non-resident Indian (NRI), wished to take over a couple of Indian companies whose stock prices were underperforming, only to be deterred by the hurdles posed by the system and finally gave up.
 
Four years later, another NRI family, the Hinduja family, forayed successfully into the Indian manufacturing sector when it acquired Ashok Leyland Ltd and Ennore Foundries Ltd in a single deal.
 
The Hinduja family, with its origins in pre-partition India, initially became wealthy in its trading ventures based in Iran, and later in the UK. 
 
Their foray into a big manufacturing venture is credited to the vision and enterprise of Gopichand Paramanand Hinduja, the third of the five sons of the founder, Paramanand Deepchand.  
 
Ashok Leyland, a venture to indigenously make motor vehicles, was set up by a local entrepreneur in the first flush of an independent nation wanting to industrialise.
 
By the mid-1950s, with the passing of the promoter, the British auto group of Rover-Leyland invested in the venture giving it the Leyland appendage.
 
The Rover-Leyland group had its own share of financial upheavals, with a bankruptcy in 1975, followed by nationalisation.
 
In the mid-1980s, the truck business of the conglomerate was acquired by a Dutch truck-maker, DAF.
 
DAF did not wish to retain the stake in the Indian venture and, hence, it was put on the block.
 
The eager suitors were many top global auto players. One such, very earnest, was the Bajaj group, the largest two-wheeler-maker then, globally.
      
The Hinduja group bid jointly with Iveco. The bid of Hinduja-Iveco was supposedly the highest and helped them bag about 40% stake in the Indian company. 
 
The news reports referable to those times indicate the cost to have been sub-£30mn (million), a steal in retrospect. 
 
It was also rumoured that the Ashok Leyland top brass were apprehensive of coming under the control of an Indian family group like the Bajaj which may have an incompatible management style. 
 
In any event, the process was a secret bidding and Hinduja pipped all else at the post with its highest bid. 
 
In 2006, the Hinduja group provided an exit to Iveco from their joint holding and was said to have spent about Rs650 crore - Rs700 crore for the 30% stake Iveco had in the holding company, Land Rover Leyland International Holdings. That stake represented a 15% voting power in the operating entity. 
 
In a matter of two decades, the value had grown multi-fold.
 
This story should be familiar to old-time industry watchers and the information is also publicly sourced with no new insight added! 
 
What follows is not readily existing in the public sources though it is constructed from the annual reports of the company, Ashok Leyland Ltd.
 
How has the company performed post the acquisition by the Hinduja group over the nearly four decades that have passed—to be precise 38 years?
 
The chart below shows the sales in value, profit before tax (PBT), profit after tax (PAT) and the net fixed assets block from 1987 for every fifth year to provide a comparison. The first period is 1997 (10-year period) and the subsequent ones are the fifth year from each, till 2025. 
 
  
The chart on the left below gives the quantity in numbers of vehicles sold for the same markers from 1987. 
 
 
The graph is not entirely linear. It shows dips and rises which are not evident in value terms. Price inflation could have lifted the turnover even when the sales may have flagged in numbers. Or, some product-mix angle.
 
The data that is more interesting is the chart on the right. 
 
This chart shows the graph of the compounded annual growth, for each decade, starting from 1987, for the top-line and the profit before tax.
 
This data point is quite counterintuitive. 
 
The striking feature is that the highest decadal growth, of both sales and PBT, happened in 1987-97. 
 
The period before that could not be checked for comparison, as the data is not accessible. 
 
The better part of the period, 1987-1997, was the dark age of controls and licensing, often disdainfully referred to as the licence-permit raj. 
 
Though the abolition of industrial licensing, Foreign Exchange Regulation Act, 1973 (FERA) and the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP) happened in 1991-92, the beneficial effects may have kicked in only some years later. Therefore, the higher growth in both sales and PBT cannot be attributable only to the period post-1992.
 
If liberalisation truly unlocked the potential of the Indian businesses and removed the suffocating state controls, the second period of 1997-2007 should reflect it.
 
The fact is that the PBT growth more than halved from 33% to 14.4% and the sales growth from 19% to 12%, annual compounding. 
 
One of the reasons, usually given in such instances is the base effect. When the base grows bigger, the annual growth rate would logically taper down. This may be partially true. The subsequent period’s sales growth falls even further but not by much to comment.
 
The bigger surprise is the steeper fall in the most recent period of 2017-2025.
 
These eight years saw the annual growth dip to 7.7%. This is the era celebrated as ‘Amrit Kaal’ when Indian business is supposedly relieved of all pinpricks that were brought upon by the past regimes.
 
Ashok Leyland’s business segment of commercial vehicles is the true spine of the economy being transportation and carriage of goods. If the economy is vibrant but this sector is falling behind, some introspection may be called for. 
 
Just for a reality check whether the MSXL workings failed somewhere, the data available for another commercial vehicle major was checked. 
 
This company was classifying all forms of vehicles manufactured as one reporting segment, irrespective of whether the vehicle was for the carriage of cargo or humans. Only in 2019, it segregated humans from non-animate goods!  
 
The six-year growth of only commercial vehicle sales shows a rate of 5.62%, even lower than that of Leyland’s.
 
So, no mistakes in the calculations!  
 
Confederations and chambers that hail in an unqualified fashion any policy change of the government should check what is missing.
 
Though this was not specifically verified, on the profitability factor too, Hinduja may have bettered Tata!
 
 
(Ranganathan V is a CA and CS. He has over 44 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as a senior advisor post-retirement, handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies.)
Comments
ganapathyramansundaram
1 month ago
Nice write up capturing all important events of the Hinduja Group's evolution in India, with an interesting headline. I recall my Ennore Foundries days close to the time Hindujas picked up stakes and the pride among employees. When I joined Hinduja group again in 2013, I could see the exponential growth and sea of change in management style and culture. I also fondly recall excellent learning under your mentorship in Murugappa group and your support in my career progression. Look forward to read more from you. Best regards. Ganapathyraman
Reply
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