Ashok Leyland Throws Down The Gauntlet With iEGR To Comply With BS-IV

Ashok Leyland Limited, the flagship of the Hinduja Group, and the second largest commercial vehicle manufacturer in India, showcased the full range of its future ready products, based on intelligent Exhaust Gas Recirculation (iEGR) technology for BS-IV engines, and industry-leading services at its annual Global Conference 2017 in Chennai.
The company also made public details about its first export order for Neptune Euro-6 engines from a customer in the US. This engine is designed, developed and manufactured in India by Ashok Leyland. It also displayed over 30 innovative products and services, including trucks, buses, Light Commercial Vehicles (LCVs), simulators, quick service bikes and gensets revolving around iEGR technology.

intelligent Innovation

Ashok Leyland is the only domestic OEM to implement exhaust gas recirculation technology successfully for its products above 130HP by deploying iEGR technology. EGR per se is a nitrogen oxide (NOx) emissions reduction technique used in petrol and diesel engines as well. EGR works by recirculating a portion of an engine’s exhaust gas back to the engine cylinders so that the unburnt fuel is also reduced. However, there is a limitation for the engine – up to 130 HP.
Without elaborating the iEGR technology Ashok Leyland states that it is a simple yet innovative solution to achieve the desired results to meet the BS-IV norms. This technology is not only better suited to Indian conditions than the Selective Catalytic Reduction (SCR) technology (based on European technology) but will also prove to be cost effective, easy to operate and maintain. It will benefit the Ashok Leyland customer, resulting in better margins than products based on SCR technology. Thought SCR is the technology to achieve BS-IV norms it comes with higher acquisition and operational cost. The increased operating cost of SCR technology, owing to the cost of Aqueous Urea Solution (AUS) or otherwise called Diesel Exhaust Fluid (DEF), off-sets the fuel economy benefits.
Vinod K Dasari, Managing Director, Ashok Leyland said that this technology was a continuation of the company’s efforts to develop innovative products at competitive cost, suitable for markets like India, to overcome challenges of emission regulations. Ashok Leyland was the first to introduce mechanical fuel pump to achieve BS-III norms while the whole world was banking on electronic pumps. This innovative and cost-effective solution gave much inroads into the market during the last five years.
EGR is not recommended for engines over 130 hp to comply with Euro-4 or BS-IV regulations. SCR technology is deployed for that. Ashok Leyland took this as a challenge and focused on developing a system that would comply with BS-IV and provide more fuel efficiency than the BS-III counterpart. Secondly, the objective was to minimise the reliability factor. Therefore, it wanted a system with minimum electronics and zeroed in on EGR with less sensors and electronics. Though Ashok Leyland owns Albonair, one of the largest companies that make SCR system, the company chose to develop an innovative solution using EGR.
According to Dasari, iEGR has multiple benefits like 10 percent better fuel economy (than BS-III), BS-IV compliant up to 400 hp engines, and needs no POC (particulate oxidisation catalyst) and additional electronics or sensors. It is lighter than SCR and incurs lower maintenance cost. Overall the BS-IV engine can improve the cost of ownership benefits by about 10 percent over SCR technology-based vehicles.
The fuel economy by SCR technology is offset by the additional cost of AUS, which is used at the rate of 10 percent of the fuel consumed. The current retail cost of AUS is between Rs 65 to Rs 75 per litre. Besides, availability of urea has to be ensured since it is given to the agriculture sector as fertilizer, with a subsidy. Moreover SCR technology gives additional fuel economy only if the vehicle runs for long at constant speeds. Therefore, Dasari opined that it may not be suitable for Indian road conditions.
Dasari said that Ashok Leyland would not apply for patent for this innovation. “It is a trade secret and we are not willing to file for patent,” he said. This is because the company does not want to elaborate the technology to the patent office; moreover, BS-IV will be gone in three years; these vehicles cannot be sold after 2020 when India will have BS-VI engines. “Those who are afraid of Indian innovation stated that these innovations are juggad. I find this disrespectful. This is Indian innovation at its best,” Dasari said.
This innovation has also helped Ashok Leyland to manage the inventory of about 10,600 vehicles of unsold BS-III vehicles. The company could just replace the engines with iEGR fitted engines and made it BS-IV compatible, while selling those engines in the aftermarket. Had it been with SCR technology, this wouldn’t have been possible, as the whole gamut of the module comprising engine, exhaust management systems, AUS storage, pumps and other paraphernalia need to be added, he said. Therefore, there is no impact for the company on the inventory or unsold BS-III vehicles.


In addition to iEGR, the newly-launched BS-IV vehicles have an additional innovative feature on telematics. The phones of the driver can give the health of the vehicle through an in-house developed app, and communicate to the fleet operator’s office and service centre as well, if necessary.
Though the company has been containing the electronic content, it cannot do away with it as every vehicle needs to have OBD – on-board diagnostics, by law, which is a tool to understand the vehicle parameters. OBD can be connected to a laptop to understand the error code and take corrective action. As the mechanics of commercial vehiclesin India may not have the luxury of having a laptop, Ashok Leyland has designed a scan tool that does the job of the laptop, when connected to OBD. As this was bit expensive, say about Rs 8,000 for the scan unit, and it will be an expensive proposition to offer all the mechanics in India, the company has further fine-tuned its innovation to make LEYASSIST. This technology leverages the Bluetooth feature of a smart phone with the same present in the BS-IV vehicle, through an in-house developed app, available on Google store and others. It nullifies the need for either a laptop or a scan device. This facility helps the mechanics diagnose the defects and rectify them.
Taking the brand promise of ‘Aapki Jeet, Hamari Jeet’ further, the company has, in recent years, expanded its network rapidly to cater to its wide set of customers. It has 1,000 touch-points with an additional 5,000 outlets for Leyparts -genuine spare parts brand. A service centre at every 75kms on all major highways, Ashok Leyland delivers its `Tatkaal’ promise of reaching customers within 4 hours and getting their vehicle back on-road within 48 hours.
The total revenue from the aftermarket has grown 31 percent with spare parts business witnessing 30 percent growth during the last five years. The number of retail outlets has reached 250 now from about 150 a few years ago. The number of mechanics connected to the company through different programmes has increased from 6,000 to 14,000.
Alongside, the company introduced a slew of initiatives and programmes at the global conference, targeting the aftermarket business in the CV industry. There were add-on service packages like Annual Maintenance Contract, Extended Warranty Package and ALCOVER aimed at giving peace of mind to the customers.
Comprehensive cover, Pan-India support, genuine parts, etc. are offered at reasonable cost to help better uptime and profitability. There was a display of Cabin Repair Facility assuring quality and quicker returns for dealers. Express Bay ensures hassle-free service with repair time assurance to the customer. This helps the dealers in better productivity, efficiency and utilization.
It has showcased Fully-Built Vehicle System – the ideal repair centre for fully built vehicles through Ashok Leyland authorised dealers. Besides, it displayed SPARK, Spare Parts Accelerated Reforms Kick-off, a programme where overall supply-chain is made more effective resulting in increased competitiveness and manifold growth in revenues. The programme ‘Samriddhi’ recognises the potential, commitment and contribution of the workshop employees and aims to bring competitiveness in the field of service.
Asked if the company resorted to offering discounts to gain market share Dasari said, “how would it be possible for us gain market share from 24 percent to 32 percent in the last five years. Secondly, if we were only relying on discounts, how would it be possible for us to witness double-digit operating margins during the last eight quarters in a row.”


The company was hitherto competing in less than one percent of the Defence budget, by supplying solutions to move people. Now it has geared itself up to compete in about 25 percent of the budget, as it has developed solutions to transport anything that is required by the Defence.
Towards this the company has set up a new facility in Ennore. The company has a special focus to grow this business not only in India but also beyond borders, Dasari said. “We have recently won tenders for the supply of mine-protected vehicles and bullet-proof vehicles. Currently, the revenue from Defence business is around Rs 500 crore. We will grow this three times”.

Exports, Aftermarket To Fuel Growth

Ashok Leyland has taken several initiatives to engage its customers differently and also in the aftermarket, according to Rajive Saharia, President, Global Sales and Distribution and Head of Aftermarket. “There are our other lines of businesses like LCVs, power solutions, etc. The internal targets are that all these things put together should at least be equal to the domestic truck and bus business,” he said.
The focus is on all three – buses, trucks and LCVs. Hitherto the company could not grow its LCV business in exports beyond a point due to the constraints on account of the joint venture. “Now that we are free, you will see the growth in LCV exports. We have left-hand drive versions of both Mitr and Partner but they are yet to be launched. We will go for on-road trials now, and may be in six to eight months sales would begin.
SAARC is right-hand drive and so those markets have already picked up a few units. The next market is going to be GCC as it is closest to Middle-East and then it will be Africa, Russia and Ukraine which are all interested in these products. Saharia has put a target of setting up a plant in a new location if the sales from the location and adjacent markets cross 200 units a month.
“Sales of 200 units a month is the learning that we have. All our plants in India are huge; they are all about size and skill. Ras-al-Kaimah (RAK) on the other hand, is all about efficiency; small but still efficient. The next replication of RAK is in Bangladesh. We inaugurated the plant last February and it is now in the ramp-up phase. In the next six months most of the Bangladesh sales will be in terms of kits that are assembled there. With this, any other cluster coming up to 200 units a month – we are ready to go. The first two obvious locations are Kenya and Ivory Coast in West Africa. The biggest problem in these countries is land acquisition,” he said.
Typically to set up a 200-units a month plant, it needs 15 acres and considering the future expansion, it decided on 25-acre size plot. Saharia said the Board has approved doubling of the capacity of RAK and, “the first thing I am doing is looking for land as we do not have space. So when we go for land, if the potential of the markets is larger, then we wouldlike to have something bigger. But if it is not viable, then we would start with something smaller.”
These satellite factory locations will cater to not only the specific market but also the neighbouring potential. Currently the RAK plant caters to the six GCC countries. It caters to the bigger markets in Saudi Arabia, Kuwait, Qatar, Oman and Bahrain. “When we go to Kenya, it will be the core market but we will also cater to Tanzania, Uganda and other countries around it, may be even Ethiopia. The plant in Ivory Coast will supply to Ghana, Congo and Burkina Faso in West Africa.

Growing Global Market

Ashok Leyland exported more trucks than buses in the last fiscal. About 55-60 percent of sales came from trucks primarily driven by the Bangladesh market. The company sold about 5,000 units there having a total industry volume of about 15,000 units annually, Anuj Khaturia, President, Global Trucks, said.
He said that the company was looking at new geographies. “We are looking at GCC countries, CIS countries, ASEAN. Wherever we are today, it is either BS-III or lower except for Ukraine which is Euro-5. In international operations today emission norms are not a problem for us. In ASEAN, including Indonesia and Malaysia, everything is Euro-2. These countries are behind but countries that are ahead in terms of emission norms like Japan, South Korea, Europe and North America are not our target markets because there you need a very different kind of product. We would like to have markets where India-like products are accepted.”
On the overall business, he said, trucks account for about 75 percent of total revenue as of now. “We are growing at a faster rate in other businesses like aftermarket and defence. Aftermarket is a huge opportunity with a lot of emphasis on spare parts. Most of it today is in the unorganised sector so customers would be more confident buying genuine OE spares rather than going to the secondary market”.

LCVs To Make A Difference

Even as it attempts to expand exports, Ashok Leyland plans to launch one new variant in 2-7 tonne light commercial vehicle (LCV) segment every quarter for the next three years. The company has just bought over the stakes of the joint venture partner Nissan and the merger of the separate corporate entities with Ashok Leyland will take place in three to six months, Nitin Seth, President, LCV, Ashok Leyland, said.
For LCVs Ashok Leyland did not have any problem in the market. It was held back by its earlier commitment with the partner.
Seth said: “One thing was very clear that there was never a market problem; the market was very huge with no shortage in demand in domestic and international sectors. Domestic is now 420,000 units and international (non-developed market) is close to 600,000. The problem was not the market but our ability to address the market. This ability was curtailed for the two years of the dispute (with the erstwhile JV partner). Now, since we have the freedom, we have to run faster and bring in products to the market.”
About the quarterly new launches he said that in the first quarter it was Partner and in this quarter we will be launching a new passenger vehicle called Dost Express.
In the next quarter it will be Dost Plus with bigger GVW, tyres and load body, he said. “We have also made an eight-metre bus by increasing the wheel base because there is a big demand for 32-seater school buses. Then there is a CNG vehicle with new leaf springs and suspension, with left- hand drive for the Gulf region. Mitr with left-hand drive will soon come as there is a huge market for smaller buses abroad. It is now up to us to develop the three platforms we have and by 2019-20 develop our own platform as well,” Seth said.
In addition, Seth feels that introduction of GST – goods and services tax in India will be a key driver because there will be bigger trucks coming from everywhere and they may not be required all the time, which is where the LCV can step in. A smaller vehicle can play a big role that can become bigger and bigger. Actual hub and spoke will happen as it is internationally. India was not doing that because every State had its own sales tax and we had to follow those norms; it is no longer required.
On the challenges in the transition to BS-IV he said, “I was happy when BS-IV happened. All the vehicles that came from Nissan were BS-IV. We had to downgrade them to BS-III. When BS-IV was introduced, I was already 80 percent there. For the LCV business it was a cakewalk.
“Our dealers did not crib at all because there was virtually no stock of BS-III anyway; our strength was BS-IV. Competition was trying to sell their BS-III against our BS-IV, but our technology and product was much superior. That is the good thing when you buy technology from a Japanese counterpart – it is already ahead of Indian norms. We are very happy to have our LCV portfolio already global ready. Our vehicle is similar to Nissan’s Cabstar so dealers in Dubai accept it readily especially since the price is lower. Earlier, this was another problem with the partner as we were not allowed to enter many markets. Now, with the IPR and global market rights brought over, we can go anywhere in the world,” he said.


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