The Directors have pleasure in presenting the Annual Report of the
 Company, together with the audited Accounts, for the year ended March
 31, 2011.
 
 FINANCIAL RESULTS
 
                                                       (Rs. lakhs)
                                            2010-2011    2009-2010
 
 Profit before tax                          80,179.93    54,477.48
 
 Less: provision for taxation               17,050.00    12,110.00
 
 Profit after tax                           63,129.93    42,367.48
 
 Balance profit from last year              57,744.98    48,230.19
 
 transfer from/(to):
 
 debenture redemption reserve                  416.66       416.67
 
                                            (5,250.00)
 
 General reserve                           (10,000.00)  (10,000.00)
 
 Profit available for appropriation        1,06,041.57    81,014.34
 
 Appropriation:
 
 proposed dividend                           26,606.77    19,955.07
 
 corporate dividend tax thereon               4,316.28     3,314.29 
 
 Balance profit carried to
 
 Balance sheet                               75,118.52    57,744.98
 
 earnings per share (face value Re.1/-)
 
 - Basic (in Rs.)                                 4.75         3.18
 
 
 Dividend
 
 The Directors recommend a dividend of 200% (Rs.2/- per equity share of
 Re.1/-) for the year ended March 31, 2011.
 
 Company Performance
 
 The Indian economy is estimated to have registered a broad-based growth
 of about 8.6% facilitated by policy stimulus and encouraging
 agricultural output. The Commercial Vehicles industry witnessed strong
 growth on the back of adequate freight availability and higher capacity
 utilization.
 
 With the above background, your Company recorded highest ever sales for
 the year ended March 31, 2011 supported by a record performance in
 exports.
 
 Sales increased by 47% over the previous year by volume and by 53.62%
 in value terms.
 
 Highlights of performance are discussed in detail in the Management
 Discussion and Analysis Report attached as Annexure-D to this Report.
 
 Research and development, technology absorption, energy conservation
 etc.
 
 Your Company has continued to focus on Research and Development
 activities with specific reference to green initiatives, fuel
 efficiency, enhancement of comforts and development of New Generation
 engines.
 
 Expenditure incurred by way of capital and revenue on these activities
 are shown separately.
 
 The particulars prescribed by the Companies (Disclosure of Particulars
 in the Report of Board of Directors) Rules,1988 relating to
 Conservation of Energy, Technology Absorption, Foreign Exchange are
 furnished in Annexure - A to this Report.
 
 Long Term Borrowings:
 
 During the financial year 2010-11, your Company issued Secured
 Non-convertible Debentures Series AL 13 to AL 15 to the tune of
 Rs.21000 lakhs repayable at the end of 3rd, 4th and 5th year and fully
 redeemed Secured Non-convertible Debentures Series AL 11 of Rs.5000
 lakhs (final installment of Rs.1666.67 lakh paid during FY 2010-11).
 
 Availment of Rupee Term Loans
 
 Your Company availed Secured Rupee Term Loans to the tune of Rs.25000
 lakhs during FY 2010-11 from a Bank for a tenor of five years.
 
 Debentures / Term Loans were utilized to fund capital expenditure
 programmes of the Company as per the terms thereof.
 
 Strategic Alliances
 
 Optare plc, U.K.
 
 In line with the Companys strategy, your Company acquired 26% in the
 equity share capital of Optare plc, U.K., a leading bus manufacturer in
 U.K., which will benefit the Company in its endeavour to address new
 markets, and to accelerate technology development.
 
 Ashok Leyland Defence Systems Limited
 
 In order to continue to participate in the defence business of the
 Company and to exploit opportunities available in the defence industry,
 your Company has made a strategic investment of 26% of the equity
 shares capital in Ashok Leyland Defence Systems Limited.
 
 Ashok Leyland (UAE) LLC,
 
 The state-of-the-art factory built as a venture between your Company
 and Ras Al Khaimah Investment Authority (RAKIA), at Ras Al Khaimah was
 inaugurated on December 16, 2010. This facility will cater to the needs
 of the African/Middle East markets and also facilitate launching of
 AVIA range of trucks manufactured by Avia Ashok Leyland Motors s.r.o.
 to these markets.
 
 Part II - Corporate matters 
 
 Corporate Governance
 
 Your Company is fully compliant with the Corporate Governance
 guidelines, as laid out in Clause 49 of the Listing Agreement. All the
 Directors (and also the members of the Senior Management - of the rank
 of General Managers and above) have confirmed in writing their
 compliance with and adherence to the Code of Conduct adopted by the
 Company. The details of the Code of Conduct are furnished in Annexure -
 B to this Report. The Executive Vice Chairman has given a
 
 certificate of compliance with the Code of Conduct, as required by SEBI
 guidelines.
 
 Many of the clauses of Corporate Governance Voluntary Guidelines 2009
 issued by Ministry of Corporate Affairs are being followed by your
 Company.
 
 The Statutory Auditors of the Company have examined the requirements of
 Corporate Governance with reference to Clause 49 of the Listing
 Agreement and have certified the compliance, as required under SEBI
 guidelines. The certificate is reproduced as Annexure - C to this
 Report.
 
 The Directors Responsibility Statement as required under Section
 217(2AA) of the Companies Act, 1956 is furnished in Annexure - E to
 this Report.
 
 The information required under Section 217(2A) of the Companies Act,
 1956 and the Rules made thereunder, in respect of employees is provided
 in the Annexure - F forming part of this Report.
 
 The CEO / CFO certification as required under the SEBI guidelines is
 attached as Annexure - G to this Report.
 
 Related Party disclosures/transactions are detailed in Note 7 of the
 Notes to the Accounts.
 
 Directors
 
 Mr R J Shahaney resigned as Director and Chairman of the Company with
 effect from October 20, 2010. The Board of Directors wishes to place on
 record its deep appreciation of Mr Shahaneys contribution during his
 tenure as a member of the Board since 1978 and as Chairman since 1997.
 
 In recognition of his outstanding contribution to your Company, the
 Board has honoured him with the title of Chairman Emeritus.
 
 Your Board of Directors place on record the resignation of Mr
 Ramachandran R Nair and Mr Anders Spare from the directorship and
 wishes to record its appreciation for the valuable contributions made
 by them.
 
 Mr D J Balaji Rao, Mr Dheeraj G Hinduja and Dr V Sumantran Directors,
 retire at the forthcoming Annual General Meeting and are eligible for
 re-appointment.  Necessary resolutions are being placed before the
 shareholders for approval.
 
 Mr Jean Brunol, Mr Sanjay K Asher and Mr Jorma Antero Halonen were
 appointed as Additional Directors at the Board Meetings held on October
 20, 2010, December 21, 2010 and May 19, 2011 respectively. Their term
 of office expires at the end of the ensuing Annual General Meeting.
 The Company has received Notices under Section 257 of the Companies Act
 proposing them for appointment as Directors of the Company.  Necessary
 resolutions relating to the same are being placed before the
 shareholders for approval.
 
 The term of Mr R Seshasayee as Managing Director expired on March 31,
 2011. In order to secure his leadership to realize the Companys
 Vision, your Board of Directors appointed him as Executive Vice
 Chairman with effect from April 1, 2011. The necessary resolution
 proposing his appointment and the remuneration payable to him is being
 placed before the shareholders for approval.
 
 In line with the succession plan drawn up and in recognition of the
 contributions made by Mr Vinod K Dasari, your Board of Directors
 appointed Mr Vinod K Dasari as Managing Director with effect from April
 1, 2011.  The necessary resolution proposing his appointment and the
 remuneration payable to him is being placed before the shareholders for
 approval.
 
 Cost Auditors
 
 The Government has stipulated Cost Audit of the Companys records in
 respect of motor vehicles as well as engineering industries(diesel
 engines). M/s Geeyes &
 
 Co., Cost Auditors have carried out these audits. Their findings have
 been satisfactory.
 
 Secretarial Audit
 
 Secretarial Audit is being carried out by a practising professional on
 voluntary basis. The findings of the Secretarial Audit have been
 satisfactory.
 
 Auditors
 
 M/s M S Krishnaswami & Rajan, Chartered Accountants and M/s Deloitte
 Haskins & Sells, Chartered Accountants, retire at the close of this
 Annual General Meeting and are eligible for re-appointment. The Company
 has received confirmation from both the firms that their appointment
 will be within the limits prescribed under Section 224(1B) of the
 Companies Act, 1956. The Audit Committee of the Board has recommended
 their re-appointment.  The necessary resolution is being placed before
 the shareholders for approval.
 
 Acknowledgement
 
 The Directors wish to express their appreciation of the continued
 co-operation of the Central and State Governments, bankers, financial
 institutions, customers, dealers and suppliers and also the valuable
 assistance and advice received from the joint venture partners, the
 major shareholders Hinduja Automotive Limited, the Hinduja Group and
 all the shareholders. The Directors also wish to thank all the
 employees for their contribution, support and continued co-operation
 through the year.
 
 
 
                                On behalf of the Board of Directors
 
 
                                                  Dheeraj G Hinduja
                                                           Chairman
 
 
 Chennai 
 May 19, 2011