To the Members,

PERFORMANCE/OPERATIONS

Your Directors have pleasure in presenting the Annual Report of Ashok Leyland Limited ("AL"/"the Company") along with the audited Financial Statements for the financial year ended March 31, 2022.

FINANCIAL RESULTS

Rs in Crores

COMPANY'S PERFORMANCE

The Commercial Vehicle market (0-55t GVW) in India grew by 26.0% YoY in total industry volume (TIV) after dropping by 38.0% over the last two consecutive years. M&HCV segment (>7.5t GVW) grew by 49.7% while LCV segment (0-7.5t GVW) grew by 16.7%. International Operations grew by 83.4% over last year driven by similar gains in both M&HCV and LCV segments.

Your Company sold 65,090 M&HCVs in the domestic market (3,789 Buses and 61,301 Trucks including Defence vehicles), registering a growth of 41.5% over last year. LCV with sales of 52,222 vehicles grew by 11.9% over the previous year.

Your Company's sale in M&HCV Trucks segment (excluding Defence vehicles) in India grew by 43.5% to 60,947 units in FY22, as compared to 42,483 units in FY21. Your Company enhanced its product portfolio with CNG models in ICV trucks segment to cater to the boost in demand for alternate fuels in the ecommerce and last-mile delivery applications. Further, product enhancements like High Horsepower Mining Tipper and Surface Tipper, helped your Company to strengthen its presence in Construction and Mining industry. Your Company pioneered in launching 8x2 Multi-Axle Truck with Dual Tyre Lift Axle and 6x2 Multi-Axle Truck with Single Tyre Lift Axle, which were well received during the year.

Your Company's sale in M&HCV Bus segment (excluding Defence vehicles) in India grew by 10.8% to 3,018 units in FY22, as compared to 2,723 units in FY21. The Aftermarket business showed a commendable growth of 30.0% over last year. Your Company added 71 new outlets during the year, increasing the total count to 907 primary touch-points. To keep up with the rising commercial vehicle operations in Northern and Eastern regions of India, your Company opened more than half of the new outlets in these regions.

In LCV, new product 'Bada Dost' has helped your Company register highest ever sales of 52,222 vehicles since inception. Your Company observed overall IO sales growth of 37.0% over FY21. Penetration in LCV portfolio across geographies was made while retaining market leadership position in MDV bus segment in SAARC and GCC countries. Your Company has achieved sales of 20,944 engines in Power Solutions Business aided by new business development with corporates and equipment manufacturers. Despite shortages in availability of semi- conductor chips, your Company has registered robust growth in Power Solutions Business. Your Company supplied an all-time high 1,125 units of completely built up units (CBUs) including bullet proof vehicles and 600 kits to the Indian army and in addition completed the execution of 711 Ambulances in record time under emergency procurement.

Highlights of performance are discussed in detail in the Management Discussion and Analysis Report attached as Annexure F to this Report. During the year, there has been no change in the nature of the business of the Company.

SHARE CAPITAL

During the year under review, there were no changes to the share capital. The issued and paid up share capital of the Company consist of 2,935,527,276 shares of face value Rs 1/- each amounting toRs2,935,527,276/- as on the date of the report.

DIVIDEND

The Dividend Distribution Policy framed in line with Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is ("SEBI" Listing Regulations) appended to this report and is hosted on the Company's website at https://www.ashokleyland.com/backend/ in/wp-content/uploads/sites/2/2021/01/Dividend Distribution Policy. pdf#toolbar=0.

In line with the policy, your Directors have recommended a dividend of Rs 1/- per equity share of face value of Rs 1/- each for the financial year ended March 31, 2022 involving an outflow of Rs 293.55 Crores.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report.

TRANSFER TO RESERVES

Your Company does not propose to transfer amounts to the general reserve out of the amount available for appropriation.

FINANCE DEBENTURES

During the year under review, your Company has issued and allotted on private placement basis, secured redeemable non-convertible debentures (NCDs) aggregating toRs200 Crores. The funds raised through NCDs have been utilised for capital expenditure and general corporate purposes.

Long term funding

(a) Secured Non-Convertible Debentures (NCDs):

During the year, your Company has placed NCDs to the extent ofRs200 Crores. No redemption of NCDs were made during the year.

(b) Rupee Term Loans:

Fresh secured rupee term loans ofRs450 Crores were availed during the year. Your Company repaid rupee term loan instalments amounting to Rs 12.50 Crores on the due date during the year.

(c) External Commercial Borrowings (ECBs):

During the year, your Company has not availed fresh ECBs and no installments were due for repayments.

As at March 31, 2022, Long term borrowings stood atRs3,245.25 Crores as againstRs2,576.52 Crores on March 31, 2021.

CREDIT RATINGS (ASSIGNED IN FY 2021-22)

HUMAN RESOURCES

Your Company continued the people framework of 6 levers - Culture, Capability, Capacity, Compassion, Collaboration and Contribution to meet dynamic business requirements towards building a high performing and caring organisation. Your Company seamlessly adopted the hybrid working model prior to opening up offices across various locations during the financial year of 2021-22.

Some of the key People initiatives undertaken during the year include:

• Long Term Wage Settlements were signed in 6 manufacturing plants covering 4400 Associates, with specific clauses focusing on flexibility in operations, Productivity, Quality, Safety, Total Employee Involvement etc. linked with variable income for Associates.

• Bonus/Ex-gratia for FY21 was concluded and Memorandum of Understanding was signed covering 8 manufacturing plants and 5100 Associates.

• Under the aegis of Ashok Leyland University, successfully launched Quality Academy which focuses on developing TQBM champions across your Company and Electronics Academy aimed at enhancing the electronics capability to be future ready.

• New HRMS Anchor 2.0 was launched to provide a superior user experience for employees. Anchor 2.0 can be used on a mobile and has features such as ask HR for closer connect with employees, Chatbot, Simplified user interface and AI- based personalised and intuitive Learning eXperience Platform (LXP) which provides multimodal learning through MOOC (Massive Open Online Courses) from platforms such as Coursera, edX, LinkedIn Learning and more. The new LXP provides an engaging learning experience through mobile app, personalised recommendations and dynamic leader boards.

• A 2-week long learning event, Learning Champions League (LCL) was organized to pique curiosity and motivate executives towards Learning initiatives CARE 2.0 (Customer Appreciation and Relationship Excellence) program was launched during the LCL to enhance the Customer Centricity competency of executives.

• Gamified simulations for providing future skills such as Agile way of Working and Design Thinking were conducted across the business and functions.

• Leaders talk series by Industry experts on topics such as "Next Generation of Robotic Surgeries" and "A peek into the Metaverse, NFT & more" to keep employees up to date with latest technology and trends

• A select set of young high potential employees underwent a year long development journey as a part of Young Talent Program (YTP). The program followed a blended approach of learning by combining Virtual Classes by XLRI, Peer Learning, MOOC Courses and mentoring.

• Awards:-

Your Company was awarded the prestigious TISS Leap Vault CLO Award - Gold in the category of 'Virtual Learning Program'. Two awards were won in People First HR Excellence Awards 2021, Champion in "Leading Practices in Learning and Development" and Winner in "Leading Practices in Employee Engagement.

EMPLOYEE HEALTH & SAFETY

The end of the financial year 2020 was marked by the COVID-19 crisis which not only impacted livelihoods but also lives as well, and this crisis has extended for a period beyond a year. Your Company swung into action by forming an Emergency Response Team with the primary objective to focus on the health and safety of employees and their family members through interventions as appropriate which included measures such as "Work from Home" policy, access to qualified medical practitioners, setting up of a dedicated help-line to address physical as also emotional well-being. Your Company continues to monitor the well-being of its workforce and has taken several measures to engage with and provide timely support to the families that were affected by the pandemic.

Your Company is committed to build an Environment, Health and Safety culture and has formed an "Environment, Health and Safety council" at the apex level, chaired by a Director. The EHS council reviews all safety incidents both reportable as also near-miss events every month, and proactively identifies measures to strengthen safety practices across its manufacturing locations. Your Company has also rolled-out a comprehensive EHS policy reiterating its commitment to protect the Environment, Health and Safety of its employees and other stakeholders.