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8/8/2019 Analysts Meet May068

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Annual Investor Meet

25 th May 2006


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The Hinduja Group


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The Hinduja Group Profile

The Group was established in 1914 inMumbaiEntered Middle East in 1919 to grow

trading initiativesPrivately owned by the Hinduja FamilyPresence in more than 25 countries andoperates across the globeEntered India for major activities in 1987Employs over 30,000 personnelworldwide


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Hinduja Group :Business Activities

Media &Entertainment

IT/ITES

Automotive Banking &Finance

Real Estate

Energy &Chemicals


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Presentation Outline

Indian CV Industry Outlook Ashok Leyland Performance and Plans


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Indian CV Industry Outlook


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CV Demand Drivers

Economy Growth in FY06 Industrial Production : 8.2 % Agriculture Growth : 2.5% Imports / Exports : 31.7% / 25%

Freight generating sectors witnessedsignificant growth

Source: CMIE


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CV Demand Drivers (Contd..)


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CV Demand Drivers (Contd..)

Infrastructure Road construction projects - NHAI

launched in 1999

Total coverage increased to18,372 Kms - pan India35% completed by 31.03.06

40% under implementation25% to be implemented


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M&HCVTIV VolumesBus Truck Total

FY 01 24,785 57,175 81,960

FY 02 16,814 73,185 89,999

FY 03 19,970 95,741 115,711

FY 04 24,591 136,804 161,395

FY 05 25,638 172,868 198,506

FY 06 28,126 179,320 207,446


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M&HCVTIV Growth Trends

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

225,000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Bus Truck Total

Truck volume trebled in last 5 years

Bus volumes stagnated


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CV Demand Drivers (Contd)

LegislationRecent Supreme Court decision onoverloading to trigger demand. Growth in MHCVs partially on account

of positive impact of the supreme courtsorder, accompanied by strong freightavailability ,allowing operators toincrease freight rates CRIS INFAC.

One time demand upto 28,000 vehicles


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Freight Rate Movement

U ptrend in freight rates indicates absorptionin market


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Freight Rate Buoyancy andOperators Cost Structure

0%5%

10%15%20%25%

30%35%

South North East West

I n c . o v e r

1 2 m o n

t h s Inc. in F re ight R ates

Inc. in Di esel P r ice

8

4

8

7Capital cost taff Ex pense

Fuel Ex penses Maintenance

Others

No significant impact of adverse interest rates


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Railways EfficiencyImprovement - N ot a concern

Proposed dedicated Freight Corridor looking to buildpartnerships with road transporters to move to interior areas - will boost demand for CVs Investment Rs.650 Billion: Phase I Rs.224 Billion Time frame : 10 years Phase I completion by 2011 Coverage 9000 kms Phase I - 2900 kmsSimilarity with Chinese market Massive expansion inRailway network in China during 1992 to 2002,

accompanied by CV growth rate of 8.9%. Similar trendexpected in Indian market.Structural change in industry with higher sales of HCVsfor highway transport and LCVs for last mile transport


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Outlook for FY07

Growth up to 9-10% CRIS INFAC.

Industry Analysts projection Averagegrowth >10%

AL targets to outperform industry


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Ashok Leylands Performance


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Composition of Sales Q4FY06

Q4FY06 Q4FY05 YOY %

Domestic - Civilian

s 6 T 64 0 4 Total 18722 15535 20.5

Defence 500 146 242.5 Exports 1180 2648 (55.4) Total Vehicles 20402 18329 11.3

Engines 2497 2243 11.3 Spares incl. Defence (Rs. Mn) 1788 1911 (6.4)


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Composition of Sales FY06

FY06 FY05 YOY %

Domestic - Civilian

s 6 0 0 0 ck 06 0 6

Total 56274 47782 17.8 Defen c e 502 146 243.8 Exports 4879 6812 (28.4) Total Vehi c les 61655 54740 12.6 Engines 7261 6254 16.1 Spares in c l. Defen c e (Rs. Mn) 7838 5460 43.6


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M&HCV: ALs Market Share

% Year Pass Goods Total

FY06

V ALMS % 47.7% 23.7% 27.0%

FY 05TIV 25,638 172,868 198,506

AL 10,469 37,137 47,606 MS % 40.8% 21.5% 24.0%FY 04

TIV 24,591 136,804 161,395 AL 11,025 33,471 44,496 MS % 44.8% 24.5% 27.6%

M S gains across all regions

Stronger in high growth segments


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Financial Results FY06

Improved margins despite raw materialcost increase

Dividend increased to 120%

FY06 % FY05 % YOY FY04 %Net Sales / Income fromOperations 52,477 100.0 41,819 100.0 25.5 33,920 100.0 Gross Operating Margin 5,401 10.3 4,229 10.1 27.7 3,946 11.6 Financial Expenses 165 0.3 28 0.1 489.3 208 0.6 Gross Profit 5,566 10.6 4,738 11.3 17.5 3,924 11.6 Depreciation 1,260 2.4 1,092 2.6 15.4 965 2.8 Profit Before Tax 4,523 8.6 3,550 8.5 27.4 2,865 8.4 Net Profit - PAT 3,273 6.2 2,714 6.5 20.6 1,936 5.7


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Operations Highlights in FY06

Capacity enhanced to 77,200 vehicles p.a.Introduction of BS3 variantsVolume growth at 17.6%, outperformed industry

growth of 4.5%Market share improvement by 300 bp -Improvement across all regions / segmentsTurnover Rs.52 Bn. (US $ 1.1 Bn.)No borrowal during 2005-06

Asset base Rs.23 Bn.Market capitalization :Rs.55 Bn. (US$ 1.2 Bn.)


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Operations Highlights FY 06(Contd)

Loan funds excluding FCCN - Rs 3.5 Bn.Net interest bearing loans - Rs 1.8 Bn.

Capital expenditure - Rs 2.4 Bn.Net Working capital - Rs 4.2 Bn.

Better asset utilisation


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Performance Highlights 5 yrs

FY06 FY05 FY04 FY03 FY02

EPS - Diluted (In Rs.) 2.46 2.04 1.63 1.01 0.78

R O C E (%) 31.0 26.2 20.9 13.4 11.6

RONW (%) 19.9 21.2 20.1 12.4 9.6Dividend Payout (%) 55.7 50.0 52.0 55.8 58.0

Asset Turnover (Times)

4.0 3.6 2.7 1.8 1.4

WC Turns ( Times) 6.7 5.9 5.7 3.6 2.6

Debt : Equity 0.2 0.3 0.5 0.8 1.0

Significant growth over five years


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Other Business Initiatives

Component / aggregates businessincluding exports to US / Europeancountries turnover target at US$ 100

million in the next three yearsEngine business expansion - volumeincrease by 100% in FY 07. Potential for further growth.

Improving shareholder returns withminimum investment


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Plans


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Plans

Capacity expansionProduct launchesPerformance improvement through Focus on non-cyclical portfolios Efficiency improvements


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Capacity Expansion

Vehicle assembly capacity to beaugmented to 100,000 in next 2 yearsProduction / sales target FY07 - 75,000vehiclesCabin facility to 40,000Indigenisation of J series engines

R&D facilities to reduce time-to-market

Capex spend around Rs.6 billionover FY07 and FY08


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New Product Launches

ICV - 1512 with H Series engineSemi Forward Control in Tipper andHaulage segments

Tractor range - 6x2 / 6x4 with 210-350 hpengine and G TW up to 49 TTipper 8x4 with 350 hp engineInterCentury Luxura busBranded BusesDefence sector - HMV and other logisticsvehicles


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Non-Cyclical Business

FY 06 FY 05 FY 04

Defence / Spare Parts 12.4 10.1 11.4

Exports 8.3 13.2 8.4

Indl. / Marine Engines 2.1 2.3 2.1Total 22.9 25.7 22.0

Share of revenue (% of turnover)

N on-cyclical revenue streams growing inabsolute quantum as also in share of total

revenue.FY 05 includes one-time order from Iraq

From FY 07, component business expected togrow exponentially

N on-cyclical revenue targeted to grow >30%


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Effi ciency ImprovementsMaterial cost reduction Emphasis on e-sourcing and global

sourcing to play a beneficial role Continued focus on value engineering

initiatives to improve margins in allexisting / new productsMission Gemba Shop floor-led team initiative with focus on

creating value through empowerment andimproving resource utilisation

Target to achieve 300 bp improvement inoperating margins over 2 years


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Ashok Leyland Stock Performance

a r a y l S e

o a n a r a y l S eo a n a r a y l S e

o a n a r

P o i n t s

R s .

e r S

h a r e

n fty

ALL

AL sto ck o u tper f or m s N IFTY m o ve m ent


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Shareholding Pattern

ForeignInstitutions16%

Corporates

2%

Public &Others

12%

Promoters

51%

DomesticInstitutions

19%

FIIs holdings doubled over 1 year

FCC N conversion as on date : 84% (IncludingPromoters)


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Thank you

analysts meet may068

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