Annual Investor Meet25th May 2006

The Hinduja Group

The Hinduja Group Profile

• The Group was established in 1914 in Mumbai

• Entered Middle East in 1919 to grow trading initiatives

• Privately owned by the Hinduja Family• Presence in more than 25 countries and

operates across the globe• Entered India for major activities in 1987• Employs over 30,000 personnel

worldwide

Hinduja Group : Business Activities

Media & Entertainment

IT/ITES

Automotive Banking & Finance

Real Estate

Energy & Chemicals

Presentation Outline

• Indian CV Industry Outlook • Ashok Leyland

– Performance and Plans

Indian CV Industry Outlook

CV Demand Drivers

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

Freight generating sectors witnessed significant growth

Source: CMIE

CV Demand Drivers (Contd..)

CV Demand Drivers (Contd..)

• Infrastructure– Road construction projects - NHAI

launched in 1999

• Total coverage increased to 18,372 Kms - pan India

• 35% completed by 31.03.06• 40% under implementation• 25% to be implemented

M&HCV TIV Volumes

207,446179,32028,126FY 06

198,506172,86825,638FY 05

161,395136,80424,591FY 04

115,71195,74119,970FY 03

16,814

24,785

Bus

89,99973,185FY 02

81,96057,175FY 01

TotalTruck

M&HCV TIV Growth Trends

0

2 5 , 0 0 0

5 0 , 0 0 0

7 5 , 0 0 0

1 0 0 , 0 0 0

1 2 5 , 0 0 0

1 5 0 , 0 0 0

1 7 5 , 0 0 0

2 0 0 , 0 0 0

2 2 5 , 0 0 0

2 0 0 0 - 0 1 2 0 0 1 - 0 2 2 0 0 2 - 0 3 2 0 0 3 - 0 4 2 0 0 4 - 0 5 2 0 0 5 - 0 6

B u s T r u c k T o t a l

• Truck volume trebled in last 5 years• Bus volumes stagnated

CV Demand Drivers (Contd…)

• Legislation• Recent Supreme Court decision on

overloading to trigger demand.– “Growth in MHCVs partially on account

of positive impact of the supreme court’s order, accompanied by strong freight availability ,allowing operators to increase freight rates “ – CRIS INFAC.

– “One time demand upto 28,000 vehicles”

Freight Rate Movement

Uptrend in freight rates indicates absorption in market

Freight Rate Buoyancy and Operators’ Cost Structure

0%5%

10%15%20%25%

30%35%

South North East West

Inc.

ove

r 12

mon

ths

Inc. in Freight Rates

Inc. in Diesel Price

18%

4%

58%

13%7%

Capital cost Staff Expense

Fuel Expenses Maintenance

Others

No significant impact of adverse interest rates

Railways Efficiency Improvement - Not a concern

• Proposed dedicated Freight Corridor – looking to build partnerships 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 kms

• Similarity with Chinese market – Massive expansion in Railway network in China during 1992 to 2002, accompanied by CV growth rate of 8.9%. Similar trend expected in Indian market.

• Structural change in industry with higher sales of HCVs for highway transport and LCVs for last mile transport

Outlook for FY07

• “Growth up to 9-10%“ – CRIS INFAC.• Industry Analysts’ projection – Average

growth >10%

AL targets to outperform industry

Ashok Leyland’s Performance

Composition of Sales Q4FY06

Q 4 F Y 0 6 Q 4 F Y 0 5 Y O Y %D o m e s t i c - C i v i l i a n

B u s 3 5 5 8 3 3 5 5 6 . 1 T r u c k 1 5 1 6 4 1 2 1 8 0 2 4 . 5 T o t a l 1 8 7 2 2 1 5 5 3 5 2 0 . 5

D e f e n c e 5 0 0 1 4 6 2 4 2 . 5 E x p o r t s 1 1 8 0 2 6 4 8 ( 5 5 . 4 ) T o t a l V e h i c l e s 2 0 4 0 2 1 8 3 2 9 1 1 . 3 E n g i n e s 2 4 9 7 2 2 4 3 1 1 . 3 S p a r e s i n c l . D e f e n c e ( R s . M n ) 1 7 8 8 1 9 1 1 ( 6 . 4 )

Composition of Sales FY06

F Y 0 6 F Y 0 5 Y O Y %D o m e s t i c - C i v i l i a n

B u s 1 4 1 6 8 1 0 7 3 0 3 2 . 0 T r u c k 4 2 1 0 6 3 7 0 5 2 1 3 . 6 T o t a l 5 6 2 7 4 4 7 7 8 2 1 7 . 8

D e f e n c e 5 0 2 1 4 6 2 4 3 . 8 E x p o r t s 4 8 7 9 6 8 1 2 ( 2 8 . 4 ) T o t a l V e h i c l e s 6 1 6 5 5 5 4 7 4 0 1 2 . 6 E n g i n e s 7 2 6 1 6 2 5 4 1 6 . 1 S p a r e s i n c l . D e f e n c e ( R s . M n ) 7 8 3 8 5 4 6 0 4 3 . 6

M&HCV: AL’s Market Share

%Y e a r P a s s G o o d s T o t a lF Y 0 6T I V 2 8 , 1 2 6 1 7 9 , 3 2 0 2 0 7 , 4 4 6 A L 1 3 , 4 0 8 4 2 , 5 8 5 5 5 , 9 9 3 M S % 4 7 . 7 % 2 3 . 7 % 2 7 . 0 %F Y 0 5T I V 2 5 , 6 3 8 1 7 2 , 8 6 8 1 9 8 , 5 0 6 A L 1 0 , 4 6 9 3 7 , 1 3 7 4 7 , 6 0 6 M S % 4 0 . 8 % 2 1 . 5 % 2 4 . 0 %F Y 0 4T I V 2 4 , 5 9 1 1 3 6 , 8 0 4 1 6 1 , 3 9 5 A L 1 1 , 0 2 5 3 3 , 4 7 1 4 4 , 4 9 6 M S % 4 4 . 8 % 2 4 . 5 % 2 7 . 6 %

• MS gains across all regions• Stronger in high growth segments

Financial Results FY06

• Improved margins despite raw material cost increase

• Dividend increased to 120%

F Y 0 6 % F Y 0 5 % Y O Y F Y 0 4 %N e t S a l e s / I n c o m e f r o m O p e r a t i o n s 5 2 , 4 7 7 1 0 0 . 0 4 1 , 8 1 9 1 0 0 . 0 2 5 . 5 3 3 , 9 2 0 1 0 0 . 0 G r o s s O p e r a t i n g M a r g i n 5 , 4 0 1 1 0 . 3 4 , 2 2 9 1 0 . 1 2 7 . 7 3 , 9 4 6 1 1 . 6 F i n a n c i a l E x p e n s e s 1 6 5 0 . 3 2 8 0 . 1 4 8 9 . 3 2 0 8 0 . 6 G r o s s P r o f i t 5 , 5 6 6 1 0 . 6 4 , 7 3 8 1 1 . 3 1 7 . 5 3 , 9 2 4 1 1 . 6 D e p r e c i a t i o n 1 , 2 6 0 2 . 4 1 , 0 9 2 2 . 6 1 5 . 4 9 6 5 2 . 8 P r o f i t B e f o r e T a x 4 , 5 2 3 8 . 6 3 , 5 5 0 8 . 5 2 7 . 4 2 , 8 6 5 8 . 4 N e t P r o f i t - P A T 3 , 2 7 3 6 . 2 2 , 7 1 4 6 . 5 2 0 . 6 1 , 9 3 6 5 . 7

Operations Highlights in FY06

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

growth of 4.5% • Market share improvement by 300 bp -

Improvement across all regions / segments• Turnover 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.)

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

Performance Highlights – 5 yrs

0.2

6.7

4.0

55.7

19.9

31.0

2.46

FY06

9.612.420.121.2RONW (%)

0.781.011.632.04EPS - Diluted (In Rs.)

2.63.65.75.9WC Turns (Times)

0.3

3.6

50.0

26.2

FY05

1.00.80.5Debt : Equity

1.41.82.7Asset Turnover (Times)

58.055.852.0Dividend Payout (%)

11.613.420.9R O C E (%)

FY02FY03FY04

Significant growth over five years

Other Business Initiatives

• Component / aggregates business including exports to US / European countries – turnover target at US$ 100 million in the next three years

• Engine business expansion - volume increase by 100% in FY 07. Potential for further growth.

Improving shareholder returns with minimum investment

Plans

Plans

• Capacity expansion• Product launches• Performance improvement through

– Focus on non-cyclical portfolios– Efficiency improvements

Capacity Expansion

• Vehicle assembly capacity to be augmented to 100,000 in next 2 years

• Production / sales target FY07 - 75,000 vehicles

• Cabin facility to 40,000 • Indigenisation of “J “ series engines• R&D facilities to reduce time-to-market

Capex spend around Rs.6 billion over FY07 and FY08

New Product Launches

• ICV - 1512 with H Series engine • Semi Forward Control in Tipper and

Haulage segments• Tractor range - 6x2 / 6x4 with 210-350 hp

engine and GTW up to 49T• Tipper 8x4 with 350 hp engine• InterCentury Luxura bus• Branded Buses• Defence sector - HMV and other logistics

vehicles

Non-Cyclical Business

22.025.722.9Total

2.12.32.1Indl. / Marine Engines

8.413.28.3Exports

11.410.112.4Defence / Spare Parts

FY 04FY 05FY 06

Share of revenue (% of turnover)

• Non-cyclical revenue streams growing in absolute quantum as also in share of total revenue.

• FY 05 includes one-time order from Iraq

• From FY 07, component business expected to grow exponentially

• Non-cyclical revenue targeted to grow >30%

Efficiency Improvements• Material cost reduction

– Emphasis on e-sourcing and global sourcing to play a beneficial role

– Continued focus on value engineering initiatives to improve margins in all existing / new products

• Mission Gemba– Shop floor-led team initiative with focus on

creating value through empowerment and improving resource utilisation

Target to achieve 300 bp improvement in operating margins over 2 years

Ashok Leyland Stock Performance

05 0 0

1 0 0 01 5 0 02 0 0 02 5 0 03 0 0 03 5 0 04 0 0 0

Mar -03

May - 03Ju l -0

3

Sep - 0 3Nov - 0 3

Jan - 04Mar -0

4

May -04Ju l -0

4

Sep -04Nov - 0 4

Jan-05Mar -0

5

May - 05Ju l -0

5

Sep - 0 5Nov - 0 5

Jan - 06Mar -0

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Poin

ts

0 . 0 05 . 0 01 0 . 0 01 5 . 0 02 0 . 0 02 5 . 0 03 0 . 0 03 5 . 0 04 0 . 0 04 5 . 0 0

(Rs.

per

Sha

re)

n i f t y

A L L

AL stock outperforms NIFTY movement

Shareholding Pattern

F o r e i g n I n s t i t u t i o n s

1 6 %

C o r p o r a t e s2 %

P u b l i c & O t h e r s

1 2 %

P r o m o t e r s5 1 %

D o m e s t i c I n s t i t u t i o n s

1 9 %• FIIs holdings doubled over 1 year

• FCCN conversion as on date : 84% (Including Promoters)

Thank you