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Corporate Presentation

June 2014
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Hinduja Group an Overview

Promoted by the Hinduja Family


Operations in over 35 countries
Products and services available in
more than 100 countries
Employs over 72,000 personnel
Multi-billion dollar turnover Group

My dharma (duty) is to work so that I can give

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Group Business Verticals

Chemical/ Banking & Information


Automotive Power
Lubes Finance Technology

Project
Media Real Estate Healthcare Trading
Development

4
Ashok Leyland: An Introduction

Vision:
Be in the global Top 10 in Medium & Heavy Commercial Vehicle Trucks (>7.5t GVW) and
global Top 5 in Medium & Heavy Commercial Vehicle Buses (8 m and above) in volume terms

Over 65 years of operations with unbroken track-record of profitability


Rich history and track
History of innovation in products - Multi-axle trucks, Articulated buses
record
History of innovation in technology - Air brakes, CNG vehicles, Plug-in hybrids

2nd largest medium and heavy commercial vehicle (Truck and Bus) player in India
Established presence
Among the largest bus-makers in the World

Exports to 34 countries
Global footprint
Targeted expansion strategy in 5 geographic clusters

Diversified, de-risked Presence in heavy trucks, heavy buses, light commercial vehicles, defence logistics,
portfolio power solutions, spare parts , and construction equipment

5
Profitable over Cycles
Sales volume
(000 nos)

83 83 94 102 114 89
49 55 62 54 64

Sale revenue (gross)


(in Rs.mn)

121,530 137,208 132,985 105,608


83,047 89,471 78,726
48,108 60,531 66,666
39,273

Profit after tax (PAT)


(in Rs.mn)
6,313 5,660
4,413 4,693 4,237 4,337
2,714 3,273 294
1,936 1,900

FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY13 FY14

Note: Figures mentioned above are standalone. Sales volume includes MHCV, LCV and defence vehicle volumes. Revenues
include aftermarket business as well
6 Source: SIAM, Company Audited Financials
and Retaining Market share in India
Despite Entry of New Rivals
Heavy Commercial Vehicles (HCV): GVW >12T and not exceeding 49T
300 31.2 32.0 30.8 35
28.7 28.3
250 30
TIV (000)

25

MS (%)
200 HCV MS
20
150 HCV TIV
251 263 15
100 189 190 10
139
50 5
0 0
FY10 FY11 FY12 FY13 FY14
Medium Commercial Vehicles (MCV): GVW >7.5T and not exceeding 12T
14.8
90 82 12.7 15
80 69
70
TIV (000)

60 53 10 MCV MS

MS (%)
8
50 6.4 MCV TIV
40 4.9 75
30 59 5
20
10
0 0
FY10 FY11 FY12 FY13 FY14
7 Source: SIAM
Ashok Leyland is in its Fourth phase of
Evolution

First phase Second phase Third phase Fourth phase (2014


(1967 1986) (1987 2005) (2006 2013) onwards)
Ownership and Hinduja Group and Iveco acquired Iveco exit Future-ready
technology Ashok Leyland Diversification Platforms
support by British Technology inputs from Iveco New Engine range
Leyland Capacity expansion
Investment in New Cab range
capabilities, World-class processes
technology

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When Market Conditions Created a Perfect
storm

2 years of continual reduction in ..exacerbated by competition


M & HCV industry volume and debt costs
000 nos
New entrants and
incumbents driving prices
-23% down

-25% Under-utilization of
investments
349
269 201 Rising costs of debt

FY12 FY13 FY14

Source: SIAM

9
AL used this as an Opportunity to Restructure
and Grow

Restructuring Growth
Fixed costs New products
Manpower Network
Working Capital Processes
Debt Capabilities
Non-core assets Delivered Quality
Defects Exports and services

10
Restructuring Outcomes
Rs. mn NOT TO SCALE

Admin Overheads Cost Manpower Cost


5,371 10,755

-14% -7%
9,997
4,610

FY13 FY14 FY13 FY14

Debt Operating Working Capital (1)


61,632
7,860
46,898 -24%
-69%
2,440
20 8

Aug'13 Mar'14 FY13 FY14

Note: (1)Operating working capital defined as Inventory + Debtors Creditors for Materials
Days of sales
11 Source: Audited financials
Restructuring: Result-oriented and
Business-focused Organization Structure
Managing Director

Global Global Power


LCV Defence Aftermarket
Trucks Buses Solutions
Business
International Sales Planning

Operations Information
Technology
Product
Development Legal &
Secretarial
Finance

Project
Human Resources Planning

Central Quality
Each business is measured on volume and market
12 share goals
Growth: Developed Contemporary Truck
Platforms from 2.5T to 49T GVW

Dost Partner Boss Captain


Launched Sep 11 Launched Jan 14 Launched Sep 13 First product launched
Jan 14 (25T tipper)
2.5T GVW 6-7.2T GVW 10-12T GVW
Platform suitable for
Featuring all-new P15 Contemporary platform Contemporary cab with
tippers, multi-axle trucks
engine (1.5L, Common rail), developed with Nissan European features
and tractor trailers (up to
58 hp, 157 Nm torque inputs Automated Manual 49T GVW)
Modern cabin with power Featuring 3L ZD30 diesel Transmission option
Contemporary, modular
steering, AC options engine with power output industry first
cab compliant with latest
LCV Cargo Carrier of the of 117 hp, 420 nm torque CV of the year 2013 EU crash requirements
year 2012- Apollo CV Ergonomic cabin with tilt Commercial Vehicle
State-of-the-art features
Awards steering, AC option, cable Magazine
hub reduction axle, V-
Additional variants under shift and other features Additional variants under Rod suspension, HVAC, 4
development (Rigid Additional variants under development (Left Hand point cab suspension, air
suspension, CNG) development (Left Hand Drive, higher power nodes) suspended seats
Drive, 4 tyre variants)
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Growth: Bus platforms from 16 to 80
seats in Capacity

Mitr Metrocity Jan Bus


Launched Jan 14 Launched in Euro Bus Innovative low floor
16-25 seats Expo 2012 (Entry+1 step) front engine
Urban transit midibus bus
Derived from Partner
platform developed by Optare Diesel and CNG, AC and
Non AC versions
Automated Manual
Transmission option
First set of orders received
for 1,444 buses
4 patents applied
Metrodecker Versa EV
Launched May 14 Electric vehicle developed
Monocoque double-decker on Optare Versa platform
developed by Optare SMMT 2012 Award for
automotive innovation
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Growth: Critical Aggregates
Engineered to Support Future Growth

P15 H Series Neptune


1.5L 3 cyl engine 3.8L 4 cyl and 6L 6 cyl 5.3L 4 Cyl and 8L 6 Cyl
engines engines
58 hp, 157.5 Nm
Torque 120-230 hp range, 160-360 hp, 600 -1475
500-850 Nm torque nm, flat torque curves
Common Rail direct
injection Mechanical and 3rd generation common
Common Rail options rail, 4 valves/ cylinder
Available in Euro 3,
Euro 4, CNG variants Upgraded to Euro 3, Available in Euro 3, Euro
Euro 4 and CNG 4, upgradable to Euro 5, 6
Applied in Dost light
Variants
commercial vehicles Launched in Vehicles and
Widely used across Power Solutions
Variants offering
most current and
higher power and
upcoming vehicle
torque under
platforms and power
development
solutions
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Growth: Distribution Network nearly
Doubled in past 3 years
639

152 +28% Focus on less-


500 penetrated
49
markets: North,
417
27
64 West, and East
4 9 India
358
171 159 Increased Parts
178
155
distribution stores
Innovation in
distribution
253 264 Containerized
203 226 workshops
Low cost outlets

FY11 FY12 FY13 FY14

Retail parts stores Containerized workshops Authorized Dealer outlets


service centres
16
Contemporary, Branded Sales & Service
Outlets in Innovative and Efficient Formats

Rebranded outlets
Showrooms and service centres in innovative formats
Display pavilions
Containerized workshops

17
Growth: New Processes Implemented
across the Value Chain
Design and Sales and
Manufacturing
Development Marketing

PRISM
Sales and Marketing Excellence

New product development Portfolio of shop-floor Breakthrough process


process , benchmarked initiatives for focusing on improving
against global best- continuous workplace process efficiency in front
practices through external improvement end marketing, sales.
consultants Initiatives across service and spares delivery
Stage-gate process , productivity, safety,
enabling development first cost, quality and other Developed with inputs
time right metrics from leading consultants

SAP driven business transformation driving business process efficiency


Implementation completed across all functions, verticals

18
Growth: Substantial Investments in
Capabilities

850 strong R&D Team


Advanced testing facilities
High speed, torture and ride-
and handling testing
NABL certified 6 post chassis
dynamometer
State-of-the-art modeling
and CAE facilities
Advanced simulation
capabilities
Frontal Impact
Multidynamic modelling
Frame and body simulation
Noise, Vibration and
Harshness

19
Growth: as well as in Manufacturing
All new integrated plant at Pantnagar, with capacity of 50,000 units in 2 shifts

Press Shop Camshaft line CWP Line

Boss- Welding robots NGC Inspection Axle machining

Assembly Panorama

20
Growth: Enhancement in Delivered Quality

Vehicle delivered factory-fresh with zero km on odometer

21
Efforts Evident in Improved Q4FY14
Financial Results
Revenue Cost of Goods Sold
Rs. mn Rs. mn Despite revenue
decline, EBITDA
17.5% 18.0%
37,285 28,245 margin expanded
30,768 23,164
due to
Favorable
revenue mix
Manpower
Q4FY13 Q4FY14 Q4FY13 Q4FY14
rationalization
Employee & Other Operating Expenses EBITDA*/ EBITDA Margin Overhead cost
Rs. mn Rs. mn reduction
6.0%
5.3%
4,235
3,292 1,983
2,821 2,473 1,839

Q4FY13 Q4FY14
Employee Benefit Cost Other Expenses Q4FY13 Q4FY14

Source: Audited financials


22 * EBITDA & EBITDA Margin Excludes other income
We are Ready to Capture the Next
Wave of Growth

1. Full range of contemporary products (2.5T-49T


GVW, 16-80 seats) and Globally benchmarked
business processes
2. World-class manufacturing facilities with
capacity to volume upside (150500 vehicles p.a.)
3. Footprint in five targeted international clusters
4. Portfolio of businesses with less cyclicality
Light Commercial Vehicles
Defence Logistics
Aftermarket
Power Solutions

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Contemporary Products and
1 Globally benchmarked Processes
Full portfolio of contemporary products
Trucks from 2.5T GVW to 49T GVW
Buses from 16 to 80 seats
Engines from 58 hp to 360 hp, 150 Nm to 1475 Nm
Future-ready CRS, AMT, Euro VI compatible, LH/RH
Compatible
Contemporary, feature-rich cabs for complete range
In-house ownership of design, manufacturing
capability for all critical aggregates Cabs, Engines

Globally benchmarked processes


New processes across design, manufacturing, sales

PRISM
and service
Developed with inputs from external consultants
Tuned over multiple cycles
Sales and Marketing Excellence
Rolled out covering 100% of organization

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2 World-class Manufacturing Facilities with
Capacity to Capture Demand Upside
Seven facilities with capacity of 150500
Ashok Leyland, India
per annum
Fully integrated plant at Pantnagar
Fully built bus facility at Alwar
Revamped machining and assembly
facility at Ennore
Hosur facilities revamped for LCV
AL UAE LLC, Ras Al Khaimah, UAE manufacture

Established as a JV with Ras Al


Khaimah Investment Authority
UK: Optare bus
manufacturing
Well-equipped vehicle manufacturing
facility
facility
Capacity 2000 per year, expandable
UAE: Bus
with limited investments
manufacturing in
partnership with Optare PLC, Leeds, UK
RAKIA Modern assembly line bus body facility
India: Six Replaces dated facilities used previously
manufacturing by Optare
facilities with total Capable of assembling diesel, hybrid
capacity of 150500
and electric buses
25 vehicles p.a.
Growing Footprint in Five Targeted
3 International Clusters
Bus body building
partners in the
Ukraine

Middle-East Avia Russia office in


Commonwealth of place, sales
Bus assembly facility Independent States commenced
at Ras-Al-Khaimah
Channel partners in
multiple GCC nations
Selling substantial
number of buses

South America
Importer company
established in Chile Company in Nigeria,
branch in Kenya
Sales commenced in
Peru Local assembler in 26 ASEAN
Nigeria, Channel
Added since 2009 Limited direct sales
partners in Kenya
Present for over 5 years Partners selection
Regular sales underway-
Not present Africa trucks and buses
underway
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4 Portfolio of Businesses with Less Cyclicality

LCV(1) Defence Logistics

Aftermarket
Dost

LCV and
Defence and
Partner Construction
Aftermarket
Equipment
business
Business

MiTR
Power Solutions
Business

Note:
1.LCV business is a JV with Nissan Motor Co.
27
LCV Business, in particular, Poised
4 to Exploit Expected Growth
000s
LCV total industry volume grew at 22% CAGR Products and capabilities to meet
from 2010 to 2013 upside

22%

461 525
362 432
286

FY10 FY11 FY12 FY13 FY14


Ashok Leylands LCVs have been well accepted
in a short time
Network of over 300 touch
points established in the past 3
years
35
27
Manufacturing capacity in place
8
0 0 at Hosur
FY10 FY11 FY12 FY13 FY14

28 Source: SIAM
Platforms and Capabilities for
4 Growth in Defence Business
Products Capabilities

Stallion 4X4 Super Stallion 6X6

Stallion 6X6 Super Stallion 8X8 Prototype facility, Sengadu


Prototypes under development

Garuda 4X4 Super Stallion 6X6 10X10 Plant, Hosur


29 - New Cab
Near-term Goals
1. Capture volume upsides from expected market recovery through
new product platforms
ready capacity and capabilities
2. Drive growth in non-cyclical and counter-cyclical businesses
Light Commercial Vehicles
Power Solutions
Defence
Spares
3. Increase sales in Middle East and Africa
4. Pursue debt reduction and operating leverage improvement
5. Pursue exits from non-core businesses

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Medium-term Strategy
1. Move from being a predominantly India-centric player to a
regional player- grow across all 5 targeted clusters
2. Deliver differentiation and increased value relative to
competition through new, contemporary platforms- Boss,
Captain, Neptune, Dost, Partner and Mitr
3. Continue driving operational excellence
4. Further de-risk against cyclicality
Defence logistics, parts
Adjacent services e.g. AMCs
5. Leverage other global products, such as those from Optare

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Summary Take-aways

Core business transformed


Globally competitive, contemporary products in place
Own critical aggregates and technologies
Targeted capacity expansion completed
Well poised to capture expected recovery in volume
growth in the near term
Clear plan for de-risked growth in the medium term
Continued thrust on debt reduction, exit from non-core
businesses

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APPENDIX

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Summary FY14 Financials
Income Statement (Rs. mn) Standalone Standalone Consolidated
FY13 FY14 FY14
Revenue 124,812 99,434 114,867
COGS 91,231 76,026 81,385
Gross Profit 33,581 23,408 33,482
Gross Margin % 26.9% 23.5% 29.1%
Employee Benefit Expense 10,755 9,997 13,456
Other Expenses 14,061 11,746 15,806
EBITDA 8,765 1,666 4,220
EBITDA Margin % 7.0% 1.7% 3.7%
D&A 3,808 3,770 5,300
EBIT 4,957 (2,105) (1,079)
Interest 3,769 4,529 8,055
Other Income 624 665 924
Exceptional Items 2,896 5,057 5,208
PBT 4,707 (912) (3,002)
Tax Expense 370 (1,206) (685)
PAT 4,337 294 (2,317)
PAT Margin % 3.5% 0.3% (2.0%)

Select Balance Sheet Items (Rs mn)


Long Term Debt 27,378 32,965 54,912
Short Term Debt (including Current Maturities of Long Term Debt) 16,176 13,938 30,088
Total Debt 43,554 46,903 85,000
Shareholder's Equity 44,551 44,479 39,892
Minority Interest - - 6,521
Total Shareholders' Equity & Liabilities 130,967 128,080 175,343

Cash and Cash Equivalents and Short Term Investments 78 3,895 5,713
Fixed Assets 59,708 58,414 70,875
Non-current Investments 23,376 24,053 6,902
Total Assets 130,967 128,080 175,343

Key Ratios
Total Debt / Equity(1) 1.38x 1.43x 3.02x
Net Debt / Equity(1) (2) 1.37x 1.31x 2.81x
Note: (1) Equity net of Revaluation Reserves.
34 (2) Net Debt = Total Debt less Cash and Cash Equivalents and Short Term Investments
Thank You

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