Update on Auto & Auto ancillary Industry Commercial Vehicles

Passenger Car & Utility Vehicles

Two Wheeler Auto Ancillary

Auto Industry

Auto Industry

PC CV

4-wheeler 2-Wheeler

Commercial Vehicles

Positive growth seen in following categories LCV goods (loads less than 3.5 T): + 19% MCV goods (7.5T -12T): +15% Passenger vehicles (across all tonnages): + 20% across categories

Negative trends seen in following categories LCV (3.5-7.5T): (10.4%) MCV (12T – 16.2T): (3.4%) HCV (16.2T – 26.4T ): (10.7%) HCV (>26.4T ): (6.1%)

The negative trend is due to a base effect wherein the growth in sales in previous year was highest in these categories

MHCV monthly sales trend Overload ban had raised

sales volumes by over 20%. Sales decline in FY’08 was visible due to higher base and sudden increase in capacity in the previous year. MHCV goods segment showed a decline of 4.5% for FY08.

Trend in freight rates and diesel prices Freight rates trends does not shown any negative trend

Passenger Cars & Utility vehicles

The passenger car industry witnessed a growth of 12% in FY2008, due to plenty of new model launches.Compact segment recorded growth of 14.2% in FY2008 and Mid size segment grew by 14.73 in FY2008, mainly backed by recently launched models Spark, i-10, Maruti SX4 and Mahindra Renault Logan.Capex over next 2 -3 years is expected at Rs.200 – 230 bnUtility vehicle register strong growth of 11% in FY 2008. Passenger car monthly sales trend

Demand for 2W is slowing down. Domestic 2W sales fell by 4.9% for FY2008. The drop in two wheeler segment can be attributed to slow down in Finance disbursements, economic slowdown, high interest rate scenario, subdued demand from saturated urban markets. Entry of new players and new model launches in the heavy ungeared scooter segments can potentially cannibalize motor cycle demand, thereby affecting urban demand. Export demand to rise from developing nations like Bangladesh, Columbia, Sri Lanka, Philippines. Competition to intensify and margins to remain under pressure.

Two Wheeler segment

Two wheeler Sales by SegmentSegment Apr-Mar 08 Apr-Mar 07 Growth (%)M otorcycles 6,545,022 7,099,551 -7.8Scooters 1,075,051 976,358 10.1M opeds 431,983 393,436 9.8Total 8,052,056 8,469,345 -4.9Source: SIAM

Two wheeler monthly sales trend

8

Budget Impact• Excise duty on small cars, Buses and their chassis, 2/3 wheelers reduced from 16% to 12%

• Reduction in CST from 3% to 2%• Small cars & 2/3 wheelers to be cheaper• Bus manufacturers to benefit• Positive for Tata Motors, Ashok Leyland, Maruti Suzuki, Bajaj • Ancillaries to benefit from reduction in CST & sales in replacement market•Customs duty on steel melting scrap and aluminium scrap reduced to Nil

• Will benefit foundries etc who use steel scrap (positive for Ennore Foundries, Bharat Forge, Amtek Auto)• No change in Peak Customs duty• Reduction in customs duty for key raw materials for tyre• Marginal positive impact on tyre manufacturers

Auto Ancillary

Production in auto component industry estimated at Rs.624 bn in 2007-08 (Rs.891 bn in terms of turnover), a growth of 12% over Rs. 560 bn in 2006-07.OEM offtake in production value terms is estimated at Rs.393 bn (comprising 70% of total production)in 2006-07 and is estimated to grow by 7% in 2007-08, due to slow pace of growth in Passenger cars & UV and Commercial vehicle segment.Margins to remain under pressure as the anticipated slowdown in automobile demand would pressurize component players to absorb any further increase in input costs. Demand for auto ancillary industry

Working Capital

Fund BASEd Nonfund Based

CC OD WCDL Export Credit

LC BG Buyers Credit

SWOT OF PRODUCT PORTFOLIO

STRENGTHS 1. A very good Penetration in the Market

and presence in terms of back up branch support 2. Export products are smooth selling hot cakes 3. Non-Fund prodcuts are competitively priced.

4. Only Bank to offer ECBs aggresively , Japanese and Korean line available , ideal for North market where there would be some connection

WEAKNESS

1. INR term loan and CC COF very

high so priced out of market.

2. Lower penetration in Tier-2 Vendors, that is where next pahse of growth will come

OPPORTUNITIES

1. Aggresively push Non-fund products like LC , Buyers

credit in conjunction with Export fund based products to reduce the overall coat of the client 2. BG model can be replicate for other manufacturers 3. Untapped markets up North

THREATS

1. Competition from PSUs as well as MNC banks

interms of pricing .

2. PSUs also becoming nimble in disbursement so that can take the sheen away from our USP.

3. Players like Barclays will keep on getting more aggressive to ghet the market share.

Outlook

Commercial VehicleDue to excise duty reduction on buses, bus chassis and trucks in Union Budget 2008-09, the passenger vehicle sub segment would receive a boost. Thrust in agriculture would benefit both goods and passenger vehicles.

Two WheelersDue to retention of high interest rates, short term improvement in 2W is tough.

Passenger Cars & Utility vehiclesDomestic car volumes to grow 1.5 times GDP growth ,since average domestic volumes growth for last 5 years has been around 1.5 times GDP.

Thank You

ANNEXURES

Annexure: Commercial VehicleLCV Goods vehicle

April - Mar 2008 April - Mar 2007 GrowthLCV (< 3.5 T) 180,332 151,419 19.1 LCV ( 3.5-7.5 T) 38,400 42,880 (10.4)Total 218,732 194,299 12.6

MCV & HCV Goods vehicleApril - Mar 2008 April - Mar 2007 Growth

MCV (7.5-12 T) 43,277 37,611 15.1 MCV (12-16.2 T) 67,715 70,113 (3.4)HCV (16.2-26.4 T) 109,812 123,013 (10.7)HCV ( >26.4T) 23,651 25,175 (6.1)Total 244,455 255,912 (4.5)

LCV & MHCV Passenger vehicleApril - Mar 2008 April - Mar 2007 Growth

Total (all tonnages) 82,720 66,978 23.5

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Annexure:MHCV goods vehicle

MCV (7.5-12 T) MCV (12-16.2 T) HCV (16.2-26.4 T) HCV ( >26.4T)0

20000

40000

60000

80000

100000

120000

140000April - Mar 2008

April - Mar 2007

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Annexure: Trend in freight rates and diesel prices

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Annexure: Demand for Auto Ancillary Demand for Auto Ancillary Industry

OEM Exports TotalSize (Rs billion)2004-05 285.0 69.0 43.0 397.02005-06 319.0 74.0 62.0 455.02006-07 E 393.0 81.0 86.0 560.02007-08 P 425.0 83.0 116.0 624.0Growth (%)2005-06 11.93 7.25 44.19 14.612006-07 E 23.2 9.46 38.71 23.082007-08 P 8.14 2.47 34.88 11.43All figures expressed in terms of production value

Replacement market

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