EQUITY ANALYSTS MEET

Performance in FY05 and

Priorities & Plans for FY06May 11, 2005

11th May 2005

Presentation outline

y AL’s Performance in FY05y CV Industry Outlooky Priorities and Plans for FY06y De-risking Strategiesy Other Events

Ashok Leyland

Performance in FY05

Volumes FY 05

FY05 FY04 YOY %Domestic - Civilian

Passenger 10730 11354 (5.5)Goods 37052 33483 10.7Total 47782 44837 6.6

Defence 146 35 317.1Exports 6812 3782 80.1Total Vehicles 54740 48654 12.5Engines 6254 5085 23.0Spares incl. Defence (Rs.Mil.) 5451 4364 24.9Production

Vehicles 54519 49150 10.9Engines 6396 4851 31.8

• Exports almost doubled

• Passenger volume drop due to prioritisation of supplies

Nos.

Volumes Q4 FY05

Q4FY05 Q4FY04 YOY %Domestic - Civilian

Passenger 3308 3461 (4.4)Goods 12227 10848 12.7Total 15535 14309 8.6

Defence 146 0 100.0Exports 2648 1507 75.7Total Vehicles 18329 15816 15.9Engines 2243 1405 59.6Spares incl. Defence (Rs.Mil.) 1919 1470 30.5Production

Vehicles 16652 14383 15.8Engines 2083 1246 67.2

Nos.

• Sale of CBUs to Defence commenced. Iraq export order completed in Q4

• Achieved targeted production & sales in Q4

M& HCV: AL’s Market Share

27.624.0Total

24.521.5Goods

44.840.9Passenger

FY04FY05%

Market share

y Improved market share from 23.2% to 25.7% in Q4y Loss of production of around 5000 vehicles due to

IR issue affected market sharey Significant presence in MAV and Tipper - Both

segments registering high growthy Improved market share in Eastern Region through

Gulf Ashley Motor

After-market Support

y Extended hours / II shift operations at 50% of dealershipsy No. of drivers trained at Namakkal Driver Training Centre

crossed the 100,000 mark-Pan India demand for trained drivers

y Help-lines covering entire markets put in place

1 746299Work bays

13321Dealership outlets13927Service Centres

Currentlevel

Additions in FY05

Capacity Utilization

– Maximised production out of capacity on ground– Productivity gain realised through wage settlements

50,00055,000

67,000 67,000

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Annual Capacity Actual Prodn (annualised)

Capacity

y Capacity ramp up through least cost routey Capacity per annum

– “H” Series Engines 65,000– AL Engines 20,000– ZF Gear Box 70,000– Vehicle Assembly 67,000

y Capex spend during 04-05 Rs 1.8 Bn.

y Assets employed as at Mar’05 contained at Rs.14 Bn (against Rs.13.7 Bn. as at Mar’04.)

Financial Results FY05FY05 % FY04 % YOY

Net Sales / Income from Operations 41824 100.0 33920 100.0 23.3Gross Operating Margin 4229 10.1 3946 11.6 7.2Financial Expenses 28 0.1 208 0.6 (86.5)Gross Profit 4738 11.3 3924 11.6 20.7Depreciation 1092 2.6 965 2.8 13.2Profit Before Tax 3550 8.5 2865 8.4 23.9Net Profit 2714 6.5 1936 5.7 40.2Basic Earnings Per Share (Rs.) 2.28 1.63 39.9

Dividend Per Share (Rs.) 1.00 0.75 33.3

Rs.Million

z Margin pressure due to cost escalation mitigated thru’ pricing, value engineering and e-Sourcing

z Control on Assets and funding strategies helped interest cost reductions

Quarter wise Performance FY05

Q1 % Q2 % Q3 % Q4 %

Net Sales / Income from Operations 8,212 100.0 9,148 100.0 9,871 100.0 14,593 100.0

Gross Operating Margin 750 9.1 748 8.2 1,020 10.3 1,711 11.7

Profit Before Tax 486 5.9 595 6.5 784 7.9 1,685 11.5

Rs. Mil.

Margin improvement in line with activity increase

Performance Highlights – 5 years

2.83.45.09.49.8WC / TO8.28.612.419.124.1RONW

2.280.7

14

5.725.0

FY05

0.770.781.011.63EPS (In Rs.)0.80.90.80.4Debt : Equity

41332621Debtors (Days)

3.83.33.75.2Inventory Turns (Times)

10.311.613.420.2R O C E (%)

FY01FY02FY03FY04

Consistency in performance improvement

CV Industry outlook

7.58.0Service Sector3.11.1Agriculture8.57.3Industrial Prod6.66.3GDP

FY06(Proj.)

FY05(Estimate)

Economy Drivers

Robust freight availability anticipated

CV Industry outlook.

y Road projects - Golden Quadrilateral 80% complete, NS-EW 9.5% complete. Tempo expected to be continued

y Pan India introduction of VAT to boost trade across state borders

y Pvt. Passenger segment to boost bus demandy Consolidation towards Higher Capacity/Powered

Vehicles to continue

CV Industry

y Product upgradation necessitated through – Emission standard– CMVR

y BS III emission norms introduced in 11 cities from April’05

y BS II emission norms introduced for all vehicles, except in 7 States, from Apr.’05

CV Industry contd..

y Continuance of BS I norms caused operational difficulties in supply chain (temporary Issue)

y Crude oil price poses uncertaintyy Overall growth estimate for Trucks and Buses in

FY06 – 10%

AL’s Priorities & Plans

y Supply Capabilitiesy Product rangesy De-risking strategies

AL’s Supply Capabilities

Capacity Build-upy Capacity Buildup: Vehicle Assembly 67000 to 77000

by July 05y Planned to augment engine/gear box capacity to

100000 in next 2 yearsy Capex for FY 06: Rs.4 Bn. (including Rs.1 Bn.

carryover from FY 05)

Product Development

y Significant expansion of the R&D centre; New design office for 400 engineers to be ready by Jan’06

y Common rail version of ‘H’ series engines under development, slated for launch in 2006-2008

y Modern front axle- Progressive introduction on all models within 2006

y Newgen cab under development, slated for launch early 2006

New Product launches

y Newgen 4026 J tractor slated for launch Jan’06y 12M rear engine Bus - ‘J’ series (260 hp) y 44T / 49T GTW tractorsy Ecomet range expansion y Engine range expansion in the lower end (from

20 hp) and in the higher end (upto 500 hp) for genset, industrial and marine applications

Fully Built solutions

y Group companies well established in offering :

– Fully Built Buses -Irizar TVS

– Fully Built Tippers & TractorTrailers - ACCL / PLHT

– 50 % of AL supply catered by above companies

De-risking Strategy

y Technologyy Manufacturingy Cyclicalityy Markety Financial

Technology De-Risking

y Tie-up with IVECO – Strong storehouse of

technology: AL has option to choose technology

depending on need

y Freedom for AL to pursue other technology options

Manufacturing Capabilities

y Secured capacity commitments from key suppliersy Global sourcing of critical componentsy Enhanced capacity for in-house manufacturing of

critical components through outsourcing of non value added operations

Cyclicality

Capacity Utilizationy Capacity Build in FY 06 <15%y Under utilization of capacity unlikelyy Targeting to produce and sell 70 000 vehiclesy Exports, Defence and E-Comet volumes targeted at

10,000 nos. (YOY increase 25%)y Increased presence in Northern and Eastern regionsy Volumes in Domestic market - increase targeted : 25%y Impact of10% drop (sensitivity) in domestic market: 6 000

vehicles

Cyclicality contd..

28.422.926.9Total

3.22.12.3Indl./Marine Engines

7.68.912.5Exports

17.611.912.1Defence / Spare Parts

FY03FY04FY05As % of Turnover

Diversifying Revenue StreamsShare of revenue from non-cyclical business

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

Market De-risking

y Balanced product / market segments y Geographical distribution – Focus on North / Easty Growth in overseas markety Defence markets –Significant opportunity

Financial De-risking

y Working Capital Cycle Reduction (improved inventory turns and receivables contained despite activity increase)

y FCCN US $100 Mn funds at 0.5% p.a available for funding capex

y Average cost of Rupee debt < 5% p.a.y Unlocking value in investments – Balance holdings in IBLy Liquid funds available as on March 05 Rs.6 Bn.y No fresh Loans planned in FY 06

Financial De-risking contd..

Cost Management initiatives

y e-Sourcing – Balance 70% of purchase basket to be covered in FY06; Targeting to reduce material cost by 3%

y Value Engineering – Continued focus on value engineering initiatives to protect margins in all existing / new products

y Mission Gemba – Shop floor led team initiative with focus on creating value through empowerment

Other events

y Ductron Castings Unit sold to group company – Ennore Foundries Ltd for a consideration of Rs.620 Mn. Book profits Rs.300 Mn. (Approx.)in FY06

y Sale of IndusInd Bank shares to comply RBI guidelines –3 % sold in FY05, balance 3 % expected to be sold in FY06

y AL participating in Rights Issue of EFL. Attractive pricing for AL to maintain its 21% holding. Investment outlay on this Rs.120 Mn.

y New initiatives on Trading in used vehicles & fleet management services

AL : Shareholding Pattern

Indian Public14.3%

Mutuals funds & UTI7.6%

Banks, FIs14.7%

Private Corporate Bodies3.3%

LRLIH50.93%

FIIs7.2%

NRIs0.4%

GDR1.6%

Thank you