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VI Foundry Conclave 1-2 March 2013 Customer Expectations Ashok Rao Automotive Axles Ltd Mysore

VI Foundry Conclave 1-2 March 2013 Customer Expectations Ashok Rao Automotive Axles Ltd Mysore. Established: April 21, 1981 Equity Share: Meritor 35% Kalyani 35% Public: 29% Land Size: 202,343.5 Sqm Current Location: Mysore, India Total Employees: 2000+.

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VI Foundry Conclave 1-2 March 2013 Customer Expectations Ashok Rao Automotive Axles Ltd Mysore

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  1. VI Foundry Conclave1-2 March 2013Customer ExpectationsAshok RaoAutomotive Axles Ltd Mysore

  2. Established: April 21, 1981 • Equity Share: Meritor 35% Kalyani 35% Public: 29% • Land Size: 202,343.5 Sqm • Current Location: Mysore, India • Total Employees: 2000+ Automotive Axles Limited BSE / NSE Ticker Symbol: AUTOAXLES

  3. Footprint N • PANTNAGAR & BHUJ • Final Axle assembly plant for AL & AMW • Brake component manufacturing and assy • NOIDA • Trailer & Tag Axle manufacturing • PITHAMPUR • Axle manufacturing unit • Brake component manufacturing & assy • JAMSHEDPUR & LUCKNOW • Brake component mfg and assembly • PUNE • Warehouse for aftermarket • BANGALORE & CHENNAI • Technical center Current • MYSORE • Export component manuf • Axle manufacturing • Drum & Disc Brake Assembly Future

  4. Major Customers - Domestic

  5. India Product Portfolio – Current MHCV Drive Axles Brakes Off-Highway & Military Non-Drive Axles Front Axle Axle for Truck mounted cranes Single Reduction Solo & Tandem Axles Drum brake for M&HCV application Tag Axle Twin-Speed Reduction 6x6 & 8x8 Military Axles Disc Brake for Truck & Coach application Trailer Axle Hub-Reduction Exports

  6. India Product Portfolio – Future Additions LCV Axles Off-Highway Military Suspensions MS02 for sub 2T vehicles Bogie Suspension Front Drive Steer Axle Motor Grader Axle MS04 for 6T vehicles Slipper Suspension Compactor Axle High Mobility Independent Suspension (HMIS) MS06 for 8-10T vehicles Loader Axle Lift Device for Tag / Trailer Axle Exports

  7. India Economic Overview • GDP • Robust growth for 10-12 years till 2008 • 2012 affected by global headwinds, de-growth in exports • 2013 appears to be bottoming-out • Industrial Production • Robust growth till 2008 post economic liberalization in ‘91 • Recovery phase between 2010-12 after global recession • 2013 will see minor improvement over 2012 • Inflation • Traditionally have been at 7-8 percent levels • High inflation recorded in 2011 & 12 • 2013 levels to stablize at 7 – 7.5 per cent levels • M&HCV Industry • Growth levels closely mirrors IIP growth • Weak demand in 2013 – negative sentiments in market • Should grow at 7-8 per cent levels from 2014 onwards Source: RBI / MOSPI / SIAM

  8. Commercial Vehicle Sales LCV Domestic Sales Trend (‘000) MHCV Sales Trend LCV Sales expected to cross 1 Mn mark by 2017 MHCV Total Sales expected to cross 500K by 2017 Vehicle Model Proliferation Competition Proliferation Approximately 25-30 new vehicle models are released every year in MHCV segment Approximately 8-10 new models are released every year in LCV segment 2011 2017 2006

  9. CV Market Key Changes … • Volume comes with Variety • Uncertainty is certain – Forecast passé? • Competition at Customer & within Suppliers will drive • Quality • Product Performance • Time to Market • Price • Product Liability

  10. Part Quality Raw Casting ppm Domestic : 20000 vsGlobal : < 5000

  11. Part Delivered Quality Typical Delivery Condition Better Delivery Condition One Quality : Export = Domestic

  12. Axle Performance • Product Abuse – No Change • Domestic CV Performance expectation ~ Global Standards • Good Engineering & Manufacturing to closer tolerances Key to success

  13. Time to Market • Concept to Customer continuously shrinking from couple of years to ~1 to 1.5 years • End to End Design / Validation (Product & Process) on Digital Platforms • Early involvement of Supply Chain thru these Platforms – requiring good Engineering capability – Product / Process for upfront participation • Program Management within the Foundry Organization to ensure on-time – FTR delivery of new programs • Follow & strictly adhere APQP

  14. Recent Experiences of Complex Castings Casting Imported from France Equivalent Domestic Casting • Landed Casting cost of Imported << Domestic • Quality Level of Imported >> Domestic • Imported Casting Wt ~ Design Wt • Local Casting Wt ~ 1.2x of Design Wt. • Why ? • Future Domestic products will use complex Castings • Are we Ready ?

  15. Pricing • Converted from Castings to Forgings because of poor Delivery & Quality • Apart from per pc savings addn savings from avoidance of COPQ Challenge : Make Castings always a compelling, competitive & preferred Option

  16. Other Expectations • Focus on Fundamentals … • Invest in Advanced Technologies …. • Support Innovations …. • Support Skill Upgradation / Continuous Trg … • Transform Foundries into a preferred destination for work at all levels

  17. To Conclude Use Lean period to prepare to be in better shape for future We need each other to be successful. Together we can do it ! All the Best !

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