VI Foundry Conclave 1-2 March 2013 Customer Expectations Ashok Rao Automotive 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: Automotive Axles Limited BSE / NSE Ticker Symbol: AUTOAXLES

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

4 Major Customers - Domestic

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

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

7 India Economic Overview Source: RBI / MOSPI / SIAM GDP Robust growth for years till 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 after global recession 2013 will see minor improvement over 2012 Inflation Traditionally have been at 7-8 percent levels High inflation recorded in 2011 & 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

8 Commercial Vehicle Sales MHCV Sales Trend LCV Domestic Sales Trend (‘000) Competition Proliferation Vehicle Model Proliferation LCV Sales expected to cross 1 Mn mark by 2017 MHCV Total Sales expected to cross 500K by MHCV 58~ LCV 79~16-17 Approximately new vehicle models are released every year in MHCV segment Approximately 8-10 new models are released every year in LCV segment

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 Consistency Metallurgy / Dimension Reduced Fettling Consistency Fettling Improved Finish / Consistency Eliminate Sec. Oprns - Spot facing Surface Finish Salt Spray : 500 Hrs Surface Protection Raw Casting ppm Domestic : vs Global : < 5000

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

12 Axle Performance Product Abuse – No Change Domestic CV Performance expectation ~ Global Standards Good Engineering & Manufacturing to closer tolerances Key to success MetricEarlierCurrent Expectation Global Warranty1 yr or 100,000 Kms 3 yrs or 300,000 Kms 500,000 Kms Reliability B10 Life 100,000 Kms400,000 Kms1 Million Kms Oil Change Interval 40,000 Kms200,000 Kms250,000 Kms

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 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 ? Casting Imported from FranceEquivalent Domestic Casting

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 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 Other Expectations

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 !