1. Partnering for Emerging Markets Focus on India Dr. Pawan Goenka President - Automotive Sector Mahindra & Mahindra Ltd. India

2. Mahindra : An Introduction Conglomerate with over 6.5 bn USD in revenues Strong presence in six business verticals Leading presence in the automotive business for over 63 years Lineage to the legendary Jeep Sales of over 1,80,000 vehicles in FY07 India’s largest SUV/UV player Alliances with Ford, Renault and International Truck

3. The India Opportunity 12 th largest economy in terms of GDP 3 rd largest economy in PPP terms Source :World Development Indicators database, World Bank, 14 September 2007

4. The Indian Automotive Market 11 th largest car market 4 th largest CV market 2 nd largest 2W market Largest tractor market Largest 3W market

5. Demonstrated Strong Growth 13 % CAGR 18 % CAGR Four wheeler market In ‘000 vehicles Auto components $ billions 19 % CAGR Source : SIAM Source : ACMA

6. Future Growth Drivers Strong GDP growth Rapidly improving infrastructure Rising disposable incomes Favorable demographics Willingness to spend Easy finance availability Replacement of ageing vehicles

7. AMP 2016: A Vision for Automotive Industry in India Revenue 35 to 145 bn USD Exports from 4 to 35 bn USD Vision 2016 “By 2016, India will emerge as the destination of choice in Asia for the design & manufacture of automobiles and automotive components. The output of the India’s automotive sector will be US$ 145 billion by 2016, contributing to 10% of India’s Gross Domestic Product and providing employment to 25 million persons additionally.”

8. It’s Not Volume Growth Alone … A global marketplace Very competitive market Technology upgradation Stringent emission and safety regulations Frequent launches of new models Low cost sourcing Increase in exports

9. 8 out of top 10 global companies have India presence They contribute 60 % of global production but 25 % of India Production Source : World motor vehicle production by manufacturer : World Ranking 2006 OICA July 2007 and SIAM data Apr-Mar 2007

10. Global vs. Indian Top 5 1.GM 2.Toyota 3.Ford 4.VW Group 5.Honda 1. 1. Maruti Suzuki 2. 2. Tata Motors 3. 3. Hyundai 4. 4. Mahindra 5. 5. Ashok Leyland Source : World motor vehicle production by manufacturer : World Ranking 2006 OICA July 2007 and SIAM data Apr-Mar 2007

11. Strong Capabilities of Indian OEM’s

12. The $ 2,500 Car (The NANO)

13. Very Competitive Market From 20 models available in year 1995 to 93 available today (Not counting the variants) 60 new launches planned in 2008 Source : Autocar India, The Economic Times, Dt. 26 Dec 2007

14. Suppliers in India MNCsMNC-JVsMNC AlliancesIndian

15. Recent Newsmakers

16. 3Cs of Global Collaboration Strategy Source : Innovation through Global Collaboration: A New Source of Competitive Advantage, Alan MacCormack, Harvard Business School Cost ContextCapability 3Cs

17. Benefits from Collaboration Source : Innovation through Global Collaboration: A New Source of Competitive Advantage, Alan MacCormack, Harvard Business School Lower CostsSuperior CapabilitiesContextual Knowledge Low cost laborRapid access to capacityMarket access Low cost materialsTechnical know-howSupplier relationships Low cost suppliersProcess expertiseInstitutional ties Low cost infrastructureDomain knowledgeGovernment connections Strength of Indian partner Strength of MNC

18. Partnership Options Licensing Automotive Value Chain DesignEngineeringSourcingManufacturingChannel Tactical JV – –Escort service – –Product based – –Asset based Strategic JV – –Comprehensive across the value chain

19. Scope of Collaboration M&M Capability Scope of Collaboration M&M Evolution Channel Contract Mfg. Product Dev. Sourcing Design Channel Contract Mfg. Licensing Contract Mfg. Royalty Investment JV Management

20. Licensing M&M Case : Peugeot Mid ’80s Technical license for engines, and transmissions Deliverables –M&M: Aggregates and related technology –Peugeot: Brand building, Commercial benefits Pure limited life commercial transaction As M&M matured, need diminished DesignEngineeringSourcingManufacturingChannel

21. Tactical JV M&M Case 1 : Mahindra Ford (50:50 JV) Mid ’90s Ford Escort assembly at M&M plant Deliverables –M&M: Market knowledge, Capacity, Relationships –Ford: Product engineering, Processes, Know how Asset based partnership, as partners matured, need diminished JV could have graduated to a higher level, but for the Scorpio development DesignEngineeringSourcingManufacturingChannel

22. Tactical JV M&M Case 2 : Mahindra Renault (51:49 JV) 2005 : Product specific JV for Logan Deliverables –M&M: India knowledge, capacity, channel, relationships, engineering support, JV management –Renault: Product, Engineering for India, Global processes, Purchasing organisation Asset based partnership but structured to meet both partners’ differing aspirations Could graduate to a different level DesignEngineeringSourcingManufacturingChannel

23. Strategic JV M&M Case : Mahindra ITEC (51:49 JV) 2005 : Comprehensive global CV tie-up JV designing full range of CVs from scratch Deliverables –M&M: Market knowledge, PD skills, LCVs, Capacity, Relationships, Sourcing and Engineering skills –ITEC: M&HCV experience, Engines, PD skills, Global brand, Sourcing and Engineering opportunity Structured to meet both partners’ complementary aspirations DesignEngineeringSourcingManufacturingChannel

24. Critical Negotiation Issues Shareholding Dilution Termination/exit pricing IPR Branding Management Governing Law

25. Other Negotiation Issues Non Solicitation Non Compete Differing return requirements Negotiations of key products and services purchased from parents Consensus decision items

26. Issues in Negotiation Process Bureaucracy in Global OEMs –Silo structure –Decision making power Discipline in Indian partner teams Strong influence of lawyers in Global OEMs Require open mindset

27. Why JVs Fail Inability of Indian partner to invest MNC does not need Indian partner any more Indian partner does not need MNC any more Non performance of JVs

28. Key Success Factors Know, appreciate and accept both partners objectives Good negotiating process covering all future contentious points and scenarios Build and nurture trust

29. Key Insight Both partners must accept Equal partnership of Un-equal partners

30. Thank You