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OPERATION STRATEGY OF

AUTOMOBILE INDUSTRYTATA

BAJAJ

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Automobile History in brief

Historyofthe automobilebegins asearly as

1769, withthe creationofsteam-powered

automobiles capableofhumantransportin

1806.

Thefirst carspoweredby internal combustion

engines runningon fuelgas appeared, whichledtotheintroductionin 1885 ofthe ubiquitous

moderngasolineorpetrol-fueledinternal

combustionengine.

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TOP 10 MOTOR Vehicle Producing

Co

untries

in

World:

2009

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Top 20 motor vehiclemanufacturing

companiesby Volume 2009:

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AUTOMOBILE INDUSTRY OF INDIA :

In February 2009, monthlysalesofpassenger carsin India exceeded 100,000 units

2nd largesttwo-wheelermarket,

11thlargest Passenger Carsproducers.

4thlargestinHeavy Trucks.

2ndlargesttractormanufacturer annual

productionofover 2.3 million units. Themonthlysalesofpassenger carsin India

exceed 100,000 units.

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Different DivisionsofIndian

Automobile Industry

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Industry classified in Three phases

1) Before Liberalization I phasetillmid80s.

2) Liberalization- II phasepost 1990.

3) Globalization: III phase-early 2000.

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Players

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Gross TurnoverofAutomobile Sector

in India:

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Segment wise Market Share in 2009-

10

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The pie chart below illustrates the market share for

2007-2008 in percentages.

Maruti (small car) and M&M in SUV

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Factors affecting Vehicle Demand

Economic Growth

Interest Rates and Availability of Finance:

Cost of Fuel:

Taxes and Duties: Disposable Income of Consumers:

Regulation of Safety and Emission Standards:

Share of Road Transport:

Restriction on Overloading: Price Sensitivity:

Brand Building and New Product Launches:

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SALES TREND

Sales(domestic as well asexports) ofthe Indianautomotiveindustryhavegrownfrom 7.3 million unitsin2003-04 to 10.9 million unitsin 2007-08, at a CAGR of10.5%.

Thisimpressivegrowthhasbeendrivenby a buoyanteconomy, increasingpurchasingpowerofthe Indianmiddleclass, new productlaunches and attractivefinanceschemesfrom automobilemanufacturers andfinancialinstitutionsandincreasedfocusonexports.

Ofthetotalsales, exports contributed 11.4% in 2007-08comparedto 6.6% in 2003-04. Exportshavegrown at aphenomenal CAGR of26.7%, whiledomestic saleshavegrown at a CAGR of9.1% duringthesameperiod.

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Strategy-TATA MOTORS

Goalisto continuetostrengthen positionin

thedomestic market, maintain operational

excellence andgrow internationalbusinessin

select countries.

strategyto achievethesegoals consistsofthe

followingelements:-

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1. Further strengthening the product

portfolio

extensive range of products in commercialvehicles

EXAMPLE:-strategic partnerships/jointventures with renowned companies such asCummins Engine Company Inc., Fiat S.p.A,Marco polo and Thonburi , and ouracquisitions ofTDCV, Hispano and Jaguar LandRover enable to expand product range andextend geographical reach.

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2. Mitigating cyclicality

strengthenournon- vehiclebusiness, such as

sparepartsales, annualmaintenance

contracts, salesofaggregatesfornon-vehicle

businesses, reconditioningofaggregates, sale

ofcastings, production aids andtooling and

fixtures and vehiclefinancingtoreducethe

impactofcyclicality.

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3. Reducing costs and breakeven

points

ThelaunchoftheTata Nano, we will be able to benefitfrom global economies of scale in the passenger vehiclebusiness as well.

Our vendorrelationships also contributetoour cost

reductions. Forexample, webelievethatthe vendorrationalizationprogramthat we are undertaking willprovideeconomiesofscaletoour vendors whichwouldbenefitour costprograms.

We are also undertaking variousinternal andexternalbenchmarkingexercisesthat wouldenable ustoimprovethe costeffectivenessofour components,systems andsub- systems.

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4.Expand customer financing in India

Withfinancingincreasinglybecoming a critical

factorin vehiclepurchases andtherising

aspirationsofconsumersin India, weintend

tosignificantlyexpandour vehiclefinancing

activitiestoenhanceour vehiclesales

Tata Capital Limited, a financialservices

companyformedby Tata Sons, which alsoundertakesfinancingofvehicles.

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5. Expanding our international

business

We areexpandingouroperationsintootherselectgeographical areas withsimilar characteristics asthe Indianmarket whereourproducts aresuitable. While we continuetoexportoutofIndia and South Korea intomanyofthese

markets, we are alsoestablishing a manufacturingfootprintwhereitisbeneficialtodoso. Wehaveestablished aSubsidiary along with Thonburi in Thailandtomanufacturepickuptrucks andhave alsoreceived approvalfromtheThailandgovernmentforthe Eco-carproject.

Ourinternationalbusinessstrategyhasresultedin a growthofourinternationaloperationsfrom 8% ofconsolidatedrevenuesinfiscal 2004 to 18.38% duringfiscal 2008.

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6. Continuing to invest in technology

and technical skills

Webelieve we areoneofthemosttechnologically advancedindigenous vehiclemanufacturersin India.

Ourresearch anddevelopmentresources, whichincludethose atour Subsidiaries, like Tata MotorsEuropean Technical Centerplc. (TMETC), TDCV,TTL andHispano, together withthetwo advancedengineering anddesign centersofJaguar Land

Rover which, werecently acquired, willfurtherincreaseour capabilitiesinproductdesign,manufacturing andquality control.

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. on nu ng ocus on g qua y

standards and enhancing customer

satisfaction Oneofourprincipalgoalsisto achievehigh

andinternationalqualitystandardsforour

products andservices, and we arepursuing

variousqualityimprovementprograms, both

internally and atoursupplierspremises.

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8. Enhancing capabilities through the

adoption of superior processes

Tata Sons Limited, andtheentitiespromotedby TataSons, including us, aim atimprovingthequalityoflifethroughleadershipin varioussectorsofnationaleconomic significance. Inpursuitofthisgoal, Tata Sonsandthe Tata Sonspromotedentitieshaveinstitutionalized an approach, calledthe Tata BusinessExcellence Modelor TBEM, whichhasbeenformulatedonthelinesofthe Malcolm Baldridge National Quality

Awardtoenableittodriveperformance and attainhigherlevelsofefficiencybothinitsbusinesses andindischargingitssocialresponsibility.

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9.Maintaining financial strength

Our cashflow from/(usedin) operationsin

fiscal 2008, 2007 and 2006 was Rs. 55,955.5

million, Rs. (8,754.8) million and Rs. 1,104.6

million, respectively. Theimprovedpositionin

ouroperating cashflowsisprimarily a result

ofvolumegrowth, implementationofcost

reductionprograms, securitizationofvehiclefinancingportfolio andprudent working

capitalmanagement.

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10. Continuing to leverage the Tata

brands

Webelievethe Tata brandnameis associated

by Indian customers withreliability, trust and

value andisgainingsignificantinternational

recognitionduetotheinternationalgrowth

strategiesofvarious Tata Companies. The Tata

brandis used anditsbenefits areleveragedby

Tata companiestotheirmutual advantage.

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Automotive Operations

Therevenuesfromour automotiveoperations

beforeintersegmenteliminations were Rs.

323,456.5 million, Rs. 299,241.4 million and

Rs. 222,120.5 millioninfiscal 2008, 2007 and

2006, respectively, beforeintersegment

elimination. Ourmainmarketisthe Indian

market, which accountedfor 90.7%, 90.8%and 88.9% ofour unitsalesinfiscal 2008,

2007 and 2006, respectively.

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Sales and Distribution of Vehicles

Oursales anddistributionnetworkin India asofJune 30, 2008 comprisedofover 1,500 salesoutletsforourpassenger and commercialvehiclesbusiness.

Mostofoursalesoutlets areexclusive TataMotorssalesoutlets. Inline withourgrowthstrategy, weformed a 100% Subsidiary, TMLDistribution Company(TMLD), to act as a

dedicatedlogisticsmanagement companytosupportthesales anddistributionoperationsofour vehicles.

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CONT.

TMLD willtakeover and/orset upstockingpoints, forboth commercial vehicles andpassenger vehicles, intheplacesofmanufacture and also atdifferentplacesinthe country. It willhelpimproveplanning, inventory

management, transportmanagement andon-timedelivery.

Inthe South Koreanmarket, TDCV uses Daewoo MotorSales Corporationsdistributionnetwork, thelargestinSouth Korea. After-salesserviceismade available

through 68 service centers andover 110 partsoutlets.Exports are carriedoutthrough TDCVs owninternationaldistribution channel.

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CONT..

Inthe South Koreanmarket, TDCV uses

Daewoo Motor Sales Corporations

distributionnetwork, thelargestin South

Korea. After-salesserviceismade available

through 68 service centers andover 110 parts

outlets. Exports are carriedoutthrough

TDCVs owninternationaldistribution channel.

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Vehicle Manufacturing Facilities

MAINLY FOUR

FIRST WAS JAMSHEDPUR.

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Components and Raw Materials

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Suppliers

Wehaveestablished a supply chainforprocuring variouscomponents. We alsooutsourcemanyofourmanufacturingprocesses and activitiesto varioussuppliers.Insuch cases, weprovidetrainingtooutsidesuppliers whodesign andmanufacturetherequiredtooling andfixtures.

Tata AutoComp Systems Limited(TACO), our associatecompany, manufactures auto components andencouragestheentryofinternationally acclaimed auto componentmanufacturersinto India bysetting upjoint ventures withthem. Someofthesejoint venturessupply componentsfor

ourproductssuch asseats, commercial vehicle airbrakes,wiringharnesses, pressed components andradiatorassemblies.

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Employees

a fair andobjectiveperformancemanagementsystemlinkedtotheperformanceofthebusinesses whichidentifies anddifferentiateshighperformers whileofferingseparation avenuesfornon- performers;

a commonpooloftalentedmanagers acrossthe TataGroup with a view toincreasingtheirmobilitythroughinter-companyjobrotation;

performance-based compensationpackagesto attractandretaintalent withinthe Tata Group; and

comprehensivetrainingprogramstoimpart andcontinuously upgradetheindustry/functionspecificskills.

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Training and Development

We are committedtobuildingthecompetenciesofouremployees andimprovingtheirperformancethroughtraining

anddevelopment. Ourfocusisonidentifyinggapsinour

employees competencies andpreparingemployeesfor changesin competitiveenvironments, as well astomeetorganizational challenges.

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Intellectual Property

Tata Motors Limitedhas 170 trademarks

registeredin India and approximately 186

trademark applications which are currently

pendingregistration. In additiontothis, our

significanttrademarks areregistered, or arein

theprocessofbeingregisteredinother

countries. We currentlyhold approximately331 oftheseregistrations worldwide andhave

made 67 applicationsoutofIndia.

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CONT.

Theregistrationsmainlyincludetrademarks

foreachofour vehiclemodels. Further, we

also usetheTata brand, whichhasbeen

licensedto usby Tata Sons Limited.

Additionally, Tata Sonshas appliedfor 9

trademarksinthenameofthe Company. The

Companyhas appliedfor 4 trademarksinthenameofTelcon.

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Other Operations

In additiontoour automotiveoperations, weare alsoinvolvedin variousotherbusinessactivitiesprimarily consistingofinformation

technologyservices and constructionequipmentmanufacturing. Ournon-automotivesegmentrecordedrevenuesbeforeinter-segmenteliminationsofRs.

37,038.1 million, Rs. 27,078.9 million and Rs.18,093.9 millionfortheyearended March 31,2008, 2007 and 2006.

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BAJAJ

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Highlightsfor 2009-10 versus 2008-09:

Bajaj Autostandalone

2009-10 hasbeen a recordyearfor Bajaj Autointermsofhighesteversales, exports, profits andmargins.

lNet sales andotheroperatingincomegrew by 35% toRs.119.21 billion.

lThe yearsaw recordsalesof2.85 million units over2.5 millionmotorcycles and 340,937 three-wheelers.

lExports roseby 15% to 891,002 units.lThe Companysoperating EBITDA stood at Rs.25.93 billion a growthof116% overlastyear.

Theoperating EBITDA margin was 21.7% ofnetsalesandotheroperatingincomefor 2009-10.

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CONT..

Operatingprofitbeforetax(PBT) grew by

170% to Rs.22.89 billion.

lP

rofita

fterta

x(PAT)

grew

by160%

to

Rs.17.03 billion.

lSurplus cash and cashequivalentsinthe

Companysbalancesheet ason 31 March

2010 stood at Rs.32.6 billion, versus Rs.9.3

billionon 31 March 2009.

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IndustryssaleofTwo-Wheelers

(Domestic + Exports)

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Bajaj Autos SalesofMotorcycles

(Domestic + Exports)

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Product-wise ExportsofBajaj Auto(in

numbers)

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Operations

Plants Duringthefirsthalfof2009-10, anumberofimprovement activities wereinitiated attheshopfloorlevel across all

plantsofthe Company. Thankstotheseinitiatives, Bajaj Auto couldproduce 32%higher volumeofoutput without anysignificantinvestments.

Table givestheplant-wise capacitiesforthelasttwoyears.

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Plant-wise capacities(innumbers)

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Activities Acrossthe Various Plants

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Processes

R&D hasbeen workingonimprovingitsoperationsinnumberofareas, such as:

Manpower:Expandingtheteamsizein areasofdesign,analysis and validationtokeep up withtherapidlyexpanding aspirationsofthe Company.

Facilities: Enhancing R&Dsdesign, computing andtestfacilities. A notable additionhasbeen a world classNVH(Noise, Vibration andHarshness) laboratory,

whichhasbeen commissioned. This willgive Bajaj Autothe abilitytomakeevenmorerefinedproducts.

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CONT

Technology: R&D hasdevelopedthe 4V DTS-i

technologyforoutstandingengine

performance. Designoptimisation has

enabledittobe usedonthe Pulsar 135 LS,

which competes at a lowerpricepoint. The

DTS-i is controlledby a new generation CDI

(Capacitor Discharge Ignition), whichtakescontinuousload andtemperatureinputsto

computetheoptimumtimingofeachspark

plug.

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TPM

Bajaj Autostartedits Total Productive Maintenanceinitiativetenyears ago withitsmanufacturingplants.In March 2007, it achieved a milestoneofhaving allitsmanufacturingfacilities awarded as TPM Excellence

Category 1 winnersby JIPM (Japan InstituteofPlantMaintenance).

Lastyear, TPM andqualityinitiatives at vendorplantsgatheredfurthermomentum. SinceinceptionofBajaj

Autos Vendor Quality and Vendor TPM awards, thetallyofQuality and TPM award winnersis asfollows:

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CONT

1.Quality award Bronze: 2009-10: 24 winners(cumulatively, 108)

2.Quality award Silver: 2009-10: 30 winners(cumulatively, 89)

3.Quality award Gold: 2009-10: 16 winners(cumulatively, 44)

4.Quality award Platinum: 2009-10: 3 winners(cumulatively, 3)

5.BAL TPM award: 2009-10: 11 winners(cumulatively, 29)

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Over 50% ofBALs vendorshave achieved a statusofsupplyingzerodefect componentstotheCompanysplantsforsixstraightmonths atleastonceduringlastfouryears(Bronze).

Almost 40% achievedzerodefectsuppliesfor 12straightmonths(Silver).

25% havehadzerodefectsuppliesfor 24 straightmonths(Gold).

Three vendorshavesuppliedzerodefectcomponentsformorethan 36 straightmonths(Platinum).

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Products

Pulsar 220 F: The Pulsar 220 F wasre-definedtobethebestperformingsportsbikein India. Itbecamethefastest Indianbike. Work wasdoneto

enhanceitspower whilereducingitsfuelconsumption. Thebike was alsomademoreaffordable.

Pulsar 180 UG: Thebike wasloaded withnew

features andstyle along withhigherperformance. Ithas, ineffect, expandedthegreaterthan 150 cc segment.

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CONT.

Pulsar 150 UG: Pulsar 150 thebackboneofthe Pulsarbrand was upgraded with a morepowerfulengine andnew featureslike cliponhandlebars andtankflaps. Thesefeatureshavemadethe Pulsar 150 thebestsellerinitscategory.

Pulsar 135 LS: The Pulsar 135 LS wasbuiltto create a lightsportsofferinginthe Pulsarfamily. It wasdesignedtobetruetothe Pulsar characterofaggression, technologicalpredisposition andoutstandingstyle. Thisbikeispoweredby a 4V DTS-i engine whichisthefirstofitskind. Thefour

valves allow theenginetobreathe well, generatingsuperbperformance, while DTS-i givesitexcellentfueleconomy.

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HONDA

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MISSION

The Mission Statement of Honda is try to

maintain a global point of view, with the

dedication to supply the highest quality products

at a reasonable price for worldwide customersatisfaction. Moreover, taking new challenges

with the pursuit of Initiative, Technology and

Quality, Honda is pursuing their 2010 Vision:

Striving to be a company society wants to existthrough creating new value, globalization, and

commitment for the future.

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STRATEGY

Automobile Industry Superior Fueleconomy Optimumsafety Driving Pleasure Worldwide

Motorcycle Industry to customer 28 plant,21 countries, R&D 6 countries

Power Business FirstbusinessofHonda Expanded 11 plant, 9 countries, sold 156countries, usedby 5.5M people ASIMO Hondajet