INDUSTRY OVERVIEW

The information in this section has been extracted from various government publications and industry sources. Neither we, the Selling Shareholders, the BRLMs nor any other person connected with the Issue have verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and, accordingly, investment decisions should not be based on such information.

CRISIL has used due care and caution in preparing this report. Information has been obtained by CRISIL from sources which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published/reproduced in any form without CRISIL's prior written approval. CRISIL is not liable for investment decisions which may be based on the views expressed in this report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL's Rating Division, which may, in its regular operations, obtain information of a confidential nature that is not available to CRISIL Research.

THE INDIAN ECONOMY
The Indian economy has demonstrated a sustained growth rate of more than 6.0% per annum since 1997, which has made it one of the world‟s fastest growing economies. According to the CIA World Factbook, India‟s economy grew by 9.0%, 7.4% and 6.5% in 2007, 2008 and 2009, respectively. India‟s population is approximately 1.16 billion, second only to China. India had an estimated GDP of approximately US$ 3.57 trillion in 2009, which makes it the fourth largest national economy in the world after the United States of America, China and Japan, in purchasing power parity terms (Source: CIA World Factbook). The GDP growth rates for certain developed and developing economies are set out below:

The Government of India‟s Eleventh Five Year Plan, which covers the period from 2007 to 2012, aims to achieve a sustainable growth rate of 9.0% with an emphasis on a broad-based and inclusive approach that would improve the quality of life of the residents of India and reduce disparities across regions and communities.

respectively. (Source: Association of German Auto Industry/Verband der Automobilindustrie.THE AUTOMOTIVE INDUSTRY Global Automotive Industry The global economic downturn led to a severe slump in the automotive industry worldwide in the second half of 2008 and the first half of 2009.8%.11 Million passenger vehicles. experienced a 40. the global automotive markets showed signs of revival during the second half of 2009. as compared to the same period in the previous year.0% to 60.78 Million vehicles in 2008 to 61. regardless of region. renewed pricing pressure on automotive components and raw materials suppliers. The overall decline in volume resulted in significant overcapacity among many manufacturers. from 70. (Source: Association of German Auto Industry/Verband der Automobilindustrie. During the last quarter of 2008. Global automotive production showed a decline of 12.0% decline in volume. The United . showed a decline of approximately 10.36 and 15.0% in passenger vehicle production. Almost all countries (with the exception of Italy and China) that were considered by the Association of German Auto Industry. and maintenance of lower inventory levels to lower operating expenses. In 2008 and 2009 (2009 figures are estimates or partially interim). Europe produced 18.73 Million vehicles in 2009. most of the world‟s markets. However. causing OEMs to implement a series of cost-cutting measures such as plant closures.0% to 30. The industry witnessed unprecedented and simultaneous slowdown across segments and geographies.

(Source: Association of German Auto Industry/Verband der Automobilindustrie) Similarly. (Source: Association of German Auto Industry. respectively.9% in the fiscal year 2004.62 Million commercial vehicles in 2008 to 5. with turnover increasing at a rate of 298. In 2008 and 2009 (2009 figures are estimates. (Source: Auto Component Industry in India.45 and 5. In this segment. China demonstrated an increase of 49. Automotive Component Manufacturers Association of India) The chart below sets forth the turnover and export figures for the automotive components industry in India for the periods stated: . with the exception of China. INDIAN AUTOMOTIVE COMPONENT INDUSTRY The automotive components industry in India has been growing steadily. almost all countries considered. from 5. As a percentage of turnover. showed a drop of approximately 30. or partially interim).9% in the fiscal year 2009 from 18. Europe produced 3. exports increased to 19. China. respectively.58 Million passenger vehicles.68 Million passenger vehicles in 2008 to 8.4%. (Source: Association of German Auto Industry/Verband der Automobilindustrie.8% between the fiscal years 2004 and 2009. from 3. Export sales have also gradually become more important over the past six years. on the other hand.38 Million passenger vehicles in 2009.648 and 132.6% jump in production. showed a 47.82 Million commercial vehicles and the United States produced 224.0% in commercial vehicle production.States produced 8.0% to 50.283 commercial vehicles.41 Million commercial vehicles in 2009 which was against the global trend.43 and 1.

The oldest form of die-casting is gravity diecasting. for most products. In gravity die-casting. which are also referred to as dies.Automotive Components Industry by Segments Aluminium Die-Casting and Machining Aluminium die-casting is the process of producing engineered metal parts by forcing molten aluminium into reusable steel moulds. high pressure die-casting is more desirable. These moulds. molten aluminium is inserted under normal atmospheric pressure. Die-casting methods vary as a result of the various methods employed in injecting the molten aluminium into the mould. can be used to produce complex shapes with a high degree of accuracy and repeatability. the aluminium is injected at high speed and . This method is utilised less frequently than low pressure and high pressure diecasting. Typically. Under this process.

website: http://www. (Source: European Aluminium Association. and expects a CAGR of 12.100. the die is placed over the furnace and the cavity is filled by forcing the molten metal upwards. (Source: North American Die Casting Association.0% until the fiscal year 2015. The various filled dies are removed and the castings are extracted.400. so the entire cavity may be filled before any portion of the casting solidifies. BRAKES The brakes segment is relatively less concentrated as compared to other segments of the automotive components industry. when CRISIL expects that the total market size to be Rs.0% and exports accounted for the balance of 11.0%. Producers may produce a number of products of varying complexity.eaa. CRISIL estimates the size of the brakes industry to be Rs. website: http://diecasting. 16. For the fiscal year 2010. high pressure die-casting moulds and machines are very expensive and are only economical when utilised on a large scale to produce a large number of products.org/faq) However. 9. from smaller products for the replacement market to fully functional brakes systems. Once the cavity is filled.high pressure. resulting in fewer discontinuities in the casting.0% of the overall demand of the brakes segment. (Source: CRISIL Research) Other characteristics of the . the replacement market accounted for 20. OEMs contributed 69.00 Million during the fiscal year 2010. the pressure is released and the metal flows back towards the furnace. In this process.net/en/aboutaluminium/production-process/castings/) Low pressure die-casting is an alternative to high pressure die-casting. Low pressure die-casting is particularly suited for use in the production of automotive wheels or other components that are symmetrical across an axis of rotation.00 Million. through the use of pressurised gas. with a large number of producers.

international shock absorber manufacturers are developing manufacturing capabilities in developing countries such as India and China. shock absorber manufacturing is dominated by Japanese companies. Relationships with OEMs are the other viable alternative to the replacement market. Globally. Asia is the fastest growing regional market. to reduce their own costs. Although raw materials are relatively expensive for the brakes industry. however OEMs typically wish to deal with only a small number of suppliers. followed by the United States and Asia. September 2008) TRANSMISSIONS Clutches are a major component of any transmission system. (Source: Cygnus business Consulting & Research. Industry Monitor – Automotive Components. (Source:CRISIL Research) SUSPENSIONS Shock absorbers play an important role in the suspensions segment of the automotive components industry due to their pervasiveness as a suspension solution. although most shock absorbers are generally sold on a regional basis. the easing of the excise . Increasingly. In India. excluding Japan.Shock absorber manufacturing in India mostly takes place in the unorganised sector. Europe is the largest producer of clutches. such costs are lessened by the lower wage costs of India and the fact that most costs are passed on to consumers. Globally.market include barriers to entry in respect of the relatively large distribution networks that are required of producers that wish to enter the replacement market.

light commercial vehicles (“LCVs”) and heavy commercial vehicles (“HCVs”). struts and gas springs for passenger vehicles. Our products include: • aluminium die-casting products. • suspension products. (Source: Cygnus Business Consulting & Research. such as clutches. such as shock absorbers for two-wheelers and threewheelers. friction plates and continuous variable transmissions. • transmission products. threewheelers. such as high-pressure. and . front forks for motorcycles and hydraulic and gas-charged dampers. passenger vehicles. We manufacture and supply a diverse range of components for two-wheelers. LCVs and HCVs. Industry Monitor – Automotive Components. June 2010) OUR BUSINESS Overview we are a leading automotive component manufacturing company in India. low-pressure and gravity die-castings and twowheeler aluminium alloy wheels.duty regime to help promote the steel industry has also had a knock-on effect in benefiting clutch manufacturers and the automobile industry as a whole.

The following table sets forth the production capacities and volumes for the fiscal year 2010 at our various manufacturing locations:hydraulic drum brakes and tandem master cylinders for three-wheelers. rotary brake discs for two-wheelers and hydraulic drum brakes and tandem master cylinders for three-wheelers. Maharashtra. . and one each in Manesar. which is owned by our indirect subsidiary Endurance Fondalmec SpA. comprising seven in Aurangabad. Maharashtra. Italy. Tamil Nadu. all of which are located in the major automotive manufacturing belts of the country. five in Pune. Uttarakhand. two in Pantnagar. Germany. Haryana and Chennai. which are owned by our subsidiary Amann Druckguss GmbH (“Amann Druckguss”). We have 16 manufacturing plants in India. and one in Torino.• brake products. We also have two manufacturing plants in Massenbachhausen. such as hydraulic disc brakes for two-wheelers. (“Endurance Fondalmec”).

suspension and transmission businesses promoted by Mr.0% equity interest. shock absorbers and gas springs for passenger vehicles and LCVs. who commenced aluminium die-casting operations in 1985 through Anurang Engineering Company Private Limited. EMM JV manufactures struts. Since then. several brake. We also have a joint venture in India with Magneti Marelli SpA (“Magneti Marelli”). Endurance Magneti Marelli Shock Absorbers (India) Private Limited (“EMM JV”).We are promoted by Mr.0% equity interest in High Technology Transmission Systems (India) Private Limited (“HTTS India”). Our Company also owns an 85. and the balance equity interest is held by Adler SpA (“Adler”). Anurang Jain in India were consolidated with our Company. HTTS India manufactures and sells clutches. a company in which we own a 50. which subsequently merged with and into our Company. our subsidiary. . Anurang Jain. friction plates and CVTs for two-wheelers and three-wheelers.

Car India and Bike India Awards in 2008 and „Auto Component Manufacturer of Year‟ at the Auto Monitor Awards in 2008. India Yamaha Motor Private Limited.2008‟ at the NDTV Profit. Royal Enfield Motors Limited. Daimler AG.Our customers include global OEMs such as various subsidiaries of Fiat Group Automobiles SpA and associated brands including Lancia and Alfa Romeo. which is our largest customer. Audi AG. a Korean automobile manufacturer that currently operates in India. a leading Indian MUV and SUV manufacturer. We have also received several awards and recognitions for quality. We have a long-standing relationship with Bajaj Auto Limited. Magyar Suzuki ZRT and two leading French automobile manufacturers. cost. We have been supplying components to Bajaj Auto Limited since our inception. Honda Motorcycle & Scooter India Private Limited and a leading Indian HCV manufacturer. . Maruti Suzuki India Limited and Honda Motorcycle & Scooter India Private Limited. delivery and vendor performance from our customers such as Bajaj Auto Limited. the two leading HCV manufacturers in India. Fiat India Automobiles Private Limited. Porsche AG. We have won several industry awards including the „Component Manufacturer of the Year . as well as leading Indian OEMs such as Bajaj Auto Limited.

• gravity die-casting products. We have since opened several more plants at various locations in India. Key Products The five major product lines of our aluminium alloy casting and machining division are: • high-pressure die-casting products. Our major . • alloy wheels. • low-pressure die-casting products. specialising in high and low-pressure diecasting. Pune in 2006. which merged with and into our Company in August 2006. and • machined products. High-pressure die-casting products We commenced high-pressure die-casting in 1985 in Aurangabad. Anurang Engineering Company Private Limited. as well as the production of alloy wheels.HISTORY Our casting and machining division is the oldest business line at our Company. We opened our alloy wheel die-casting plant in Chakan. In 1996. established a high-pressure die-casting facility in Aurangabad in 1985. Pune. We manufacture a number of high-pressure diecasting products for a variety of vehicles. we opened our second high-pressure die-casting plant in Takve.

Platina and Discover. FZ16.high-pressure die-casting products include crank cases for Bajaj motorcycles and Honda scooters and front and rear transmission housings for a leading Indian HCV manufacturer‟s passenger vehicles. for front or rear-only applications for motorcycles ranging from 125 cc motorcycles. Three-wheeler drum brake assemblies We produce drum brakes for use in three-wheelers such as the Bajaj RE. . YBR and Gladiator. RE Max and RE Diesel. We produce aluminium alloy wheels for Yamaha motorcycles such as the Fazer. including front and rear discs. Two-wheeler hydraulic disc brake assemblies We manufacture two-wheeler hydraulic disc brake assemblies. such as the Bajaj Discover. such as the Royal Enfield Electra. to 500 cc motorcycles. Alba. FZS. Libero. and for Bajaj motorcycles such as the Pulsar. disc brake calliper assemblies and wheel cylinder assemblies. master cylinders and callipers. Our major hydraulic disc brake products include brake discs. Alloy wheels We commenced the production of alloy wheels in 2006 at our manufacturing facility in Chakan. Our major drum brake products include brake panel assemblies.

LCV and HCV struts and gas springs. Transmissions Key Products The major products of our transmissions division include: • clutch assemblies. • continuous variable transmissions (“CVTs”). and • friction plates. pistons. which are manufactured by EMM JV. For the fiscal year 2010. steel sheets. Raw Materials The principal raw materials we use in our production are aluminium alloys. such as springs.1% of our total income. steel tubes and customized mechanical components. under-brackets and gears. produced according to our specifications.Suspensions The major products of our suspension division include: • two-wheeler and three-wheeler shock absorbers • passenger vehicle. canisters. . our total raw materials costs accounted for 55.

our total electricity costs comprised 4. Thus. The mode of transportation for . we believe that our purchases of aluminium alloy are relatively unexposed to the risk of market price fluctuations as such price fluctuations are often directly passed through to our customers at the negotiated price. The prices that we agree with our raw materials suppliers are fixed on a quarterly basis. Transportation Our domestic operations use a number of different modes of transportation including road.9% of our total income. we have also set up three wind power plants aggregating 7. Germany and Italy purchase utilities from their respective local utility companies. For the fiscal year 2010.Aluminium In our domestic operations. which is the same timeframe for which we enter into price agreements with our customers. For our German and Italian operations. In India. Our operations in India. air and rail to supply our customers with adequate amounts of finished goods and within their required deadlines. Our alloy suppliers for our domestic operators are typically based in India and Southeast Asia. Utilities Electricity To power our operations. we primarily purchase most of our aluminium at prices that are directly negotiated with our customers on a regular basis.1 MW in Rajasthan and Maharashtra. we need a substantial amount of electricity. we purchase our aluminium at spot market prices.

we ship finished goods to our OEM clients by road. RESEARCH AND DEVELOPMENT We believe that continued research and development activities are critical to maintaining our leadership position in the industry and will provide us with a competitive advantage as we seek additional business with new and existing customers. Typically. We own four dedicated research and development centres. technicians and support staff. As of July 31. and these arrangements are handled by our customers. for research in passenger vehicle suspension systems. . including defect and failure analysis of die-casting components. In a few cases. All of these centres are approved by DSIR. 2010. we employed 95 research and development engineers. • process and tool engineering. transmissions and brake systems) and one in Pune (for casting). Consequently. We also own an additional research and development centre in Pune through EMM JV. Our research and development activities and initiatives include: • materials engineering and metallurgical research. our customers may directly pick up the goods at our own facilities. size and value of the order. all of our product divisions are supported by DSIR-approved R&D centres that allow the divisions to design.a particular shipment is dependent on the urgency. develop and produce new products. designers. three in Aurangabad (one each for twowheeler and three-wheeler suspensions.

Agreement with WP Suspension Austria GmbH . such as radial fatigue and cornering fatigue tests in respect of our alloy wheel designs. Endurance Magneti Marelli Shock Absorbers (India) Private Limited (“EMM JV”). assembly and marketing of struts and shock absorbers for use in passenger vehicles. was formed for the design. • product simulation using sophisticated computer aided design and computerbased simulations such as nonlinear simulation of alloy wheel designs. manufacture. • a comprehensive prototyping program including mock-ups and real-world testing. Technical Collaborations We have entered into joint ventures and technical collaborations with a number of partners across vehicle segments that are typically valid for three to seven years. LCVs and HCVs. Joint Venture with Magneti Marelli Our Company entered into a joint venture agreement with Magneti Marelli on June 11. and • quality assurance and testing. such as the design of a new disc brake system for a newlylaunched 150 cc motorcycle. pursuant to which a joint venture company.• product design and reverse engineering. 2008.

manufacturing and distributing high performance suspension components for use in motorcycles. 2007. 2008. Under the terms of the agreement. on an OEM basis. The terms of the agreement prevent the sale of licensed products made under the agreement outside of India unless a royalty has been paid on such products. License and Technical Assistance Agreement with Akebono Brake Industry Company Limited Our Company entered into an agreement with Akebono Brake Industry Company Limited on March 30. Exports are permitted in the form of original equipment installed on . The agreement requires that our Company will not sell similar products made under the agreement outside of the designated manufacturing and sales territory of India. Akebono has agreed to provide technical assistance and licensing arrangements to our Company to develop and produce drum brake shoes and linings for use in two-wheelers and three-wheelers in India. sales by our Company are to be made only to Bajaj Auto Limited or an Austrian motorcycle company. The agreement provides that should Bajaj Auto Limited or the Austrian motorcycle company require these products outside of India.Our Company entered into an agreement with WP Suspension Austria GmbH on July 6. Under the terms of the agreement. WP Suspension has agreed to provide technical assistance with regard to developing. Further. and exclusively within India. our Company and WP Suspension will meet with the objective of acceding to such request. through the use of non-asbestos adhesive and grinding technology. and the license itself is non-exclusive and nontransferable. Akebono has also agreed to provide training for our engineers at our Company sites or at Akebono‟s site.

India). we do not have a single competitor across all our product ranges. The leading competitive players within the various product ranges in which we operate include: Aluminium Die-casting: Sunbeam. Rico Auto (Gurgaon. We face both domestic and international competition. Sundaram Clayton (Chennai. The terms of the agreement prevent the manufacture of licensed products outside India.vehicles made in India. India). Jay Hind Industries (Pune. large suppliers work with only a limited number of OEMs. Competition The automotive component industry is extremely competitive. Haryana. Under the terms of the agreement. We are yet to initiate any transfer of technology under this agreement. Turkey and Italy. replacements for such original equipment or as replacement parts in 15 Asian countries. Technical Assistance Agreement with Teksid Our Company entered into an agreement with Teksid Aluminium Srl on July 4. Consequently. The license is non-transferable. Tamil Nadu. Typically. 2008. India) . Maharashtra. Teksid will provide technical assistance and licensing arrangement to allow our Company to develop and produce aluminium cylinder heads for use in passenger vehicles.

India) Awards The following lists some of the awards that we have received in recognition of our achievements. Car India and Bike India. Maharashtra. India) as well as international competitors from China Brakes (Two-Wheelers and Three-Wheelers): Brembo (Pune. 2008 • NDTV Profit. India) CVTs (Two-Wheelers): FCC Rico (Gurgaon. India) Clutch Assemblies (Two-Wheelers and Three-wheelers): FCC Rico (Gurgaon. Auto Component Manufacturer of the Year.Aluminium Alloy Wheels (Two-Wheelers): Enkei (Pune. 2009 • Auto Monitor Awards. India) Struts/Shock Absorbers/Gas Springs (Passenger Vehicles. Makino (Delhi. LCVs and HCVs):Gabriel. Silver Award. HR Excellence for Best Innovative Retention Strategies. Maharashtra. India and Pune. Maharashtra. 2010 • NIPM. 2008 . Munjal Showa (Gurgaon. Haryana. Tennaco. Haryana. Haryana. Bosch Chassis Systems (Jalgaon. Best HR Practices Award. Maharashtra. products or services for the last three calendar years: Overall • Greentech Foundation. India). India).

research and development and to develop domestic safety and environmental standards at par with international standards. Ministry of Heavy Industries and Public Enterprises. The Automotive Mission Plan. ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry. 2002. GoI in December 2006. in relation to the preparation of the Tenth Five Year Mission Plan for the Indian Automotive Industry. to encourage modernisation of the industry and facilitate indigenous design. among other things. For the promotion of exports in the auto component sector. with the aim. 2006-2016 (“Automotive Mission Plan”) was released by the Ministry of Heavy Industries and Public Enterprises. among others. containing recommendations of the Task Force of the Development Council on Automobile and Allied Industries constituted by the Government of India. it recommends the creation of Special Automotive Component Parks and virtual Special Economic Zones. GoI in March 2002. to promote a globally competitive automotive industry and emerge as a global source for auto components. 2006-2016 The Automotive Mission Plan. as amended (“National Auto Policy”) was introduced by the Department of Heavy Industries. which would .REGULATIONS AND POLICIESREGULATIONS AND POLICIES Regulation of the automotive components manufacturing industry The National Auto Policy The National Auto Policy.

the Selling Shareholder and the Registrar to the Issue. Underwriting Agreement dated [●] between our Company. Issue Agreement dated September 27. 3.enjoy certain exemptions on sales tax. 2. Escrow Collection Bank and the Registrar to the Issue. 6. the Selling Shareholder. 2010 between our Company. Escrow Agreement dated [●] between our Company. Memorandum of Understanding dated September 20. the BRLMs. 5. BRLMs and the Syndicate Members. the Selling Shareholder and the BRLMs. the BRLMs and the Syndicate Members. . 4. the Selling Shareholder. 2010 between our Company. excise and customs duty. 2010 between our Company. the Selling Shareholder and the BRLMs. Material Contracts for the Issue 1. as well as certain tax exemptions and concessions in relation to promotion of research and development (“R&D”) in the automotive sector OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION A. Syndicate Agreement dated [●] between our Company. the Selling Shareholder. Engagement Letter dated September 15.

. as the case may be. We further certify that all statements in this Draft Red Herring Prospectus are true and correct.DECLARATION We. hereby declare and certify that all relevant provisions of the Companies Act and the guidelines and regulations issued by the Government or the regulations or guidelines issued by SEBI established under Section 3 of the SEBI Act as the case may be. have been complied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the Companies Act or the SEBI Act or rules or regulations or guidelines.