WELCOME

TVS Motor Company

Investors meet

Mumbai

August 20, 2002

Investors meet – August 2002 2

 Presentation plan

1. Two wheeler industry in India

2. TVS Motor performance
3. Key initiatives / achievements
4. Future plans

Investors meet – August 2002 3

 1.Two wheeler industry
All India

Investors meet – August 2002 4

 Two-wheeler sales trend – All India
Monthly average (000’s )
450
415

GR
400
CA
% 360
10
350
315 313

300 283

250
98-99 99-00 00-01 01-02 Q1 02-03

Two wheeler industry has grown by 10 % CAGR between 98-99 to Q1 2002-03

Investors meet – August 2002 5

 Two-wheeler category-wise sales growth –All India
CAGR growth between 98-99 to Q1 2002-03

Category CAGR %
Motorcycles 33%
Step thrus -25%
Ungeared scooter 18%
Geared scooter -22%
Mopeds -12%
Total two wheeler 10%
Motorcycle is the fastest growing category followed
by ungeared scooter
Investors meet – August 2002 6
 Two-wheeler industry – All India
Category share %
1998-99 2001-02 Q1 2002-03
35
66 73

18

10

7 8

7 9 9

33 13 8 2
2

Mopeds Motorcycles Step thru Geared scooters Ungeared scooter

Motorcycle and ungeared scooter category have grown

Investors meet – August 2002 7

 Two-wheeler industry projections –Categorywise
Volume in 000’s
4835( 12%)
5000 475 (16%)
4321
425 (-20%)
408
3785 3757 75 (-18%)
4000 372
534
3401 397
238 91
605
986
3000 159
1116
203

246 2867 3500 (22%)

2000 2028
1613
1177
1000
624 611 568 422 360
(-15%)

0
1998-99 1999-00 2000-01 2001-02 2002-03 Proj.

Mopeds Motorycles Step thrus Geared scooters Ungeared scooters

Two wheeler industry is expected to grow by 12 % over 2001-02
fuelled by motorcycles growth of 22 %
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2.TVS Motor performance

Investors meet – August 2002 9

 TVS-M vehicle sales (category-wise)
Monthly average (in 000’s )
120

90 (23%)

90
73 73 21 (-9%)
70
58
23 14 (17%)
31
60
32
28 12
12
11
55(45%)
8
30
38
27 30
22

0
1998-99 1999-00 2000-01 2001-02 Apr-Jul 2002-03
Actual

Motorcycles Ungeared scooters Mopeds

Figure in ( ) indicate growth over 2001-02

Investors meet – August 2002 10

 TVS-M Sales growth-1st Quarter
Volume in 000s
Q1 2001-02 Q1 2002-03 Growth %

Two wheeler industry 957 1246 30%

TVS-M total sales 184 265 44%

Motorcycle industry 589 911 55%

TVS Motorcycle sales 87 164 89%

Year on year TVS Motorcycle sales has grown by 89% better than industry

Investors meet – August 2002 11

 TVS-M Motorcycle market share
( last 4 quarters)
Market share( % )
20%
18% 18%
18%
16%
16%

14% 13%

12%

10%
Q2 01-02 Q3 01-02 Q4 01-02 Q1 02-03
TVS Victor launch helped to regain market share from 13 % to 18%

Market share during July 2002 is 19.6%

Investors meet – August 2002 12
 TVS-M Motorcycle revenue
( last 4 quarters)
% of total Vehicle revenue
80%
74%
73%
75%
68%
70%

65%

60% 57%

55%

50%
Q2 01-02 Q3 01-02 Q4 01-02 Q1 02-03
Percentage revenue from motorcycles has increased
from 57% to 74%
Investors meet – August 2002 13
 TVS-M Product profile
50000
Fiero

45000
Ex-Showroom Price-Bangalore (Jul`02)

Victor
40000

35000
Max100 Dlx
Max100 R
30000
Scooty ES Max100
25000
XL Super HD
Scooty KS
20000
Sport
XL Champ XL Super
15000

10000

UN GEARED
MOPEDS MOTORCYCLES
SCOOTER

TVS has products in every category & price range

Investors meet – August 2002 14

 Key initiatives / achievements

Research & Development:

• Resources 01-02 02-03 budget

Expenditure (% to sales) 1.5 % 3.0 %

• Nearly 400 engineers

• Projects in association with leading International

research labs and Indian institutes

Investors meet – August 2002 15

 Key initiatives / achievements
Research & Development (continued) :

• World class facility for engine development and

testing

• Won technology award 2002 from Department of

Science and Technology for commercialisation of
indigenous technology

• Pro-E user award for best product and process

design during 2001-02

Investors meet – August 2002 16

 Key initiatives / achievements
TVS Victor rated “best in class”
• Development completed in record time
• Management of “target cost”
• Unique product features
• Meeting latent needs of user
• Sales promotional activity “Sales on Wheels”
• Fastest ramp-up to 50,000 per month in 12 months
TVS Victor successfully launched and sold 100,000
units within 8 months

Investors meet – August 2002 17

 Key initiatives / achievements

Sales & Marketing :

• Selling focus shifted to ‘product benefits’.

• Dealer sales and service process for total

customer satisfaction
• Focused promotion of utility products in rural
markets

• Enhanced distribution network – All India

Investors meet – August 2002 18

 TVS-M Distribution network
Numbers
1500
1427 1437

1400
1328

s e
1300 rea
i nc
1190
1%
1200 3
1100

1100

1000
98-99 99-00 00-01 01-02 Q1 02-03

Total distribution network has grown by 31% from 1998-99 to Q1 2002-03

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 Dealership - frontage

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 Key initiatives / achievements

Sales & Marketing (continued) :

• Sachin Tendulkar as TVS brand ambassador

• Focused promotion for Scooty - Over 200,000

young women contacted through special project

• Brand investment doubled in last two years

Investors meet – August 2002 21

 Key initiatives / achievements

Cost Management :
Variable cost reduction
• Value engineering
• Indigenisation of components
• Strategic buying
• Alternate sourcing
• Manufacturing cost reduction through TPM

Achieved Rs 640 mn cost reduction during 2001-02

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 Key initiatives / achievements

Cost Management :
Fixed cost reduction
• Productivity improvement through JIT
• Waste elimination projects

Plant productivity improved by 20% during 2001-02

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 Key initiatives / achievements

Manufacturing :

• Two production plants – Hosur and Mysore

• Flexible manufacturing capacity - 1 million units

of motorcycles and 0.6 million units of
others (moped and scooty) by end of 2002-03

Investors meet – August 2002 24

 Key initiatives / achievements

Information technology :
• Integration of suppliers, dealers and
service centers through Web ( mySAP)

• Improved response through integrated supply

chain (Dealers-Manufacturing-Suppliers)

• Investment of Rs 150 mn

Identified Rs 200 mn savings potential

Investors meet – August 2002 25

 TVS-M Sales and turnover
( last 4 quarters)

Sales ( ‘000 nos) Sales turnover (Rs Billion)

275 7
265
6.3
260 6.4
246 5.8

245 5.8
234
5.2
230 5.2

215 4.6 4.3

202

200 4
Q2 01-02 Q3 01-02 Q4 01-02 Q1 02-03 Q2 01-02 Q3 01-02 Q4 01-02 Q1 02-03

-Motorcycle sales ( value) in Q1 2002-03 increased by 93% as compared to Q2 2001-02

Investors meet – August 2002 26

 TVS-M Profit Before Tax
( last 4 quarters)
PBT ( Rs Million )
500
424

400 351

300

200 164 169

100
Q2 01-02 Q3 01-02 Q4 01-02 Q1 02-03

Investors meet – August 2002 27

 TVS-M Profit After Tax
( last 4 quarters)
PAT ( Rs Million )
400

320 268
232
240

160
104 107

80
Q2 01-02 Q3 01-02 Q4 01-02 Q1 02-03

Investors meet – August 2002 28

 Summary of financials
2000-01 and 2001-02
Rs.in million
Particulars 2000-01 2001-02 Growth %
Gross income 18324 19444 6%
EBITD 1401 1436 3%
Interest 146 118 -19%
Depreciation 437 492 13%
Profit before tax 818 825 1%
Provision for tax
-Current tax 191 179 -6%
-Deferred tax NA 107 NA
Profit after tax 627 539 -14%
EPS (in Rs.) 27 23 -14%

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 Summary of financials
Q1 2001-02 and Q1 2002-03
Rs.in million
Particulars Q1 2001-02 Q1 2002-03 Growth %
Gross income 4130 6322 53%
EBITD 305 584 91%
Interest 49 27 -45%
Depreciation 118 133 13%
Profit before tax 138 424 208%
Provision for tax
-Current tax 30 123 309%
-Deferred tax NA 33 NA
Profit after tax 108 268 149%
EPS (in Rs.) (not annualised) 5 12 149%

Investors meet – August 2002 30

 TVS-M Key ratios
Sl. 2000-01 2001-02 Q1 2002-03
RATIOS
no
1 Profit before tax / sales % 4.5 4.2 6.7
2 Fixed cost / sales % 16.3 16.7 14.7
3 Sales / net fixed assets Average Times 4.5 4.6 5.9
4 Inventory turn - total Average Times 16.9 16.8 22.6
5 Total debt / equity ratio Times 0.5 0.5 0.4
6 Return on capital employed Average % 17.2 16.3 31.6
7 Return on networth Average % 18.7 15.9 31.8
8 Earnings per share Rs. 27.1 23.3 46.4
9 Sales / employee Average Rs million 4.6 4.9 5.9

Investors meet – August 2002 31

 TVS-M Cash flow
Rs. in million

PARTICULARS 2000-01 2001-02

PAT (Profit after tax) 627 539

ADD: Depreciation 437 492

LESS: Dividend 205 433

Movement in working capital (224) 1053

Capital expenditure (742) (428)

Other cash flows (285) (347)

Net cash flow for the year (393) 876

Cash and cash equivalents at the beginning 130 (263)

Cash and cash equivalents at the end (263) 613

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 4.Future plans

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 New product development

• Customer engineering
• Multiple product development
• Lead time reduction
• Develop advanced technologies
• Use of information technology in the area of
Product Data Management

Investors meet – August 2002 34

 Sales and Marketing

• Build the TVS brand nationally

• Improve channel management

• Improve finance availability through Harita Finance

• Customer relationship management through IT

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 International business

• Increasing distribution in Asian, African and

Latin American countries
• Intensive Sales & Marketing efforts in
Srilanka and Bangladesh to establish leadership

• Market entry in South East Asia.

• Target to achieve 15% of turnover through

International business within five years

Investors meet – August 2002 36

 Cost management
Variable cost:
• Value engineering
• Strategic buying
• Alternate sourcing
• Manufacturing cost reduction through TPM
• E-buying
• Global sourcing
Fixed cost:
• Accelerate TPM, JIT
• Improve indirect area productivity through
business process re-engineering
Investors meet – August 2002 37
 Investments

Rs. 2000 mn capital expenditure in 2002-03 and

Rs. 1500 mn in each year during next two years

• Capacity expansion
• New products
• R & D Infrastructure
• Information technology

Will be funded by internal accruals

Investors meet – August 2002 38

 Thank you

Investors meet – August 2002 39