Aluminum

Apparel Industry

Auto Component Banking

Business Process Management (BPM)

Cement

Chlor-Alkali Coal

Commercial Vehicle

Construction

Cotton & Cotton Yarn

CRAMS Industry Crude Oil

Education

Gems & Jewellery

Hotel Housing FinanceMan Made Fibre

Manganese Ore

Natural Gas

Paper

Passenger Vehicle Pesticides

Commercial Vehicle

Pipe

Power GenerationRefining & Marketing

Power

Roads & Highways

Roads Freight Transport

Seed Industry

Shipbuilding

Shipping Steel

Sugar

Telecom Tower

Telecom-Wireless

Tractor

Two Wheeler Tyre

Zinc & Lead

Renewable Energy Sources

Hospital IndustryPassenger Vehicle

AluminumBanking Express Service

Roads Freight Transport

Seed IndustryGems & Jewellery

Steel Express Service

Cotton & Cotton Yarn Tractor

Natural Gas

Pesticides

Passenger Vehicle

Two Wheeler

CRAMS IndustryCrude Oil

Crude Oil Man Made Fibre

IndianThe

CommercialVehicle IndustryOctober

2013

M&HCV GCs has been the backbone of the road freight transport industry. Although

this sub-segment constitutes around 1/3rd in volume terms, it contributes around

3/4th in terms of tonnage. The M&HCV industry is more cyclical in nature as compared

to the LCV and this cycle is mainly influenced by macroeconomic scenario. Hence, with

the slowdown in economic activities (viz. industrial, agriculture, construction and

mining) post second half of FY12, the demand for M&HCV GC segment started

shrinking. CARE Research foresees, even after taking into consideration the festive

demand, no major revival is expected in the near term and M&HCV GC domestic sales

to observe a drop.

M&HCV GC demand todecline in near term asgloomy economicenvironment notexpected to ease

The GC segment, which dominates the CV sales in domestic market, is highly sensitive to

economic scenario prevailing in the country. Healthy economic environment which

ensured strong growth in freight demand, coupled with stability in fuel prices and rise in

investments towards infrastructure and construction activities fuelled strong rise in GC

demand post economic crises of FY09. Hence, during FY10-FY12 period, GC was able to

register a strong rise of around 25 per cent on CAGR basis. However, slowing economic

growth since the start of FY13 pulled down the demand for GCs as it observed a drop of

around 1 per cent. CARE Research foresees with no significant revival expected in the

economic activities, FY14 would continue to exert pressure on demand for both

M&HCV GC and LCV GC sub-segments.

CARE Research observed that the proportion of LCV GC sales in overall GC market in

these selected countries is more than 80 per cent. High urbanization levels has led the

organized retail sector to flourish in these economies much earlier than it has been in

India, which in turn developed the concept of hub and spoke model for transportation

and better logistics infrastructure for improving efficiency. Increasing usage of hub and

spoke model also created demand for more LCV GCs per HCVs in order to effectively

redistribute freight from the nodal points to different end users. Furthermore, better cost

economics in redistribution freight, greater maneuverability in cities, and regulatory

restrictions over the entry of HCVs in cities has fuelled the growth of LCV GCs in these

countries.

GC demand has beenworst hit bymacro-economicheadwinds

India being apredominant M&HCVmarket; LCVs graduallygaining ground as Indiais slowly but surelycatching up with theglobal trend

Government initiatives to improve public transport infrastructure under JNNURM

coupled with rise in institutional buying (i.e. corporate and educational institutions) and

demand from private fleet operators fuelled the growth in bus demand during last 4-5

years. The demand for LCV PCs has been driven by its increasing usage as stage carriers

in rural areas and emerging cities. CARE Research believes rising demand from STUs

under government initiatives like JNNURM II combined with increasing usage of public

transport vehicles by working population in medium term will fuel demand for PCs.

CARE Research foresees not much relief is expected for bus demand this fiscal citing

delay in government allocation of funds towards purchase of 10,000 new buses under

JNNURM II as announced in Union Budget of FY14.

Investments in transportinfrastructure wouldpush the demand forPC segment in mediumterm

IndianThe

CommercialVehicleIndustry

Table of

Contents

Section- I CARE Research's Outlook

Section- II Industry Section

Outlook on Indian CV industry

¢Domestic market expected to grow at a CAGR of 6-7 per cent till FY18

¢GC demand has been worst hit by macro-economic headwinds

¢Slowdown in redistribution to adversely affect LCV GC demand in FY14

¢M&HCV GC demand to decline in near term as gloomy economic environment not expected to ease

¢India being a predominant M&HCV market; LCVs gradually gaining grounds...

¢Growth of organized retail along with increasing urbanization levels would drive LCV demand in near to medium term

¢Rising urbanization has fuelled growth in passenger mobility during last one decade

¢Growing popularity of road travel has enhanced the buying of buses from private fleet operators as well as State Transport Undertakings (STUs) in last one decade

¢Initiatives like JNNURM provided great fillip to bus demand in last 4-5 years

¢Export too would remain under pressure in short term

Outlook on Profitability

¢Industry top line to witness a straight second year drop in FY14

¢Volatile rupee to constrain domestic OEMs from reaping the benefits of global softening in metals prices

¢Domestic steel prices to remain firm on the back of sharp rupee depreciation

¢Similar to steel, aluminum prices too expected to remain firm on the back of sharp rupee depreciation

¢Natural rubber prices to soften, as supply constrains ease and demand pressure continues

¢Sluggish demand would continue to strain on utilization levels of the industry

Evolution

¢Regulatory Phase

¢Developmental Phase

¢Liberalization Phase

¢Modernization Phase

Regulations

¢Motor Vehicle Act

¢Emission Norms

¢Permits

¡Goods Carrier Permit

¡National Permit

¢Carriage of Goods Act, 2007

¢Custom Duty

¢Excise Duty

¢Age Norms

¢Foreign Direct Investment

Domestic Market

¢After three consecutive years of growth, CV industry witnesses decline in FY13

¢Weak economic conditions led to tardy demand for GC segment

¢LCV GC continues to remain the mainstay.

¢M&HCV GC sales plunge on low industrial and mining activity

IndianThe

CommercialVehicleIndustry

¢Investments in urban infrastructure spur the PC segment

¢Demand Drivers

Exports

¢CV exports plunged in FY13

¢GC continues to dominate the CV exports

¢PC exports witness a decline in FY13

¢Singapore continues to remain key export destinations for CV in FY13

Industry Segments and Competition

¢GC segment continue to dominate CV demand

¢SCVs continued to dominate LCV GC market since its introduction in FY05

¢Competition intensifies in the SCV segment

¢HCVs were worst hit in M&HCV segment due to economic slowdown and mining ban in some key mining states.

¡ICVs continue to gain share on the back of better operating economics

¡MCVs share continues to drop

¡Increasing application of hub and spoke concept led to rise in the demand for HCVs

¢Increasing need for public transport infrastructure fuelled growth in PC segment

¡Rise in demand from inter and intra city stage carrier operator as well as corporate have led to spurt in the demand for LCV PC

¡Buying from STUs under Government initiatives to improve public transport infrastructure was the major driver for M&HCV PC demand recently

Cost Analysis

¢Raw Material Cost

¡Steel

¡Rubber

¢Selling and Distribution costs

¢Employee Cost

Credit Profile

¢Operating Margins

¢Net Margins

¢Return on Capital Employed

¢Fixed Asset Turnover Ratio

¢Debt-Equity

¢Working Capital Management

Tata Motors Limited

Ashok Leyland Limited

Mahindra and Mahindra Limited

¢Segment wise domestic sales and exports of the GC Industry

¢Player wise GC domestic sales in sub-segment

¢Segment wise domestic sales and exports of PC industry

¢Player wise PC domestic sales in sub-segment

SECTION- III Company Section

Section- IV Annexures

Table of

Contents

IndianThe

CommercialVehicleIndustry

Table of

Contents

List of TablesSECTION- I CARE Research's Outlook

SECTION- II INDUSTRY SECTION

SECTION- III Company Section

Outlook on Indian Commercial Vehicle Industry

¢LCV GC sub segment wise domestic sales forecast

¢M&HCV GC sub segment wise domestic sales forecast

Outlook on Profitability

¢Key financial indicators

Regulations

¢Trend in emission norms

Domestic Market

¢Sub-segment wise domestic sales (LCV GC)

¢Sub-segment wise domestic sales (M&HCV GC)

¢Sub-segment wise domestic sales (LCV PC & M&HCV PC)

Cost Analysis

¢Trend in Raw materials cost as a percentage to net sales (%)

¢Trend in Selling and Distribution cost as a percentage to net sales (%)

¢Trend in Employee cost as a percentage to net sales (%)

Credit Profile

¢Trend in operating margins (%)

¢Trend in net margins (%)

¢Trend in Return on Capital Employed (%)

¢Trend in Debt-Equity

¢Key Financial indicators

Ashok Leyland Limited

¢Key performance indicators

¢First Half Update

Mahindra and Mahindra Limited

¢Key performance indicators

¢First Half Update

Tata Motors Limited

¢Key performance indicators

¢First Half Update

IndianThe

CommercialVehicleIndustry

Table of

Contents

List of GraphsSECTION- I CARE Research's OUTLOOK

SECTION- II Industry Section

Outlook on Indian Commercial Vehicle Industry

¢Outlook on domestic CV industry

¢Outlook on domestic GC segment

¢Country wise HCV/LCV proportion in GC sales in CY 2012

¢Share of LCV in GC sales

¢Outlook on retail industry

¢Trend in growth levels in IIP Consumer durables

¢Growth in sector wise GDP

¢Estimates of utilization levels of M&HCV GC in primary freight distribution

¢Passenger mobility through roads

¢Trend of road projects awarded and targets by NHAI

¢Outlook on domestic PC industry

¢Outlook on CV exports

Outlook on Profitability

¢Outlook on Sales, Volume and Realization

¢Outlook on domestic HR coil prices (Rs/tonne)

¢Outlook on domestic aluminum prices (Rs/tonne)

¢Outlook on domestic natural rubber prices

¢Trend in capacity utilization

Evolution

¢Evolution of CV industry

¢Industry structure of CV industry

Regulations

¢Regulatory Framework

Domestic Market

¢Trend in domestic CV industry

¢Trend in domestic GC industry

¢Trend in domestic PC industry

¢Demand Drivers

Exports

¢Trend in CV exports

¢Trend in GC exports

¢Trend in PC exports

¢GC exports – Destination wise export share (Value) in FY12 & FY13

Industry Segments and Competition

¢Break up of GC and PC industry in FY13

¢Break up of GC industry (FY13)

¢Trend in share of different sub segments in LCV GC segment

¢Trend in share of key players in less than 3.5 tonne segment

IndianThe

CommercialVehicleIndustry

Table of

Contents

IndianThe

CommercialVehicleIndustry

¢Trend in share of different sub segments in M&HCV segment

¢Trend in share of key players in ICV's segment

¢Trend in share of key players in MCV's segment

¢Trend in share of key players in HCV segment

¢Breakup of PC industry (FY13)

¢Trend in share of key players in LCV PC segment

¢Trend in share of key players in M&HCV PC segment

Cost Analysis

¢Annual and monthly trend in steel prices

¢Annual and monthly trend in rubber prices

Credit Profile

¢Trend in Fixed Asset turnover

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