Dashboard the Monthly Auto Update

June 2014 Dashboard The Monthly Auto Update

Data Track: June 2014 volume update of auto majors Speedometer  Sector overview and outlook ...... 2 June 2014 relative performance  Hero MotoCorp ...... 3  Bajaj Auto ...... 4  HMSI ...... 6  TVS Motor ...... 7  Maruti Suzuki ...... 9  Mahindra & Mahindra ...... 11  Tata Motors ...... 13  Ashok Leyland ...... 15  Eicher Motors ...... 16

Sector Gauge: May 2014 update 12-month relative performance  Two-wheelers ...... 17  Three-wheelers ...... 19  Cars and UVs ...... 21  Commercial vehicles...... 23

Management Media Interviews & News developments  Maruti Suzuki: Mr Mayank Pareek, COO, (Sales & Marketing) ..... 26  Bajaj Auto: Mr Rajiv Bajaj , Managing Director...... 29  Yamaha launches upgraded FZ and FZ-S bikes ...... 32  New Ford Fiesta Facelift Launched ...... 32 Aggregate Volumes For June 2014* Segment Jun-14 Jun-13 YoY (%) May-14 MoM (%) FY15YTD FY14YTD Chg (%) 2-Wheelers 1,320,778 1,166,110 13.3 1,497,471 -11.8 4,161,110 3,637,134 14.4 Motorcycle 1,029,673 936,524 9.9 1,186,281 -13.2 3,273,375 2,948,112 11.0 Scooters 228,643 169,934 34.5 249,355 -8.3 699,964 507,416 37.9 3-Wheelers 56,226 52,285 7.5 42,141 33.4 150,362 148,786 1.1 Cars 114,103 90,887 25.5 103,115 10.7 304,698 284,487 7.1 UVs 39,513 38,791 1.9 40,517 -2.5 118,573 126,640 -6.4 Commercial Vehicles 39,466 51,543 -23.4 39,272 0.5 107,757 144,119 -25.2 LCV 20,117 31,794 -36.7 20,522 -2.0 59,240 92,923 -36.2 M&HCV 19,349 19,749 -2.0 18,750 3.2 48,517 51,196 -5.2 Tractors (M&M) 29,884 27,749 7.7 23,940 24.8 74,555 74,577 0.0 Total Volumes 1,599,970 1,427,365 12.1 1,746,456 -8.4 4,917,055 4,415,743 11.4 * Aggregate of Bajaj, Hero, TVS Motor, HMSI, Maruti, M&M, Tata Motors, Ashok Leyland & Eicher Motors Source: Company, MOSL Comparative Valuation CMP * Rating TP P/E (x) EV/EBITDA (x) RoE (%) RoCE (%) Auto OEM's (INR) (INR) FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E Bajaj Auto 2,295 Buy 2,191 18.0 15.7 12.0 10.0 35.0 33.7 48.8 46.8 Hero MotoCorp 2,589 Buy 2,712 17.6 14.3 12.4 10.2 47.1 46.7 61.9 62.6 TVS Motor 171 Buy 178 17.0 12.5 10.5 7.7 29.9 31.6 32.7 36.5 M&M 1,236 Buy 1,310 15.9 12.2 14.5 11.6 18.0 18.5 19.0 20.1 Maruti Suzuki 2,630 Buy 2,977 12.3 10.0 10.0 8.0 19.8 22.1 0.0 0.0 Tata Motors 469 Buy 574 9.2 6.9 3.8 2.9 22.3 23.8 22.6 25.0 Ashok Leyland 36 Buy 38 NA 26.4 14.5 9.0 0.9 7.9 5.0 9.5 Amara Raja Batteries 496 Buy 515 19.7 15.7 11.8 9.2 27.1 27.5 37.9 38.9 * Price as on 3rd July 2014. # Nos. are on CY basis Source: Company, MOSL Jinesh Gandhi ([email protected]); +91 22 3982 5416 Chirag Jain ([email protected]); + 91 22 3982 5418 1 Investors are advised to refer through disclosures made at the end of the Research Report. Dashboard

Data Track Sector overview and outlook Recovery signs gathers pace across segments; monsoon remains key near term monitorable

Sharp improvement in PV demand; MHCV decline continues to moderate With improved consumer sentiments, post general elections, passenger vehicle demand has improved considerably. Lead indicators of CV industry such as freight rates, fleet operators' utilization are turning positive over the last few months. Recent rail fare hike on freight movement would further support road freight rates. Recovery in two-wheeler industry continues with double digit growth. While tractors (M&M) registered 8% growth, below average monsoon poses a risk to FY15 growth forecast.

Product lifecycle key factor to off-set competitive forces Competitive intensity is expected to remain high across segments, especially in PVs and CVs, with several launches from challengers and incumbents. While volume recovery would be witnessed across segments, benefit of the same would differ from player to player depending on their product lifecycle and competitive intensity. Product lifecycle of incumbents like HMCL (2-3 new product launches) and MSIL (3 new product launches) is favorable, whereas MM doesn't have any major launch lined- up for FY15. In CVs, we expect continued roll-out of new trucks from Eicher and Daimler, along with ramp-up in their distribution network, keeping incumbents on their toes.

Improvement in economic activity post general election proving to be key catalyst for demand recovery Revival in economic activity along with improve in business and customer sentiments leading to demand recovery. The pace of project clearences and increase in investment activity would be key to monitor demand moving forward.

Valuation and view Demand environment and changing competitive landscape in the auto sector would be the key determinants of stock performance. Prefer Maruti Suzuki and Tata Motors in large caps and TVS Motor and Ashok Leyland in mid-caps.

Key Financial Indicators Volume Chg (%) ^ EBITDA Margins (%) EPS (INR) * EPS Growth (%) * Auto OEM's FY15E FY16E FY15E FY16E FY15E FY16E FY15E FY16E Bajaj Auto 9.1 13.6 20.4 20.4 127.2 146.1 13.5 14.9 Hero MotoCorp 7.7 13.5 13.0 14.0 147.3 180.8 39.5 22.8 TVS Motor 24.6 17.6 7.4 7.9 10.1 13.7 35.5 19.9 M&M 5.0 14.7 13.1 13.7 59.4 72.9 19.3 7.3 Maruti Suzuki 16.3 17.1 13.1 13.8 41.0 30.9 132.5 172.6 Tata Motors * 10.5 20.1 16.1 16.5 50.9 68.3 11.3 34.2 Ashok Leyland 20.3 24.3 5.9 8.9 -0.3 1.8 NA NA Eicher Motors # - - 11.6 13.7 226.0n 340.5 54.9 50.7 ^ Volume growth for standalone; * Consolidated wherever applicable, ** Royalty adjusted margins, # Nos. are on CY basis.

July 2014 2 Dashboard

Data Track Hero MotoCorp June volumes up 8%; cautious guidance on below average monsoon

Highlights  Hero Moto's Jun-14 sales stood at 541,594 units (+7.8% YoY, -10% MoM), above our estimate of 524,590 units.  The recent advertising campaign on Splendor iSmart has helped to generate more awareness about its new i3S technology, leading to capacity expansion for the model. It recently unveiled four new products, the key launch among them being 100-cc scooter, Dash.  Our estimates model for ~8% growth in FY15, implying residual growth of ~7% or ~552,856 units. Below average monsoon could pose risk to both urban and rural demand, as per management.  Hero Moto recently commenced production at its 4th manufacturing plant at Neemrana, Rajasthan. The plant has an installed capacity of 750K units, taking the total annual installed capacity to 7.65m units of 2Ws.  Hero Moto trades at 17.6x/14.3x FY15E/FY16E EPS of INR147/INR180 respectively. Maintain Buy.

Hero MotoCorp: two-wheelers

FY12 FY13 FY14 FY15 690,000 625,000 560,000 495,000 430,000 365,000 300,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Hero MotoCorp: Financial & Valuation Summary Bloomberg HMCL IN Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE Equity Shares (m) 200 End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%) CMP (INR) 2,589 3/13A 235,827 21,182 106.1 -10.9 24.4 21.5 10.3 15.6 45.6 43.6 52-Wk Range (INR) 2,775/1,636 3/14A 251,249 21,091 105.6 -0.4 24.5 21.9 9.2 14.2 39.8 50.7 1,6,12 Rel. Perf. (%) 7/6/25 3/15E 278,567 29,415 147.3 39.5 17.6 14.9 7.5 12.4 47.1 61.9 M.Cap. (USD b) 8.6 3/16E 321,598 36,111 180.8 22.8 14.3 12.8 6.0 10.2 46.7 62.6

July 2014 3 Dashboard

Data Track Bajaj Auto Below est; 3W volumes rise 5%, exports grow 12%

Snapshot of volumes for May 2014 Resi- Residual FY15 YTD YoY MoM FY14- Chg FY15 YoY Jun-14 Jun-13 May-14 FY15-YTD dual Monthly Monthly (%) (%) YTD (%) estimate (%) Gr. (%) Run rate Run rate Total volume 305,465 295,749 3.3 351,436 -13.1 988,430 979,275 0.9 4,221,623 9.1 11.8 359,244 329,477 Motorcycles 262,202 254,544 3.0 313,020 -16.2 874,858 860,151 1.7 3,728,130 8.9 11.4 317,030 291,619 Three-Wheelers 43,263 41,205 5.0 38,416 12.6 113,572 860,151 -4.7 493,493 10.2 15.6 42,213 37,857 Domestic 170,391 175,350 -2.8 195,257 -12.7 546,463 119,124 -11.4 2,452,831 7.3 14.2 211,819 182,154 Exports 135,074 120,399 12.2 156,179 -13.5 441,967 616,712 21.9 1,768,792 11.7 8.6 147,425 147,322 Source: Company, MOSL

Highlights  Bajaj Auto's Jun-14 total sales below our estimates. Total sales grew by 3.3% YoY (- Weak market conditions, 13.1% MoM) to 305,465 units (est 327,267 units) lack of presence in the  Motorcycle volumes grew by 3% YoY (-16.2% MoM) at 262,202 units (est 285,056 high growing scooter units). segment and high  3W volumes have grown by 5% YoY (+12.6% MoM) to 43,263 units (est 42,211 units) competitive pressures due to rise in sales to key export markets. impacting motorcycle  Domestic volumes have declined by 2.8%, while exports have grown by 12% YoY volumes mainly driven by motorcycle exports.  Within domestic motorcycle segment, management indicated strong 30% growth in Pulsar volumes, while Discover performance continues to remain weak.  BJAUT plans to launch another variant of Discover (150cc) in Jul-14 to improve its performance in the executive segment.  Resumption of sales to Egypt (of 5k 3Ws and 3k motorcycles) has been delayed due to documentation formalities and would be booked in July.  The stock trades at 18x/15.7x FY15E/FY16E EPS respectively. Maintain Buy.

Bajaj Auto: Financial & Valuation Summary Bloomberg BJAUT IN Year Net Sales PAT EPS EPS P/E P/CE P/BV EV/ RoE RoCE Equity Shares (m) 289.4 End (INR m) (INR m) (INR) Gr. (%) (X) (X) (X) EBITDA (%) (%) CMP (INR) 2,295 3/13A 199,973 30,436 105.2 -2.0 21.8 20.7 8.4 16.4 43.7 59.8 52-Wk Range (INR) 2,364/1,683 3/14A 201,495 32,420 112.0 6.5 20.5 19.4 6.9 14.0 37.0 51.8 1,6,12 Rel.Perf.(%) 14/1/-9 3/15E 226,400 36,801 127.2 13.5 18.0 17.2 5.8 12.0 35.0 48.8 M.Cap. (USD b) 11.1 3/16E 258,515 42,270 146.1 14.9 15.7 15.0 4.9 10.0 33.7 46.8

July 2014 4 Dashboard

Two-wheeler volumes (units)

FY12 FY13 FY14 FY15 440,000 Volumes decline on 375,000 MoM basis

310,000

245,000

180,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Three-wheeler volumes (units)

FY12 FY13 FY14 FY15 52,000

45,000 Three-wheeler volumes grow due to rise in sales 38,000 to key export markets 31,000

24,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Export volumes (units)

FY12 FY13 FY14 FY15 200,000

Exports grew by 160,000 12.2% YoY

120,000

80,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Market mix

Domestic Exports 100%

75%

Share of domestic sales 50% have declined in 25% recent months 0% Oct-11 Oct-12 Oct-13 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Apr-14 Jun-14 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13 Dec-13 Feb-14

Source: Company, MOSL July 2014 5 Dashboard

Data Track HMSI Sales growth at 28% driven by 31% growth in scooters, motorcycles see healthy growth of 25%

Highlights Scooters have been the  HMSI June-14 sales grow by 28% YoY to 323,224 units. Growth was dirven by both key growth driver of the scooters and motorcycles segment. volumes  Scooters grew by 31% YoY to 172,19 units, while motorcycles reported healthy growth of 25% YoY to 151,105 units.  HMSI has recently launced Activa 125cc to consolidate its market position in the scooter segment.

HMSI: Monthly volume trend

FY12 FY13 FY14 FY15 400,000

325,000

250,000

175,000

100,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

July 2014 6 Dashboard

Data Track TVS Motor In-line with estimates; Scooters and exports drive growth; new launches drive motorcycle growth

Snapshot of volumes for May 2014 YoY YTD YoY Resi- Residual FY15 YTD MoM FY15- FY14- FY15 Jun-14 Jun-13 (%) May-14 (%) (%) dual Monthly Monthly (%) chg YTD YTD estimate chg chg chg Gr. (%) Run rate Run rate Total volume 202,177 164,128 23.2 210,293 -3.9 603,153 494,494 22.0 2,593,108 24.6 25.4 221,106 201,051 Motorcycles 74,772 59,015 26.7 85,475 -12.5 233,883 193,470 20.9 989,205 24.7 25.9 83,925 77,961 Scooters 56,524 38,684 46.1 53,924 4.8 156,517 102,123 53.3 698,936 46.9 45.2 60,269 52,172 Mopeds 62,462 59,652 4.7 61,835 1.0 187,771 181,606 3.4 803,914 10.1 12.3 68,460 62,590 Three-Wheelers 8,419 6,777 24.2 9,059 -7.1 24,982 17,295 44.4 101,053 23.8 18.2 8,452 8,327 Source: Company, MOSL

Highlights TVS Motor launched an  TVS Motor total sales grew 23.2% to 202,177 units (v/s est 204,000 units). all-new Star City plus  Exports have grown by 24%, while domestic sales have also registered healthy and refreshed Wego 23% growth.  Motorcycles grew 26.7% YoY to 74,772 units (est 77,000 units) driven by new model launch (Star City Plus).  Scooters continued their strong growth momentum with growth of 46% YoY to 56,524 (est 55,000 units).  Mopeds have recovered with 4.7% YoY growth (v/s FY14 decline of 8%). Strong growth in non-south markets has been the key growth driver.  Three-wheeler sales have grown by 24% YoY to 8,419 units led primarily by exports.  Management has guided for 25% volume growth for FY15 driven by: a) recent success of Jupiter, b) upcoming launch of new Scooty Zest (110cc variant) and c) two motorcycle launches Star City Plus (launched in May 2014) and Victor (expected in 3QFY15).  The stock trades at 17/12.5x standalone FY15E/16E EPS respectively. Maintain Buy.

TVS Motor Company Ltd: Valuation summary Equity Shares (m) 475.1 Year Net Sales PAT EPS EPS P/E P/BV RoE RoCE EV/ End (INR m) (INR m) (INR) Gr. (%) (X) (X) (%) (%) EBITDA 52-Week Range (IN 175/28 03/13A 70,650 1,810 3.8 -27.3 44.9 6.6 15.1 15.7 21.4 1,6,12 Rel. Perf. (%) 20/102/360 03/14A 79,619 2,607 5.5 44.0 31.2 5.7 19.7 20.3 17.8 M.Cap. (INR b) 81.4 03/15E 104,997 4,799 10.1 84.1 17.0 4.5 29.9 32.7 10.5 M.Cap. (USD b) 1.4 03/16E 128,555 6,501 13.7 35.5 12.5 3.5 31.6 36.5 7.7

July 2014 7 Dashboard

Motorcyle volumes (units)

FY12 FY13 FY14 FY15 98,000

86,000

74,000

62,000

50,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

Scooters and mopeds (units)

FY12 FY13 FY14 FY15 132,000

114,000

Scooters grew by 46.1% 96,000

78,000

60,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r Sales mix

Motorcycles Scooters & Mopeds 100%

Share of scooter and 75% moped sales marginally 50% rises MoM 25%

0% Oct-11 Oct-12 Oct-13 Jun-11 Apr-12 Jun-12 Apr-13 Jun-13 Apr-14 Jun-14 Aug-11 Dec-11 Feb-12 Aug-12 Dec-12 Feb-13 Aug-13 Dec-13 Feb-14

Source: Company, MOSL

July 2014 8 Dashboard

Data Track Maruti Suzuki Above estimates at 112,773 units, retails stronger than wholesales, first time buyers returning, guides double digit growth for FY15

Snapshot of volumes for May 2014 Resi‐ Residual FY15 YTD YoY MoM FY14‐ Chg FY15 YoY Jun‐14 Jun‐13 May‐14 FY15‐YTD dual Monthly Monthly (%) (%) YTD (%) estimate (%) Gr. (%) Run rate Run rate Total volume 112,773 84,455 33.5 100,925 11.7 299,894 266,434 12.6 1,343,574 16.3 17.5 115,964 99,965 Domestic 100,964 77,002 31.1 90,560 11.5 270,643 245,346 10.3 1,238,171 17.5 19.7 107,503 90,214 C 9,738 6,833 42.5 10,771 -9.6 28,831 22,701 27.0 A2 69,911 50,974 37.2 55,462 26.1 175,075 152,704 14.6 A3 16,312 12,862 26.8 19,074 -14.5 51,470 50,677 1.6 UV 5,003 4,997 0.1 5,253 -4.8 15,267 14,622 4.4 Export 11,809 7,453 58.4 10,365 13.9 29,251 21,088 38.7 105,402 4.0 -5.1 8,461 9,750 Source: Company, MOSL

Highlights "The footfall has started  Maruti Suzuki (MSIL) reported Jun-14 volume growth of 33.5% (11.7% MoM) to getting converted into 112,773 units (est 101,250 units). Domestic volumes grew by 31.1% (+11.5% MoM) sales. We saw a big surge to 100,964 units, while exports have grown by 58% to 11,809 units on low base. in first-time car buyers  Compact segment volumes (comprises of key models of Swift, Celerio) grew by and a good turnaround in 6% YoY to 22,293 units. However, the Mini segment (comprising key models of the last 5-6 weeks," he Alto and WagonR) grew strongly by 52% to 47,618. Overall, the A2 segment grew adds. According to him, by 37% YoY to 69,911 units (est 56,000 units). retail sales was higher in  Dzire volumes (compact sedan) grew by 27.4% to 15,990 units. June compared to  Management commentary on monthly sales performance very positive. Indicated wholesales, which is a that retails have been stronger than wholesale at 108k units (95k units in May) very positive sign for the with clear signs of first time buyers returning in the market. Expect healthy double industry". - Mayank digit growth for FY15 for MSIL (earlier guidance of 8-10%, our estimate of 12.4%) Pareek, Maruti Suzuki driven by improved sentiments and new launches. Discounts though currently India, Chief Operating remains at high levels, are expected to normalize July onwards. Officer (Marketing and  Given its leadership position and three new launches (Celerio, Ciaz in 2QFY15 and Sales) as quoted in media compact SUV in 4QFY15), along with an expected launch of new Sx4 (sedan) and a compact SUV in FY15, MSIL expected to continue its healthy growth.  Celerio capacity to be increased from July 2014 by 30% to 7,000 units. 28,000 units have already been delivered, with 30,000 bookings in hand.  MSIL trades at 19.8x/15.2x our FY15E/16E Consol. EPS respectively. Maintain Buy.

Maruti Suzuki: Financial & Valuation Summary Bloomberg MSIL IN Year Total Inc. PAT Con. EPS EPS Con. P/E P/CE P/BV EV/ RoE RoCE Equity Sha res (m) 302.1 End (INR m) (INR m) (INR) Gr. (%) (x) (x) (X) EBITDA (%) (%) CMP (INR) 2,630 3/13A 435,879 23,921 81.7 40.5 32.2 18.3 4.3 17.3 12.9 15.5 52-Wk Ra nge (INR) 2,663/1,217 3/14A 437,005 27,831 94.4 15.5 27.8 16.1 3.8 13.8 13.3 16.5 1,6,12 Rel.Perf.(%) 9/26/31 3/15E 518,907 39,245 132.5 40.3 19.8 12.3 3.3 10.1 16.1 19.8 M.Cap. (USD b) 13.2 3/16E 621,453 51,382 172.6 30.3 15.2 10.0 2.8 7.6 17.8 22.1 SPIL merger w.e.f 1/Apr/2012 July 2014 9 Dashboard

Monthly volumes (units)

Export volumes (units)

Exports grow by 58% on low base

Market mix

Share of domestic sales have improved

Source: Company, MOSL

July 2014 10 Dashboard

Data Track Mahindra & Mahindra June-14 volumes in-line estimate at 68,355 units (v/s est 66,969 units); UVs grow 3% (YoY), tractors grew 8% YoY

Snapshot of volumes for May 2014 Resi- Residual FY15 YTD YoY MoM FY14- Chg FY15 YoY Jun-14 Jun-13 May-14 FY15-YTD dual Monthly Monthly (%) (%) YTD (%) estimate (%) Gr. (%) Run rate Run rate Total volume 68,355 65,841 3.8 61,809 10.6 187,169 197,561 -5.3 814,224 5.0 8.5 69,673 62,390 UV (incl. pick-ups 32,532 31,562 3.1 32,891 -1.1 97,065 104,802 -7.4 449,671 5.0 9.0 39,178 32,355 LCV 995 911 9.2 846 17.6 2,591 2,599 -0.3 8,977 10.0 14.8 710 864 Verito (Logan) 400 1,316 -69.6 400 0.0 1,150 3,216 -64.2 8,144 0.0 41.9 777 383 Three-Wheelers 4,544 4,303 5.6 3,732 21.8 11,808 12,367 -4.5 66,416 5.0 7.3 6,068 3,936 Tractors 29,884 27,749 7.7 23,940 24.8 74,555 74,577 0.0 281,016 5.0 6.9 22,940 24,852 Source: Company, MOSL

Highlights "Looking at the product  M&M's UV volumes (incl. pick-ups) grew by 3% YoY (-1.1% MoM) to 32,532 units portfolio that we have (v/s est 32,193 units). The Passenger UVs volumes declined 3% YoY (-12% MoM) to and the likely economic 16,780 units, whereas pick-ups grew by 3% YoY (-10% MoM) to 14,138 units. We activities emerging out of estimate UV volumes to grow 5% in FY14, implying 9% residual growth or ~39,178 the new government's residual run-rate. long-term investment  LCV segment grew by 9% YoY (+17.6% MoM) to 995 units (v/s est 865 units). 3W plans, we see that volumes grew 5.6% YoY (+21.8% MoM) to 4,544 units (v/s est 4,393 units). demand will have a good  On release of monthly sales performance, M&M Chief Executive (Automotive potential. But monsoon Division) Pravin Shah said: " We have achieved a marginal growth in our sales impacts people's during June 2014 and do hope that the auto industry will continue to stay in a sentiment, so there you positive zone. The recent announcement by the government of an extension in can see the holdback in the lowering of excise duty will provide a fillip leading upto the festive season". terms of purchases,  M&M Tractor volumes grew by 7.7% YoY (+24.8% MoM) to 29,884 units (v/s est mainly connected with 28,859 units). Management has guided 8-10% growth for FY15. We estimate tractor the personal usages," volume growth of ~5% in FY15, implying residual growth of 7% or monthly run- said M&M Chief rate of ~22,940 units. Executive (Automotive  Rajesh Jejurikar, Chief Executive, M&M's Farm Equipment and Two Wheeler Division) Pravin Shah, as Division said pick up in monsoon rains during this month would enable increased quoted in media coverage of kharif crop leading to higher agricultural output.  The stock trades at 16.2x/12.2 consol. FY15E/FY16E EPS of INR76.4/101.6 respectively. Maintain Buy.

Mahindra and Mahindra: Financial & Valuation Summary Bloomberg MM IN Year Net Sales S/A PAT * S/A EPS * Cons. Con. EPS P/E Cons. RoE RoCE EV/ EV/ Equity Sha res (m) 587.2 End (INR m) (INR m) (INR) EPS (INR) Gr (%) (x) P/E (x) (%) (%) Sales (x) EBITDA CMP (INR) 1,236 3/13A 404,412 36,344 60.7 60.9 18.9 20.4 20.3 22.4 23.2 1.2 10.4 52‐Wk Ra nge (INR) 1,269/742 3/14E 405,085 39,051 65.2 72.7 19.3 18.9 17.0 22.1 20.3 1.8 15.3 1,6,12 Rel.Perf.(%) ‐8/5/‐9 3/15E 431,966 35,573 59.4 76.4 5.1 20.8 16.2 17.5 18.5 1.7 14.9 M.Cap. (USD b) 12.4 3/16E 509,523 43,622 72.9 101.6 33.0 17.0 12.2 18.6 20.1 1.4 11.6 * S/A including MVML July 2014 11 Dashboard

Utility vehicle volumes (units)

UV volumes grow on improving customer sentiments and low base

Tractor volume (units)

Product mix

Tractors and UVs dominate the segment mix

Source: Company, MOSL

July 2014 12 Dashboard

Data Track Tata Motors Below est at 38.6k units (est 47k units); weak performance across segments despite low base

Snapshot of volumes for June 2014 Resi‐ Residual FY15 YTD YoY MoM FY14‐ Chg FY15 YoY Jun‐14 Jun‐13 May‐14 FY15‐YTD dual Monthly Monthly (%) (%) YTD (%) estimate (%) Gr. (%) Run rate Run rate Total volume 38,557 52,708 ‐26.8 37,525 2.8 109,974 153,172 ‐28.2 638,633 12.9 28.1 58,740 36,658 HCV's 10,814 11,733 -7.8 10,181 6.2 30,575 32,997 -7.3 141,150 15.0 23.2 12,286 10,192 LCV's 19,525 28,630 -31.8 17,928 8.9 53,930 83,500 -35.4 334,940 12.5 31.2 31,223 17,977 Cars 6,168 10,113 -39.0 7,043 -12.4 19,156 29,459 -35.0 128,791 13.7 30.8 12,182 6,385 UV's 2,050 2,232 -8.2 2,373 -13.6 6,313 7,216 -12.5 33,752 5.0 10.1 3,049 2,104 of which exports 3,814 3,996 -4.6 3,191 19.5 6,526 11,435 -42.9 Source: Company, MOSL

Highlights Discounts remain high on  Tata Motors Jun-14 sales volumes have declined by 26.8% YoY to 38,557 units (v/s weak demand scenario est 47,148 units). and higher competitive  HCV sales declined 7.8% YoY (up 6.2% MoM) despite low base to 10,814 units (est pressures 12,320 units). Our industry interaction indicates that freight rates have started inching upwards driven by gradual increase in fleet operators utilization. Over the next few months, we expect recovery in MHCV volumes on expectation of pick-up in economic activity and sharp drop in volumes over last two years  LCV sales declined by 32% YoY (up 8.9% MoM) to 19,525 (est 21,473 units). Our industry interaction indicates that credit availability has been difficult due to rise in defaults.  Car sales stood at 6,168 units (est 11,124 units), a de-growth of 39% YoY (-12.4% MoM).  UV sales were at 2,050 units (est 2,232 units), a decline of 8% YoY (-13.6% MoM).  The stock trades at 8.7x/6.3x FY15E/16E consol. EPS respectively. Maintain Buy.

Tata Motors: Financial & Valuation Summary Bloomberg TTMT IN Year Sales Adj. PAT Adj. EPS Norm. P/E Norm. RoE RoCE EV/ EV/ Actual Eq. Sh (m) 3,218.9 End * (INR m) (INR m) (INR) EPS (INR) ^ Ratio P/E (x) (%) (%) Sales (x) EBITDA (x) CMP (INR) 469 3/13A 1,888,176 103,286 32.1 12.4 12.9 33.3 29.4 23.4 0.8 5.9 52-Wk Ra nge (INR) 472/273 3/14A 2,330,214 146,708 45.6 19.1 9.1 21.7 33.1 27.3 0.6 4.1 1,6,12 Rel. Perf. (%) 3/0/25 3/15E 2,633,489 152,593 47.4 17.7 8.7 23.4 26.1 24.4 0.6 3.6 M.Cap. (USD b) 22.2 3/16E 3,366,259 211,830 65.8 28.4 6.3 14.6 27.8 27.3 0.4 2.6 * Consolidated; ^ Normalized for capitalized expenses

July 2014 13 Dashboard

M&HCV volumes (units)

M&HCV volumes continue to remain under pressure

LCV volumes (units)

Decline in LCVs reflecting weakness in consumption spend

Car volumes (units)

Domestic car volumes continues to decline sharply

Product mix in the CV segment

LCVs account for over 70% of the CV product portfolio

Source: Company, MOSL July 2014 14 Dashboard

Data Track Ashok Leyland Above estimates; M&HCV registers 17% growth post 23 months of decline; LCVs though continues to remain weak

Snapshot of volumes for June 2014 Resi‐ Residual FY15 YTD YoY MoM FY14‐ Chg FY15 YoY Jun‐14 Jun‐13 May‐14 FY15‐YTD dual Monthly Monthly (%) (%) YTD (%) estimate (%) Gr. (%) Run rate Run rate Total volume 7,452 6,967 7.0 6,632 12.4 19,981 20 ‐8.0 105,012 20.3 29.7 9,448 6,660 CV (ex LCV) 5,542 4,714 17.6 4,884 13.5 14,949 15 0.3 67,012 14.9 19.9 5,785 4,983 LCV (Nissan JV) 1,910 2,253 -15.2 1,748 9.3 5,032 31 -26.3 38,000 31.0 48.7 3,663 1,677 Source: Company, MOSL

Highlights MHCV volumes grow  Ashok Leyland reported sales volume growth of 7% YoY (+12.4% MoM) in Jun-14 at 17% YoY sales volumes to 7,452 units (est 7,052 units).  MHCVs have witnessed growth post 23 months of decline driven by recovery in economic activity and aggressive entry into ICV segment (with BOSS product).  Decline in LCVs (Dost & Stile) continues. Jun-14 witnessed a decline of 15% YoY to 1,910 units (est 1,802 units).  The stock trades at 19.9x FY16E EPS, 9.9x EV/EBITDA and 1.9x P/BV. Maintain Buy.

Trend in M&HCV voulmes (units)

FY12 FY13 FY14 FY15 14,000

11,000

8,000

5,000

2,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Bloomberg AL IN Ashok Leyland: Financial & Valuation Summary Equity Shares (m) 2,660.7 Year Net Sales PAT EPS EPS P/E P/BV RoE RoCE EV/ EV/ CMP (I NR) 36 End (INR m) (INR m) (INR) Gr. (%) (x) (x) (%) (%) Sales (x) EBITDA (x) 52-Week Range 39/12 3/13A 124,812 4,337 0.6 -73.3 56.7 2.1 3.9 6.5 1.0 14.9 1,6,12 Rel. Perf. (%) 8/93/48 3/14A 99,434 294 -1.8 - - 2.1 -10.7 -1.5 1.3 80.5 M.Cap. (INR b) 95 3/15E 112,383 -759 -0.3 - - 2.0 -1.6 3.7 1.2 20.1 M.Ca p . (USD b) 1.6 3/16E 146,504 5,094 1.8 - 19.9 1.9 9.9 10.9 0.9 9.9

July 2014 15 Dashboard

Data Track Eicher Motors Above est; RE grows 83% YoY to 25k units, CV grows by 26.8% YoY to 4,187 units (est 3,344 units) , buses and HD registers 28% and 36% growth respectively

Snapshot of volumes for June 2014 YoY (%) MoM (%) YTD (%) Jun‐14 Jun‐13 May‐14 CY14‐YTD chg chg chg Royal Enfield 25,303 13,805 83.3 25,010 1.2 138,399 85.1 VECV 4,187 3,302 26.8 3,685 13.6 20,787 (10.8) LMD 1,744 1,765 -1.2 1,522 14.6 9,979 (25.3) HD 501 368 36.1 2,597 -80.7 -24 (23.6) Buses 1,229 957 28.4 1,152 6.7 17,766 (20.3) Volvo 65 48 35.4 69 -5.8 301 32.0

Highlights  Royal Enfield volumes continue to grow at a high rate. Sales in June-14 increased Royal Enfield is targeting by 83% YoY to 25,303 units. The company has guided sales of 280,000 units for sales of 280,000 units in CY14. CY14 respectively  VECV reported above expected CV sales with 26.8% growth at 4,187 units (est 3,344 units).  Domestic LMD sales have declined by 1.2% YoY to 1,744 units (est 1,522 units), while HD trucks grew by 36% YoY to 501 units (est 350 units).  Domestic bus sales grew by 28.4% YoY to 1,229 units (est 1053 units).  Volvo trucks sales grew 62% YoY to 55 units.  The stock trades at 31.9x/22.7x CY14E/CY15E EPS respectively. Maintain Buy.

Eicher Motors: Financial & Valuation Summary Bloomberg EIM IN Year Net Sales PAT EPS EPS P/E P/BV RoE RoCE EV/EBITDA Div. Yld Equity Shares (m) 27.0 End (INR b) (INR b) (INR) Gr (%) (x) (x) (%) (%) (x) (%) 52-Week Range (INR) 8,679/2,975 12/12A 63.9 3.2 120.1 5.0 71.6 13.2 20.0 22.7 61.1 0.2 1,6,12 Rel. Perf. (%) 15/41/102 12/13A 68.1 3.9 145.9 21.5 59.0 11.3 20.7 21.8 40.9 0.3 M.Cap. (INR b) 232.3 12/14E 84.3 7.3 270.0 85.0 31.9 9.5 32.5 30.8 24.0 0.4 M.Cap. (USD b) 3.9 12/15E 112.2 10.2 378.5 40.2 22.7 7.3 36.3 37.7 16.2 0.5 E: MOSL Estimates

July 2014 16 Dashboard

Sector Gauge Two-wheelers Scooters continue to gain share, mopeds showing recovery signs

Two-wheelers: Volume snapshot May-14 May-13 YoY (%) Apr-14 MoM (%) FY14 FY13 Chg (%) Total Domestic 2W 1,401,849 1,206,041 16.2 1,303,332 7.6 14,734,133 13,759,433 7.1 % of Tota l 2W 87 89 87 88 88 Total Motorcycle 983,488 881,156 11.6 910,793 8.0 10,473,636 10,081,315 3.9 % of Domestic 2W 70 73 70 71 73 <125cc 808,748 749,786 7.9 747,802 8.2 8,763,603 8,464,133 3.5 % of Motorcycle 82 85 82 84 84 >125cc 174,740 131,370 33.0 162,991 7.2 1,710,033 1,617,182 5.7 % of Motorcycle 18 15 18 16 16 Scooters & Mopeds 418,361 324,885 28.8 392,539 6.6 4,260,497 3,678,118 15.8 % of Domestic 2W 30 27 30 29 27 Exports 211,005 148,181 42.4 194,056 8.7 2,073,288 1,955,665 6.0 % of Tota l 2W 13 11 13 12 12 Total 2W 1,612,854 1,354,222 19.1 1,497,388 7.7 16,807,421 15,715,098 7.0 Source: Company, MOSL

Two-wheelers: Domestic volume trend (units)

2W domestic industry sales grew by 16.2% TVS Motor Yamaha HMSI Bajaj Aut in May-14

Domestic market share in 2-wheelers

Increasing competition in 2-wheeler segment, with HMSI consistently gaining market share

July 2014 17 Dashboard

Motorcycles: domestic volume trend

Motorcycle volumes show growth

Motorcycles: domestic market share

Hero MotoCorp continues to dominate motorcycle segment, although HMSI's increasing its market share

Two-wheelers: Product mix

Motorcycles dominate 2W segment, though share of scooters rising rapidly

Two-wheelers: export volumes (units)

Export volumes recovered strongly

July 2014 18 Dashboard

Sector Gauge Three-wheelers Demand improves driven both by domestic and exports

Three-wheelers: Volume snapshot May-14 May-13 YoY (%) Apr-14 MoM (%) FY14 FY13 Chg (%) Total Domestic 3W 40,369 35,841 12.6 33,602 20.1 479,634 538,597 ‐10.9 % of Total 3W 57 59 50 58 64 Passenger 32,948 28,783 14.5 26,468 24.5 384,951 441,124 ‐12.7 % of Domestic eW 82 80 79 80 82 Total Goods 7,421 7,058 5.1 7,134 4.0 94,683 97,473 ‐2.9 % of Domestic 3W 18 20 21 20 18 <1T 7,263 6,866 5.8 7,049 3.0 91,865 94,584 ‐2.9 % of Goods Vehicle9897 99 9797 >1T 158 192 ‐17.7 85 85.9 2,818 2,889 ‐2.5 % of Goods Vehicle 2 3 1 3 3 Exports 30,039 25,248 19.0 33,602 ‐10.6 353,392 303,088 16.6 % of Total 3W 43 41 50 42 36 Total 3W 70,408 61,089 15.3 67,204 4.8 833,026 841,685 ‐1.0 Source: SIAM/MOSL

Three-wheelers: volume trend (including exports)

FY12 FY13 FY14 FY15 92,000

80,000

68,000

56,000

44,000

32,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Three-wheelers: domestic segment mix

Passenger segment dominates three- wheelers with over 80% contribution

July 2014 19 Dashboard

Three wheelers: passenger segment market share

Bajaj Auto continues to dominate passenger segment…

Three wheelers: goods segment market share

... Piaggio continues to lead in the goods segment

Others M&M Piaggio

July 2014 20 Dashboard

Sector Gauge Cars and UVs Sales improves YoY led by improved consumer sentiments

Cars: domestic volume (units)

FY12 FY13 FY14 FY15 240,000

200,000 Car volumes grow marginally 160,000

120,000

80,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

UVs & MPVs: domestic volume (units)

FY12 FY13 FY14 FY15 106,000

UV & MPV volumes declines YoY 76,000

46,000

16,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

July 2014 21 Dashboard

Passenger vehicles: export volume (units)

FY12 FY13 FY14 FY15 65,000 56,000

Export volumes 47,000 declines 11% YoY 38,000

29,000 20,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Cars: domestic market share

MSIL market share improves sequentially

UVs: domestic market share

In UVs, Maruti's market share dropped on lower Ertiga sales

Passenger vehicles: segment mix

A2 dominates the passenger vehicles segment

July 2014 22 Dashboard

Sector Gauge Commercial vehicles M&HCV decline moderate, LCV remains weak

Commercial vehicles: Volume snapshot May-14 May-13 YoY (%) Apr-14 MoM (%) FY14 FY13 Chg (%) Total Domestic CVs 46,635 55,380 ‐15.8 42,988 8.5 631,806 792,861 ‐20.3 % of Total CVs8892928991 Total M&HCV 16,424 18,441 ‐10.9 15,383 6.8 199,958 268,340 ‐25.5 % of Domestic CVs3533363234 Goods 13,140 14,366 ‐8.5 12,506 5.1 161,255 221,430 ‐27.2 % of M&HCVs 80 78 81 81 83 Passenger 3,284 4,075 ‐19.4 2,877 14.1 38,703 46,910 ‐17.5 % of M&HCVs 20 22 19 19 17 Total LCVs 30,211 36,939 ‐18.2 27,605 9.4 431,848 524,521 ‐17.7 % of Domestic CVs6567646866 Goods 25,533 32,066 ‐20.4 23,708 7.7 389,049 476,694 ‐18.4 % of LCVs 55 58 55 62 60 Passenger 4,678 4,873 ‐4.0 3,897 20.0 42,799 47,827 ‐10.5 % of LCVs109976 Exports 6,344 4,907 29.3 3,500 81.3 76,850 80,000 ‐3.9 % of Total CVs128 8 119 Total CVs 52,979 60,287 ‐12.1 46,488 14.0 708,656 872,861 ‐18.8 Source: SIAM/MOSL M&HCVs: Domestic volume - goods (units)

FY12 FY13 FY14 FY15 40,000

M&HCV volumes 32,000 remains under pressure 24,000 16,000

8,000

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

M&HCVs: domestic volume - buses (units)

FY12 FY13 FY14 FY15 7,500

6,000

4,500 3,000

1,500

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Ma r

July 2014 23 Dashboard

M&HCVs: domestic market share, goods (%)

Tata Motors continue to dominate M&HCV goods segment

M&HCVs: domestic market share, buses (%)

LCVs: domestic volumes (units)

Weakness spreading to LCV segment as well

July 2014 24 Dashboard

LCVs: domestic market share (%)

TataMotor Piaggio M&M Others 100% Tata Motors dominates 75% the domestic LCV segment 50% 25%

0% 14 14 13 13 13 12 12 12 11 11 14 13 13 13 12 12 12 11 11 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Jul Jul Jul Jan Jan Jan Sep Nov Sep Nov Sep Nov Mar Mar Mar May May May May

Goods: segment-wise break-up (%)

LCVs contribution to CVs increased

July 2014 25 Dashboard

Major developments in the auto sector News and Events June 2014

Maruti Suzuki: Maruti eyes healthy double-digit growth in FY15 sales - Media Interview of Mr Mayank Pareek, COO (Sales & Marketing) by CNBC on Jun- 14 Sales performance CNBC Anchor: You clocked 1.12 lakh sales for the month of June, which is higher than street expectations. Can you take us through what lead to the good performance this time segment wise? A: This has come on top of many things. I will give you reasons; this time we have grown in all segments and since March customers were holding back on their purchases despite of having high footfalls and high enquiries. However, over the last five-six weeks we are seeing that footfalls are getting converted into sales. Also, we have seen a big surge in the first-time car buyers.

If you see our numbers, our entry level cars like Alto and Wagon-R have clocked high numbers. In fact, Wagon-R sales have been the highest-ever so far. We have sold more than 17,000 Wagon-R this month. So, first-time buyers have come back.

We have also seen great upsurge in exchange. It has grown by 34 percent. We exchanged 34,000 vehicles in this month which is almost same as the second largest car maker in this country. So, all over I have seen a great turnaround since last five-six weeks.

CNBC Anchor: The excise duty cut has also been extended. Do you think that would lead as well and would this kind of sales number continues at Maruti? A: That has helped. The excise was done in March first week, but for first two months, we didn't see much of an effect because elections were going on and customers were holding back on their decision. But immediately after that, we have seen a great turnaround and the decision by government to continue till December 31 and we hope it will be after that also has helped big time.

CNBC Anchor: I was going through your export numbers, there is a 60 percent growth that you have seen in your exports year on year this time. Can you tell us what the average run rate could be going forward in exports and how much of a boost are you expecting by the end of FY15? A: Exports do not go by one-month number because one ship sails on the 30th of the month, that month's sale will be high. But this year what we are targeting is at least hold on to last year's number or see a margin of growth on that. So, we are not very bullish on the export front this year. The exports markets economies are not turning around. They are not doing really well. So this one month I couldn't take as an aberration.

July 2014 26 Dashboard

CNBC Anchor: What has been the number of Celerios that you have been selling and what is the outlook on that? A: It is around 5,000. We are holding on to 5,000 since we launched - monthly 5,000. We have a supply constraint in Celerio and so to increase the supply the whole supply chain is to response. We are working towards augmenting the supply. Till then this will be around 5,000. This month was 5000.

CNBC Anchor: You have a lot of new launches coming up and the analyst fraternity has got very excited at the prospects of higher market share going forward because of the new launches. Can you indicate to us the new Ciaz, when it gets launch by the end of September, what kind of run rate would you be looking at and by the end of FY15 what kind of market share is Maruti targeting in the domestic passenger vehicle segment? A: There are too many questions rolled in one but let me answer that. First thing first that even this month of June our market share is 45.8, this is highest in last four-five years and we hope to maintain something like that. Going forward we will be entering into new segments and we displayed some of these cars in auto expo, for example Ciaz and S-Cross and going forward we will be launching that. As of now we have not announced when we will be launching and as per our company policy we will refrain from commenting on future products but we are very excited and bullish on the performance of these proposed new models.

CNBC Anchor: What could the volume growth be for Maruti in FY15 across all segments? A: We are planning a healthy double digit growth, all segments together. Last year was flat, a year before was minus and this year we are putting everything behind it and we are quite confident the way it has happened in the last three months - Q1 has been plus around 10.3 percent which is a good news, in fact June the most exciting thing which is not even reported is that retails have been more than the wholesales. The figure which you are reporting of 100,964 is the wholesale figure but retail is 107,864, which is higher than our wholesale which is a very good news.

CNBC Anchor: We have already spoken about excise duty cut being extended even ahead of Budget. Is there anything else that we can look forward to or the auto industry can expect in Budget or would that be pretty much it, the fact that excise cut has already been extended? A: Instead of specifically going for what needs to be done for auto industry, I would say what is good for India is good for auto industry. Economy grows, people buy cars, people buy cars they buy Maruti cars and it is good for us. So, overall growth in economy is what we are looking forward to.

CNBC Anchor: Have the level of discounting gone down considerably, now that footfalls are picking up and what is the average discounting level across products? A: When there is a slowdown you need to bring customer to your fold and turn them and get them converted. Typically all manufacturers including us were offering very high discount - that continues. I think July onwards I will see them tapering down.

July 2014 27 Dashboard

CNBC Anchor: There are some reports that suggests or rather some analysts who suggest that Maruti could see because of a slue of new launches etc, could see a volume growth of about 20-22 percent over the next three years, do you think Maruti is at an inflection point where it is just the start of double digit volume growth and you could even see 20 percent plus in the next couple of years? A: Let's keep our fingers crossed. We are playing like 20-20 game ball by ball, our target every month should be better than the previous month and you see April-May- June is like that but on a serious note we think that medium to long-term India has a huge potential and Maruti will definitely lead this market by huge growth.

CNBC Anchor: What is the product pipeline in the next 12 months, the launch pipeline? A: We will not share the product pipeline but suffice to say that we have product roadmap till 2020 because product development takes almost 48 months so we are working on product line of 2019-20 now and we have many exciting products.

CNBC Anchor: Has the dieselisation of auto industry stopped because of last one or so when we have seen every month diesel price hike of 50 paise. Is the shift or is the mix now a bit better between petrol and diesel than what it was one-and-a-half year back? A: Diesel story is very interesting. At the peak in November 2012 diesel share of the industry was 62 percent but as soon as we started seeing 50 paise per month increase in diesel prices, gradually it is coming down. As of now this month's number has not come but in May it stood at around 51 percent, so 51 diesel and 49 petrol. However, the good news is the CNG. We are seeing good growth in CNG numbers although CNG availability is only in few markets but wherever it is there we have seen a good jump in CNG numbers.

July 2014 28 Dashboard

Bajaj Auto: Strong 30% growth in Pulsar, to launch new Discover 150cc in Aug [MEDIA ARTICLE - CNBC] Speaking to CNBC-TV18 on release of June sales performance, Bajaj Auto Managing Director Rajiv Bajaj said the company's market share in the motorcycle segment has been stable at 18-19 percent for the last few months. On market share trends, Bajaj said Honda has been increasing its presence at the expense of Hero and Bajaj. He said the Pulsar segment (sports bike) saw a double digit growth in June. Bajaj is aiming for a similar growth rate in both its domestic and export markets. The company is planning to launch an upgraded version of Discover next month. In an interview last month, Bajaj had said that pushing sales of Discover continued to be a challenge. Bajaj is pinning its hopes on Discover to recoup its market share in the motorcycle segment.

Below is the transcript of Rajiv Bajaj's interview with Anuj Singhal and Sonia Shenoy on CNBC-TV18.

Sonia: For the entire sector, we have seen a rebound across categories and in your sales as well. Second month now that motorcycle sales have grown by about 3 percent. Can you safely say that worst is over for the two-wheeler space including a company like yourself? A: It seems so. In the last three months or so, we have seen definite improvement in sales across segments not only in two-wheelers or more specifically in our case in motorcycles but also in the three-wheeler segment aided of course by the release of permit as well over there. So, definitely there is a positive trend in the market.

Sonia: The export numbers are weak on a month-on-month basis at 1.35 lakh units despite the shipments to Egypt beginning, any kind of reason for that? A: There are two reasons. In the previous month, in the month of May, we did benefit from some preponement of motorcycle sales and that is why I said last month that motorcycle sales in terms of exports would not be sustainable at those levels. That is one.

Second, the 5,000 three-wheelers and 3,000 motorcycles that were to be exported to Egypt, due to some document issues that export has slipped by a week or so. So it will go now in the first week of July. So we will once again see a bit of a spike when we speak next month and view July.

So month-to-month business tend to happen but there is no doubt that if we compare for Q1 for example -- if I got this right -- I think exports are up by 22 percent over April- June from about 360,000 to 442,000. So I think 22 percent is very good.

Anuj: We were talking to Maruti management yesterday and they said that after the election verdict, the sentiment has changed quite positively and a lot of footfalls are turning into actual buying. Would you corroborate that, is that something that is happening on the two-wheeler front as well? A: Generally I would. For us to be more specific, we have seen double digit growth in the Pulsar segment which is very important for us. We are also seeing that segment expand so that is a good qualitative sign. We saw very strong double digit growth close to 30 percent or so, that is also very good.

July 2014 29 Dashboard

Also, our own performance remains somewhat subdued in the Discover segment. That is more a Bajaj Auto specific issue and dependent on our own product launches, I think the industry is witnessing good sales there as well.

Anuj: Do you have any kind of targets set for yourself in this financial year in terms of overall sales? A: We have no specific target. We finished last year just under 4 million and clearly we like to see strong double digit growth both in domestic and export market. On top of that, we would also like to equally see strong double digit growth both in the motorcycle and three-wheeler segment.

So far I would say that we are on course for that. For example, in the domestic three- wheeler segment we have had pretty unusually high growth last month. If I remember right, it was about 16,000 to 23,000 so again that is unusual. It is not necessarily indicative of the kind of growth we expect in the coming month but on the whole, yes, I think we are on course of double digit growth.

Sonia: On a month-on-month basis, domestic volumes are weak despite the buying that the industry has seen to avail of the excise duty benefits. Do you think that Bajaj Auto could continue to lag its peers until there is some concrete plan put into place to recover market share? A: I would think that we should see that change from this quarter for sure because as I just said we have double digit growth in Pulsar and very strong double digit growth with the Platina.

What we have to get into the positive territory is Discover. What has happened there in the last year or so is that due to intensity of competition especially between Hero and Honda, who have always been dominant in that segment, other players have got somewhat marginalised.

What is important before we gain market share is to strongly win back mindshare and the best way to do that is to do that by putting the best motorcycle into the market place. So we start production in a few days of a new big Discover, which we believe will become the benchmark of motorcycles in the market. So that will be launched into the market next month. If you win back mindshare and win back footfalls on that basis then by September we will be able to get Discover also back into a positive growth territory.

Sonia: Don't you think that the time has come perhaps to come out with a different strategy rather than launching different CC bikes under the same Discover brand? I am just putting forward to you what a lot of the feedback we get on the street, we spoke with a dealer yesterday who indicated that Bajaj Auto is losing market share purely because there are too many variants of the same brand? A: As I said last time, with the Pulsar, we have probably as many variants between the 135-180-220 etc as we do with the Discover but we were first to market with the Pulsar, we created the category and we always have a 50 percent share there. That issue never comes up. Such issues do come up when you are a challenger.

July 2014 30 Dashboard

Let me put it the other way, companies like Yamaha and TVS and Suzuki, I suppose, do not have too many variants in that category but their market shares are lower than ours.

Sonia: What is the exact market share you have clocked in this month? A: I do not know about last month exactly because I do not have all the competition numbers but typically we have been at 18-19 percent market share over the last six months. What is well known is that that used to be about 4 percent higher last year. So the new Discover - that is what we have to win back in the first place.

Anuj: You have been quite candid in the past as well. Would it be fair to assume that Honda has hurt Bajaj more than Hero? A: It depends again on the segment. If we are talking about the Discover segment then I think Honda has grown probably at the expense of both. If they have grown a little more at the expense of Bajaj, I would not be able to say yes or no at this time because I don't have those numbers in front of me.

At some point, I always say that speaking about sales becomes a little one dimensional when one doesn't look at the bottomline correspondingly. We are away from pricing low, from discounting, from heavy advertising and heavy promotion and protected these bottomlines. So I think each company makes its own choice of the balance sheet between market share and bottomline.

Sonia: How much of the new Discover have you sold this month? A: We are starting this month the production of the new one. The 150 CC Discover, so we hope to make their numbers between 5,000 and 10,000 this month and we will launch that into the markets next month.

Anuj: What has been the response to the higher CC Duke and what is the plan here? A: I think the Dukes are doing very well. If I remember right, in a month of June last year, the sale of KTM in India was about 550 motorcycles and I think that is up to about 1,300-1,400 this June. So clearly, there is a trend towards a higher CC motorcycle and KTM is a big beneficiary of that.

On top of that, we have of course exported another 4,000-5,000. So now of all KTM sold worldwide close to a third if not 40 percent is coming out of the Chakan plant in India.

July 2014 31 Dashboard

Yamaha launches upgraded FZ and FZ-S bikes for up to INR78,250 Yamaha: FZ and FZ-S bikes NEW DELHI: Japanese two-wheeler maker Yamaha today launched upgraded variants of its 150 CC bikes - FZ and FZ-S - priced up to INR78,250 (ex-showroom Delhi).

The company, which had first launched the FZ series in India in 2008, will start selling the two variants - FZ Version 2.0 and FZ-S Version 2.0 from tomorrow.

While the new FZ variant is priced at INR76,250, the FZ-S version would be retailed at INR78,250 (ex-showroom Delhi).

"With these new model introduction we certainly hope to strengthen our foothold in the segment," Yamaha Motor India Sales Vice President- Sales & Marketing Roy Kurian told reporters here.

The company is currently selling around 18,000 units per month of the FZ series, including Fazer and with the launch of these two variants the Japanese firm expects to sell around 24,000 units per month, Kurian added.

On the company's upcoming manufacturing plant in Chennai, Kurian said: "Construction at the plant is progressing well and production would begin from November".

The Chennai facility, on which the company is investing INR1,500 crore, will have a production capacity of 1.8 million.

New Ford Fiesta Facelift Launched at INR7.69 Lakh Ford Fiesta Facelift irst showcased at the 2014 Indian Auto Expo in February, the Ford Fiesta facelift has been finally rolled out in the country. The company has discontinued the petrol version of the car and launched it in three diesel variants instead - Ambiente, Trend and Titanium, priced at INR7,69,000, INR8,55,720 and INR 9,29,449, respectively.

With both, design and feature updates, the new Ford Fiesta surely becomes a slightly more up-market product this time. Compared to the discontinued model, the prices have come down a notch. Delving into details, the most noticeable change is to its front fascia, which now features a new family grille, revised bumper and repositioned fog lamps. The rear receives a new bumper along with revised tail lamps. The side profile, however, remains unchanged.

There are a few changes inside the cabin as well. With new black-beige colour dashboard and the gloss-black plastic on the centre console, the updated Fiesta definitely looks better. However, the overall design of the interiors remain unchanged. Powering the 2014 Ford Fiesta is a 1.5-litre diesel engine that churns out a maximum power output of 90bhp. Though the same engine also powered the discontinued model, Ford claims that it returns a an improved mileage this time.

Against the exiting model's 23.5Km/l, the new model returns 25.1Km/l, which makes it the second most fuel efficient vehicle in its league after the Honda City.

July 2014 32 Dashboard

NOTES

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