TATA MOTORS LIMITED

BUY Target Price:Rs.866.00 CMP: Rs.721.70 Market Cap: Rs.392575.9mn.

Date: 3 Feb,2010.

Key Ratios:

Particulars FY09 A FY10E FY11E

OPM(%) 10 15 15

PAT(%) 4 6 7

ROE(%) 8 15 15

ROCE(%) 7 13 13

P/BV(x) 3.04 2.73 2.32

P/E(x) 37.05 18.38 15.53

EV/EBDITA(x) 14.48 8.95 8.52

Debt Equity(x) 1.09 1.02 0.95

Key Data:

Sector Automobile Sector

Face Value 10.00

52 wk. High/Low (Rs.) 842.00/128.10

Volume (2 wk.

Avg.)(lakh)

6.72

BSE Code 500570

SYNOPSIS

• Tata Motors Limited is India's largest automobile

company, leader in commercial vehicles in each

segment, and among the top three in passenger

vehicles with winning products in the compact,

midsize car and utility vehicle segments.

• The company is the world' fourth largest truck

manufacturer, and the world's second largest bus

manufacturer.

• The only Indian company in the world with the

capability to produce vehicles in all the segments

right from HCV, MCV, LCV, Trucks, Buses, Utility

vehicles, Passenger cars.

• Tata Motors announced the launch of Grande MK II,

an upgraded version of its premium Sumo offering in

the domestic market.

• The topline of the company is expected to grow at

a CAGR of 8% over 2008A to 2011E.

Share Holding Pattern:

V.S.R. Sastry

Vice President

Equity Research Desk

91-22-25276077

vsrsastry@firstcallindiaequity.com

Dr. V.V.L.N. Sastry Ph.D.

Chief Research Officer

drsastry@firstcallindia.com

Table of Content

Investment Highlights ................................................................................................................................... 3

Peer Group Comparison ................................................................................................................................ 8

Financials ..................................................................................................................................................... 11

Charts .......................................................................................................................................................... 14

Outlook and Conclusion .............................................................................................................................. 16

Industry Overview ....................................................................................................................................... 16

Investment Highlights

• Results Updates (Q3 FY10)

The bottomline of the company for the quarter stood at Rs.4001.40mn from

Rs.(2632.60)mn of same period of last year. Total revenue for the third quarter stood at

Rs.89799.00 mn from Rs.47586.20 which is 88.7% increased than that of a year ago period.

EPS for the quarter stood at Rs.7.36 per equity share of Rs.10.00 each. Face value has been

changed for this quarter.

Expenditure of the company increased 60% YoY to Rs.78748.20mn from Rs.49072.10mn of

same period of last year. Interest expenses for the quarter stood at Rs.2861.40mn. OPM &

NPM for the quarter stood at 12% and 4% respectively.

Quarterly Results - Standalone (Rs in mn)

As at Dec - 09 Dec - 08 %Change

Net Sales 89799.00 47586.20 88.7

Net Profit 4001.40 -2632.60

Basic EPS 7.36 -5.12

Equity Capital 5439.60 5140.50

Introduction of new products and strong continued growth in the existing portfolio, along

with government stimulus, a benign liquidity environment and overall economic recovery,

has driven domestic demand revival during the current year. The sales volume for the

quarter (including exports) stood at 165,413 vehicles. This is a growth of 67.5% over sales

of 98,760 vehicles in Q3 2008-09, which witnessed steep decline in volumes impacted by

the financial crisis.

In the domestic market, Commercial Vehicles sales increased by 88.8% to 93,520 units

leading to a market share of 64.3%. With a growth of 121.6% in Q3 2009-10 over sales in

Q3 2008-09, the Medium and Heavy Commercial Vehicle segment witnessed a yearon- year

growth for the second quarter in a row in the current fiscal year. Light Commercial

Vehicles, led by the continued strong performance of the Ace and its variants and on the

low base of previous year, witnessed significant growth of 70.5% over Q3 2008-09.

While investment in infrastructure projects, continuing stimulus support and smooth

implementation of the change in emission norms would influence the magnitude of growth

in the coming quarters, the company has planned several new product launches to defend

and improve its market position.

Passenger Vehicles, including Fiat and Jaguar and Land Rover vehicles distributed in India,

grew by 46% in the domestic market to 61,593 units. The market share for Tata passenger

vehicles for the period stood at 11.8%. The company launched the new Indigo Manza

during the quarter which saw the Indigo range sales grow by 63.5% over Q3 2008-09,

substantially higher than the 35% growth of the Entry Mid-size Sedan market.

The company has also ramped up the production rate of the Nano at the plant in

Uttarakhand, and has till December 31, 2009 delivered 17,537 units of Nano. Along with

Fiat, the company has a joint market share of 13.1% in the industry.

• Tata Motors January sales at 65,478 nos.

Tata Motors’ total sales (including exports) of Tata commercial and passenger vehicles in

January 2010 were 65,478 vehicles, a growth of 77% over 36,931 vehicles sold in January

2009. The company’s domestic sales of Tata commercial and passenger vehicles for January

2010 were 62,202 nos., a 74 % growth over 35,704 nos. sold in January last year.

Cumulative sales (including exports) for the company for the fiscal at 498,108 nos.,

recorded a growth of 24 % over 400,284 nos. sold last year.

o Commercial Vehicles

The company’s sales of commercial vehicles in January 2010 in the domestic market were

35,957 nos., the second highest ever and a 107% growth compared to 17,373 vehicles sold

in January last year. LCV sales were 20,255 nos., the highest ever and a growth of 75% over

January last year. M&HCV sales stood at 15,702 nos., a growth of 170% over January last

year.

Cumulative sales of commercial vehicles in the domestic market for the fiscal are 291,125

nos., a growth of 37% over last year. Cumulative LCV sales are 174,276 nos., a growth of

45% over last year, while M&HCV sales stood at 116,849 nos., a growth of 26% over last

year.

o Passenger Vehicles

The passenger vehicles business reported a total sale and distribution offtake of 28,547

nos. (26,245 Tata + 2,302 Fiat) in the domestic market in January 2010, the highest ever

and a 43% increase compared to 19,911 nos. (18,331 Tata + 1,580 Fiat) in January last year.

Sales of Tata cars, at 22,707 nos. are the highest ever and a growth of 47% over January

2009. Sales of the Tata Nano were 4,001 nos. The Indica range sales were 11,448 nos., the

highest this fiscal though flat over January last year. The Indigo range recorded sales of

7,258 nos., the highest ever since the Indigo’s launch in 2002 and a growth of 83% over

January last year. The Sumo/Safari range accounted for sales of 3,538 nos., the highest this

fiscal and a growth of 21% over January last year.

Jaguar Land Rover sales continued their upward trend since launch in June with their

highest sales in January.

Cumulative sales and distribution offtake of passenger vehicles in the domestic market for

the fiscal are 200,573 nos. (180,184 Tata + 20,389 Fiat), against 162,425 nos. (157,439 Tata

+ 4,986 Fiat) last year, a growth of 23%. Cumulative sales of the Nano are 21,535 nos.

Cumulative sales of the Indica range at 91,295 nos., reported a growth of 6%. Cumulative

sales of the Indigo family are 41,724 nos., higher by 3%, coming into the positive territory

for the first time this fiscal based on the growing acceptance of the newly launched Indigo

Manza. Cumulative sales of the Sumo/Safari range are 25,630 nos., lower by 17%.

o Exports

The company's sales from exports at 3,276 vehicles in January 2010 registered a growth of

167% compared to 1,227 vehicles in January last year. The cumulative sales from exports

for the fiscal at 26,799 nos. are lower by 12% over 30,293 nos. in the same period last year.

• Tata Nano wins the Indian Car of the Year (ICOTY) Award

The Tata Nano has won the prestigious Indian Car of the Year (ICOTY) award. In its fifth

year running and modeled along the lines of the American, European and Japanese Car of

the Year, the ICOTY award and Indian Motorcycle of the Year (IMOTY) award have been

instituted by leading automotive magazines in India, in association with JK Tyre, to bring

the auto industry in India at par internationally in recognising their efforts.

Tata Motors launches the Sumo Grande MK II

Tata Motors announced the launch of Grande MK II, an upgraded version of its premium

Sumo offering in the domestic market. The Grande MK II seeks to deliver added value to

customers through substantial changes in the exteriors and interiors combined with

improvements in drivability, ride and handling and comfort.

The exteriors have been accentuated by a new chrome lined grill, side rub rails with

chrome inserts and indicators on ORVMs. The interiors have been refreshed to give the

vehicle a completely new, contemporary look with a two tone theme complemented by a

new faux wood centre console and new fabric upholstery.

• Tata Motors begins distribution of Prima World truck

Tata Motors has begun distribution of its Prima range of World Trucks, which was unveiled

in May. The first product, the Prima 4028 S, is a 40-tonne 266-PS (Cummins ISBE engine)

tractor with a 9-speed ZF transmission, and a matching trailer with new generation brakes,

ABS and specialised axles for heavy duty and high speed application. The 4028 S tractor-

trailer is ideal for carrying freight, like steel, cement, and containers, up to 40.2 tonnes of

Gross Combination Weight.

• Tata Motors launches the next generation all-new Indigo MANZA

Tata Motors launched its new generation sedan, the Tata Indigo MANZA. Built on its new

car platform, the Indigo MANZA succeeds the highly successful Tata Indigo, which became

a best-seller in the very first year of its launch in 2003 and has since then sold close to

275,000 nos of the range.

• FREELANDER 2 launched in India

Land Rover launched the highly acclaimed Freelander 2 in India. The Freelander 2 joins the

acclaimed Discovery 4, the quintessential sports tourer, the Range Rover Sport and the

ultimate luxury 4x4, the Range Rover, all of which were launched earlier in India in June

this year.

The Freelander 2 has redefined the compact premium 4x4 segment. It delivers outstanding

on-road performance as well as class-leading off-road ability, the hallmark of Land Rovers.

A dynamic design, purposeful stance, smart and spacious interior, and an abundance of

advanced technologies complete the package.

• TMETC confirms UK government assistance for Tata Indica Vista EV project

Tata Motors European Technical Centre plc (TMETC) appreciates the £10 million loan,

under the UK government’s Automotive Assistance Programme (AAP), to develop and

manufacture the Tata Indica Vista Electric Vehicle in the UK with an investment of £25

million. The Tata Indica Vista EV will be the first four-seater electric car with a range of up

to 200 km to become available this year in Europe.

TMETC is a wholly owned subsidiary of Tata Motors in the UK, engaged in design

engineering and development of automobiles, working synergistically with Tata Motors.

• Tata Motors introduces Tata SK 407 Tipper in Kerala

Tata Motors reinforced its position in the tipper segment with the launch of the Tata SK

407 Tipper. Tata Motors has always been on the forefront of offering customized &

innovative solutions to customers. The Tata SK 407 Tipper is a small capacity tipper

introduced as an entry level product and forms an important milestone in Tata Motors’

efforts to service the diverse and growing requirements of the Kerala tipper segment,

among the largest and most vital tipper markets in the country.

• Tata Motors introduces the all new Tata 407 Pickup, Tata Super Ace and Tata Ace EX

Tata Motors unveiled its all new ‘Tata 407 Pickup’ and the new offerings from the Ace

Platform -- ‘Tata Super Ace’ and ‘Tata Ace EX’ -- across the country.The introduction of

these new products- Tata 407 Pickup, Tata Super Ace and Tata EX are all set to vitalize the

sub-one-tonne to 3 tonne segment with more payload options and greater power for the

changing demands of its customers. These vehicles signal Tata Motors commitment to

provide better quality vehicles at affordable price to enable consumers to enhance their

business needs.

Company Profile

Tata Motors Limited is India's largest automobile company, it is the leader in commercial

vehicles in each segment, and among the top three in passenger vehicles with winning

products in the compact, midsize car and utility vehicle segments. The company is the world's

fourth largest truck manufacturer, and the world's second largest bus manufacturer.

Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India.

Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The

company's manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune

(Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka).

Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with

Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and

Fiat powertrains. The company is establishing a new plant at Sanand (Gujarat). The company's

dealership, sales, services and spare parts network comprises over 3500 touch points; Tata

Motors also distributes and markets Fiat branded cars in India.

Tata Motors is also expanding its international footprint, established through exports since

1961. The company's commercial and passenger vehicles are already being marketed in

several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South

America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine,

Russia, Senegal and South Africa.

With over 3,000 engineers and scientists, the company's Engineering Research Centre,

established in 1966, has enabled pioneering technologies and products. The company today

has R&D centres in Pune, Jamshedpur, Lucknow, Dharwad in India, and in South Korea, Spain,

and the UK. It was Tata Motors, which developed the first indigenously developed Light

Commercial Vehicle, India's first Sports Utility Vehicle and, in 1998, the Tata Indica, India's first

fully indigenous passenger car. Within two years of launch, Tata Indica became India's largest

selling car in its segment. In 2005, Tata Motors created a new segment by launching the Tata

Ace, India's first indigenously developed mini-truck.

In January 2008, Tata Motors unveiled its People's Car, the Tata Nano, which India and the

world have been looking forward to. The Tata Nano has been subsequently launched, as

planned, in India in March 2009. A development, which signifies a first for the global

automobile industry, the Nano brings the comfort and safety of a car within the reach of

thousands of families. The standard version has been priced at Rs.100,000 (excluding VAT and

transportation cost).

In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile industry,

in keeping with its pioneering tradition, by unveiling its new range of world standard trucks

called Prima. In their power, speed, carrying capacity, operating economy and trims, they will

introduce new benchmarks in India and match the best in the world in performance at a lower

life-cycle cost.

Through its subsidiaries, the company is engaged in engineering and automotive solutions,

construction equipment manufacturing, automotive vehicle components manufacturing and

supply chain activities, machine tools and factory automation solutions, high-precision tooling

and plastic and electronic components for automotive and computer applications, and

automotive retailing and service operations.

Tata Motors has several joint venture, subsidiary and associate companies

o Jaguar Land Rover

o Tata Technologies Ltd. (TTL) and its subsidiaries

o Telco Construction Equipment Co. Ltd. (Telcon)

o HV Axles Ltd. (HVAL)

o HV Transmissions Ltd. (HVTL)

o TAL Manufacturing Solutions Ltd. (TAL)

o Sheba Properties Ltd. (Sheba)

o Concorde Motors (India) Ltd. (Concorde)

o Tata Daewoo Commercial Vehicle Company Ltd (TDWCV)

o Hispano Carrocera S. A. (HC)

o Tata Motors Insurance Broking & Advisory Services Ltd (TMIBASL)

o Tata Motors European Technical Centre plc

o Tata Motors Finance Limited

o Tata Motors Thailand

Future Product launches showcased at Auto-Expo

o PRIMA 1125

o PRIMA 3128

o PRIMA 3138

o PRIMA 4038

o PRIMA 4938

o PRIMA 7548

o MAGIC IRIS

o LPT 1613 CNG

o STARBUS HYBRID

o XENON CNG

o TATA ARIA

o INDICA VISTA EV

o TATA VENTURE

o INDICA SPORTS (concept)

o TATA PR1MA (concept)

o SUMO GRANDE MK-II

Peer Group Comparison

Name of the

company

CMP

(As on 3

Feb, 2010)

Market

Cap.

(Rs. Mn.)

EPS

(Rs.)

P/E

(x)

P/BV

(x) Dividend(%)

Tata motors 721.70 392575.9 43.4 16.6 3.00 60

Ashok Leyland 52.15 69377.1 1.91 27.3 3.29 100

Mahindra and

Mahindra 1051.00 294092.1 69.1 15.1

5.61 100

Eicher Motors Ltd 570.40 15225.6 11.7 48.4 3.18 50

Key Concerns

• Increase in fuel prices has an adverse impact on automobile demand as consumers think

of alternative solutions and postpone purchases

• Hardening of consumer interest rates could have an adverse impact on the automotive

industry.

• Growing global competition

• Intensity of competition has increased in almost all the segments of the Indian

automotive market due to entry of new players and expansion plans of existing ones

Financials

12 Months Ended Profit & Loss Account (Standalone)

Particulars FY 08 A FY 09 A FY 10 E FY11 E

(Rs.Mn) 12m 12m 12m 12m

Net Sales 287,308.20 256,607.90 332412.40 365653.64

Other Income 4,831.80 9,259.70 7407.52 7777.90

Total Income 292,140.00 265,867.60 339819.92 373431.54

Expenditure -257,028.50 -240,247.80 -291552.14 -318118.67

Operating Profit 35,111.50 25,619.80 48267.78 55312.87

Interest -2,823.70 -6,736.80 -11256.77 -12382.45

Gross Profit 32,287.80 18,883.00 37011.01 42930.42

Depreciation -6,523.10 -8,745.40 -10339.46 -11373.4

Profit before Tax 25,764.70 10,137.60 26671.56 31557.02

Tax -5,475.50 -125 -5311.96 -6285.0

Net Profit 20,289.20 10,012.60 21359.59 25272.06

Equity Capital 3,855.40 5,140.50 5,439.60 5,439.60

Reserves 74,284.50 116,910.30 138,269.89 163,541.95

EPS 52.63 19.48 39.27 46.46

Quarterly Ended Profit & Loss Account (Standalone)

Particulars June 09 A Sep 09 A Dec 09 A Mar 10 E

(Rs.Mn) 3m 3m 3m 3m

Net Sales 64,046.30 79,788.20 89,799.00 98778.90

Other Income 3,193.60 4,209.30 2.1 2.52

Total Income 67,239.90 83,997.50 89,801.10 98781.42

Expenditure -56,933.80 -69,438.60 -78,748.20 -86431.54

Operating Profit 10,306.10 14,558.90 11,052.90 12349.88

Interest -2,534.50 -2,856.40 -2,861.40 -3004.47

Gross Profit 7,771.60 11,702.50 8,191.50 9345.41

Depreciation -2,291.20 -2,634.00 -2,641.10 -2773.16

Profit before Tax 5,480.40 9,068.50 5,550.40 6572.26

Tax -342.8 -1,777.10 -1,549.00 -1643.06

Net Profit 5,137.60 7,291.40 4,001.40 4929.19

Equity Capital 5,140.50 5,140.50 5,439.60 5439.60

EPS 9.99 14.18 7.36 9.06

*A=Actual, E=Estimated

Charts

Comparative Graph

TATA MOTORS BSE SENSEX

Outlook and Conclusion

• At the current market price of Rs.721.70, the stock trades at a P/E of 18.38x and 15.53x for

FY10E and FY11E respectively.

• On the basis of EV/EBDITA, the stock trades at 8.95x and 8.52x for FY10E and FY11E

respectively.

• Price to Book Value of the stock is expected to be at 2.73 and 2.32 respectively for FY10E and

FY11E.

• The Net sales of the company are expected to grow at a CAGR of 8% over 2008 to 2011E.

• Tata Motors announced the launch of Grande MK II, an upgraded version of its premium

Sumo offering in the domestic market.

• The company has launched the Indigo Manza which continues to have a very exiting

response in the market place and very recently last month in December, the company

launched the Mark II Sumo Grande, Nano production has been continuously ramped up. The

company have completed deliveries of closed to about 18,000 cars till 31st December.

• Introduction of new products and strong continued growth in the existing portfolio, along

with government stimulus, a benign liquidity environment and overall economic recovery,

has driven domestic demand revival during the current year.

• While investment in infrastructure projects, continuing stimulus support and smooth

implementation of the change in emission norms would influence the magnitude of growth

in the coming quarters, the company has planned several new product launches to defend

and improve its market position.

• We recommend ‘BUY’ in this particular scrip with a target price of Rs.866.00. for Medium to

Long Term Gains.

Industry Overview

The growth of the Indian middle class along with the growth of the economy over the past few

years has attracted global auto majors to the Indian market. Moreover, India provides trained

manpower at competitive costs making India a favoured global manufacturing hub. The

attractiveness of the Indian markets on one hand and the stagnation of the auto sector in

markets such as Europe, US and Japan on the other have resulted in shifting of new capacities

and flow of capital to the Indian automobile industry.

The midas touch of India is clearly visible on the financials of global auto majors. Be it Japanese

auto majors Suzuki and Honda, or Korean car giant Hyundai, all are increasingly banking on

their Indian operations for adding weight to their businesses as numbers stay uncertain in

developed markets due to economic recession and slowdown.

Hyundai’s Indian subsidiary contributes between 15 per cent and 20 per cent to Hyundai's

global turnover.

According to the International Yearbook of Industrial Statistics 2008 released by United Nations

Industrial Development Organisation (UNIDO), India ranks 12th in the list of the world’s top 15

automakers.

Moreover, according to a new study released by global consultancy firm Deloitte, at least one

Indian company will be among the top six carmakers that would dominate the global auto

industry by 2020. According to the study, the car industry would see a massive capacity building

in low-cost locations like India and China as manufacturers shift base from developed regions.

Production

Although the sector was hit by economic slowdown, overall production (passenger vehicles,

commercial vehicles, two wheelers and three wheelers) increased from 10.85 million vehicles in

2007-08 to 11.17 million vehicles in 2008-09. Passenger vehicles increased marginally from 1.77

million to 1.83 million while two-wheelers increased from 8.02 million to 8.41 million.

In recent times, India has emerged as one of the favourite investment destinations for

automotive manufacturers.

• Japanese major Nissan has decided to shift the entire production of its small car, Micra,

from the UK to India. After production of the Micra begins here, Nissan plans to

manufacture four more models in India, involving a total investment of over US$ 412.2

million.

• Toyota Motors (TMC) plans to utilise the proposed Indo-Thai free trade agreement (FTA)

to make India a hub for small cars to be exported to its global markets. Toyota has

earmarked US$ 657.1 million for 2008-11 to set up a second plant in Bangalore to make

200,000 cars from the current 80,000 units. The company is also keen to set up a

transmission and engine unit at the second plant.

• Suzuki Motorcycle India (SMIPL), a wholly-owned subsidiary of Japanese auto major

Suzuki Motor Corporation, plans to double production capacity of its two-wheelers to

300,000 units by the end of the current fiscal year. The company will invest Rs 125 crore

(US$ 26.77 million).

• Ford Motor Company is investing US$ 500 million on transforming its India business into

a volume manufacturing and export hub and a regional centre of excellence for small

car development and production.

• Volkswagen has set a target to localise production in India to about 80 per cent in 2-3

years from the current levels of almost 50 per cent as it seeks to offer cars at more

competitive prices.

Domestic Market

In spite of global economic slowdown, there was a marginal increase in the number of vehicles

sold in 2008-09 as compared to 2007-08. Total number of vehicles sold including passenger

vehicles, commercial vehicles, two-wheelers and three-wheelers in 2008-09 was 9.72 million as

compared to 9.65 million in 2007-08.

Further, the sales also picked up in 2009-10. On the back of strong festive demand and easier

availability of finance, passenger car sales in the country during October registered the highest

growth in more than two years. According to the Society of Indian Automobile Manufacturers

(SIAM), sales of passenger cars increased by 34 per cent at 132,615 units in October against

99,052 units during the same month last year. While this is the ninth consecutive month of

positive growth for passenger cars, the double-digit growth registered across other auto

segments may actually result in the highest-ever growth of the industry this fiscal at a time

when markets like Europe and the US are struggling with single digit growth.

Sales of trucks and buses in India, a key barometer of industrial activity, rose 52 per cent at

42,562 units in October, the fourth straight rise and the strongest expansion since April 2007.

Total two-wheeler sales went up 10.6 per cent at 750,229 units from 678,245 units in the same

period last year.

According to a survey by Credit Analysis and Research (CARE) Ratings, the domestic passenger

vehicle sales will accelerate at a CAGR of 13.9 per cent from 1.55 million units in FY 09 to 2.98

million units in FY 14.

Passenger vehicle exports are likely to grow at a CAGR of 22 per cent from 335,739 units in FY

09 to 909,000 units by the end of FY 14.

Exports

According to SIAM, automobile sales (including passenger vehicles, commercial vehicles, two-

wheelers and three-wheelers) in the overseas markets increased to 1.53 million units in 2008-

09 from 1.23 million units in 2007-08.

Export of passenger vehicles increased from 218,401 in 2007-08 to 335,739 units in 2008-09.

Moreover, growth continued during the first half of the current year. India exported a total of

230,000 cars, vans, SUVs and trucks between January and July 2009, posting a growth of 18 per

cent.

India has become the second-largest maker of small cars, overtaking Brazil. Small cars account

for 80 per cent of the domestic market (up from 75 per cent last year) and exports are growing

at top speed. According to SIAM, small car exports rose 53 per cent between April and

September to 197,249 units against 129,090 units a year ago.

India Yamaha Motor Ltd (IYML) plans to double its exports from India to 140,000 units by 2010.

Maruti Suzuki India expects to export 120,000 cars during 2009-10. Of this, 100,000 will be the

A-Star, its newest hatchback.

Policy

In order to make India a power to reckon with in the automotive sector the government

launched the Automotive Mission Plan (AMP) 2006-2016.

The vision of the AMP is "to emerge as the destination of choice in the world for design and

manufacture of automobiles and auto components with output reaching a level of US$ 145

billion accounting for more than 10 per cent of the GDP and providing additional employment

to 25 million people by 2016."

As per the AMP, it is estimated that the total turnover of the automotive industry in India

would be in the order of US$ 122 billion - US$ 159 billion in 2016. It is expected that in real

terms, India would continue to enjoy its eminent position of being the largest tractor and three-

wheeler manufacturers in the world and the world's second largest two-wheeler manufacturer.

By 2016, India will emerge as the world's seventh largest car producer (as compared to the

eleventh largest currently) and retain the fourth largest position in world truck manufacturing

sector. Further, by 2016, the automotive sector would double its contribution to the country's

GDP from current levels of five per cent to 10 per cent.

_______________________________________ _____________

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but we do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

B. Harikrishna Banking & Financial Services

B. Prathap IT

C.V.S.L.Kameswari Pharma

U. Janaki Rao Capital Goods; Real & Infra

D.Asha Kiran Kumar Auto

E. Swethalatha Oil & Gas

A.Rajesh FMCG

Rachna Twari Diversified

Kavita Singh Diversified

Nimesh Gada Diversified

Priya Shetty Diversified

Tarang Pawar Diversified

Neelam Dubey Diversified

Firstcall India also provides

Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,TakeoverOffers, Offer for Sale and

Buy Back Offerings.

Corporate Finance Offerings include Foreign Currency Loan Syndications,Placement of Equity / Debt with

multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity &

DebtSyndications and Structured Deals.

Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-

offs, valuation of business, corporate restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &

Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures

Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs,

GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore

Stock Exchanges and other international stock exchanges.

For Further Details Contact:

3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071

Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089

E-mail: info@firstcallindiaequity.com

www.firstcallindiaequity.com