ASAHI INDIA GLASS LTD. Ninth CLSA India Forum 8 th November, 2006

1. ASAHI INDIA GLASS LTD. Ninth CLSA India Forum 8th November, 2006

2. Contents • AIS – At a Glance • Industry Review - Auto Glass - Float Glass - Architectural Processing • AIS Plans - Demand / Revenue - Supply / Costs - New Products / Markets - Capex / Expansion - Goals

3. AIS – At a Glance Brief snap shot of AIS – from inception till FY 2005-06 These figures contain, in brief, the story of AIS’s growth from a supplier of automotive tempered glass to Maruti Udyog (Suzuki) when we began, to the current situation of India’s largest glass company, with profitable growth flowing from all the actions taken since the birth of the organization.

4. AIS – At a Glass

5. Industry Review – Customers • Strong economic growth in India impacting AIS’s core markets - automobiles and housing / construction. • Average annual growth in the Indian passenger car industry (Cars + MUVs) has been 20 % in the last 3 years. Annual growth projected at 15 % over next 5 years. • OEMs doubling / adding new capacities • Over 10 new models lined up for launch in the next 3 years • Construction industry witnessing a boom, with a large number of commercial and residential projects coming up across the country. • Float glass demand growing at 13 % p.a. Demand to improve further, with the boom being witnessed in the construction industry, accompanied by the increased glass usage in the buildings. • Architectural processed glass (tempered, laminated and double-glazed) likely to witness higher annual growth at 25 % over the next few years. • Enormous potential for glass visible, with per capita glass consumption in the country at 0.8 kg still remaining very low, and processed glass constituting only around 7 - 8 % of the total glass consumption.

6. Industry Review – Costs & Outlook • Glass Industry adversely impacted by rise in certain input costs like energy, freight, soda ash, etc., resulting in approximately 21 % increase in cost of glass. Compared to 2004/2005 levels - Energy cost, which constitutes 36 % of glass cost, up by 60 % - Soda Ash, which is 17 % of glass cost, up 23 % - Freight cost, constituting 14 % of glass cost, increased 26 % • The pincer of rising input costs and falling finished goods price severely impacted industry’s profitability during FY 06. • AIS, in particular, further impacted in FY 06 by - Increase in power cost, resulting from rise in fuel prices - Rise in certain raw material expenses, driven by exchange rate • The cost increase likely to be contained / corrected due to recent positive developments like - Reduction in oil prices - Strengthening of Indian Rupee

7. Industry Review – Earnings visibility / durability • Auto glass prices not expected to change significantly. Realizations likely to be better due to strong demand for higher value-added products, with increased value of glass content per car. • Prices of float glass have strengthened this year significantly. • Prices likely to stay closer to current levels or increase marginally in the short to medium term, in light of the following : - Shut down of two glass plant, namely Triveni’s Chinese float plant (250 tpd) and HSG’s sheet glass plant (180 tpd), squeezing supplies in the market - Continuation of anti-dumping duty until January, 2008 on imports of clear and tinted glass from China & Indonesia - New capacities coming up only in the year 2008 • Prices of value-added and processed glass likely to remain strong. Use of value-added and processed glass to increase further, resulting in higher price realization and better margins.

8. AIS Plans – Demand / Revenue • AIS to continue to maintain its leadership status in the Indian passenger car industry. • Market share projected to decline from the current level of 80 % to 70 % over next 5 years, dictated primarily by OEs’ policy of developing multiple vendors. • AIS’s auto sales volume to grow with higher OE sales, increased penetration in the after market with target market share of over 50 %, and a significant increase in export sales. Year-on-year growth of 20 % expected in sales. • AIS’s share in the Indian float glass market to increase significantly from 20 % to nearly 35 %, post commissioning of its Integrated Glass Plant at Roorkee. • AIS Glass Solutions, which emerged as a leader in architectural processing business within first year of its operations, to further consolidate its leadership position by significantly boosting sales and improving margins through new products and value addition. Sales to increase exponentially over the coming years, if the plans of the developers and builders actually translate into projects on the ground. • AIS likely to grow faster than market, targeting higher sales growth in value-added products, with focus on long term margin improvement and cash generations, and not just on gains in market share. • AIS’s focus to continue on long term margin improvement and cash generations

9. AIS Plans – Supply / Cost • AIS’s strategy of building scales with forward and backward linkages to help AIS in realizing operational synergies and reducing its costs through - Internalization of glass sourcing for auto and architectural processing - Improved operational efficiencies - Consolidation of supplies of key inputs - Reduction in packing and logistics cost through integrated operations - Lower overheads / unit, with large scale plants • Roorkee Plant to provide significant cost advantage, estimated in the range of 15 %, for most of the product lines due to benefits like fiscal incentives, low power tariff, reduced packing / freight costs, etc. • Reduction in energy cost through use of alternative energy sources to be another focus area. The plan, which is currently under study, envisages use of thermal power, wind power and hydel power at various plant locations of AIS. The plan, with significant saving potential, is likely to be implemented in next one to two years. • Continued focus on raising internal efficiencies by following principles of TQM, TPS and Lean Manufacturing at all its manufacturing locations to help AIS in further reducing costs and overheads.

10. AIS Plans – New Products / Markets • Focus has been on improving product mix with a high proportion of innovative, high value-added products and solutions. The line up includes : Auto Glass : Solar control glass, Glass Antenna, IR cut windshield & Water repellent glass Float Glass : Value-added products like high performance Reflective Glass, Copper-free Mirror Glass Solutions : AIS Stronglas, AIS Securityglas, AIS Acousticglas, Customized products like tempered - laminated, tempered - IGP with gas, etc. • Exports of value added glass is a key element in AIS’s business strategy to insulate it in the event of demand-supply imbalance, necessitating export of float glass at variable cost / loss . This will not only help AIS in recovering full cost of glass, but also help in converting losses into decent profits. • The immediate action plan aims at further increasing export of auto glass to European markets, starting export of architectural processed glass in the booming Middle-East region, and exploring possibility of export of specialty glass like appliance glass.

11. AIS Plans – Capex / Expansion • Current phase of the expansion program almost completed, effectively capturing each element of the auto and architectural glass value chains. • The projects covered in the current phase included : - Integrated Glass Plant at Roorkee, with manufacturing units for float glass, reflective glass, mirror, auto glass and architectural processed glass - Auto Glass Plant at Chennai - Architectural Processing Plants at Taloja, Rewari, Chennai Most of the manufacturing units at Roorkee to be functional by end of FY 07. • Of the total capex of Rs. 1100 crores for the projected expansions, the current phase covers a capex of Rs. 950 crores approximately. Capex to start tapering off after completion of all the units at Roorkee in 2007. • The next phase of expansion envisages ramping up capacity at the Auto Glass Plant at Chennai. The expansion is likely to be completed in next 2-3 years. • AIS’s continued focus on self-sufficiency in process and product development through in-house development centre and designing facility to further help in reducing costs and improving development cycle. • These expansions to further strengthen AIS’s competitiveness, enable it to offer “technologically demanding” higher value-added products, and improve its position of being among the lowest cost high quality full solutions providers to the customers.

12. AIS Plans – Goals • In terms of its value chain strategy, AIS is encompassing each element of the glass value chain to capture profitable markets at the value added end of the chain. The strategy aims to : - Captively consume nearly 50 - 60 % of AIS’s total float glass production for value-added auto glass and architectural glass products - De-commoditize the glass business - Improve profitability by capturing end markets and delivering value-added products and services • FY 08 will be the year when the ongoing expansions will be fully commissioned. Revenues are expected to grow by over 100 %, compared to FY 06 levels. • Over the next 5 years, AIS aims to achieve : - Top line growth in the range of 15-20 %, on CAGR basis - Better operating margins, compared to the current level of 21 % - Quality of Japan at Cost of China =======