CATs PRODUCTION CONCEPT AND MDI’S BUSINESS MODEL

1. CATs PRODUCTION CONCEPT AND MDI’S BUSINESS MODEL

2. THE REVERSED GLOBALIZATION OR HOW TO THINK GLOBALLY AND ACT LOCALLY • MDI creates the “Dealer/Manufacturer/Partner” concept • Instead of a unique massive production plant located in a single place the MDI production concept is based on many small turnkey units spread around the world. • 80 % of the car ismanufactured locally and soldin the same location.

3. A unique massive production plant… CLASSICAL WAY OF PRODUCING AND EXPORTING CARS

4. CONVENTIONAL METHOD OF MANUFACTURING AND EXPORTING CARS

5. sent to distributors in various countries.. CONVENTIONAL METHOD OF MANUFACTURING AND EXPORTING CARS …Massive plant in a specific location , cars

6. CONVENTIONAL METHOD OF MANUFACTURING AND EXPORTING CARS …then to local dealers.

7. Small production units spread around the world… MDI PRODUCTION CONCEPT

8. MDI PRODUCTION CONCEPT .. manufacturing and selling cars locally.

9. PRODUCTION PARTS PRODUCT BUILT UP CAR MANUFATURER Components outsourcers Sub-components outsourcers TRANSPORT Raw materials Single parts outsourcers ADVANTAGES OF THE CONCEPT ACTUAL LOGISTICS

10. PRODUCTION PARTS PRODUCT BUILT UP CAR MANUFATURER P P Platforms and terminals T T Components outsourcers Sub-components outsourcers Distributors Dealers Raw materials Single parts outsourcers Customers ADVANTAGES OF THE CONCEPT ACTUAL LOGISTICS

11. PRODUCTION PARTS PRODUCT BUILT UP CAR MANUFATURER P P P P Platforms and terminals T T T T Components outsourcers Sub-components outsourcers TRAINS Dealers Raw material Single parts outsourcers Customers ADVANTAGES OF THE CONCEPT ACTUAL LOGISTICS Distributors

12. PRODUCTION PARTS PRODUCT BUILT UP CAR MANUFATURER P P P P P P P P Platforms and terminals T T T T T T T T Components outsourcers Sub-components outsourcers Distributors Dealers Raw materials Single parts outsourcers Customers ADVANTAGES OF THE CONCEPT ACTUAL LOGISTICS BOATS  CO2

13. PRODUCTION PARTS PRODUCT BUILT UP CAR MANUFATURER P P P P P P P P P P Platforms and terminals T T T T T T T T T T Components outsourcers Sub-components outsourcers Distributors Dealers Raw materials Single parts outsourcers TRUCKS  CO2 Customers ADVANTAGES OF THE CONCEPT ACTUAL LOGISTICS

14. X PRODUCTION PARTS PRODUCT BUILT UP X X X X X CAR MANUFATURER X X X X X P P P P X X P P P P X X X X X X Platforms and terminals T T T T T T T T X X X X X • NO DISTRIBUTORS X Components outsourcers X • NO INTERMEDIATES STOCKS • LESS OUTSOURCERS: • SINCE 80% OF THE CAR IS PRODUCED LOCALLY Sub-components outsourcers Distributors Dealers Raw material Single parts outsourcers • UNIQUE PLANT REPLACED BY MDI TURNKEY UNITS Customers ADVANTAGES OF THE CONCEPT MDI CONCEPT SIMPLIFIES LOGISTICS SIMPLIFICATION OF LOGISTICS

15. ADVANTAGES OF THE CONCEPT MDI CONCEPT SIMPLIFIES LOGISTICS SIMPLIFICATION OF LOGISTICS THE OUTSOURCERS ARE CHOSEN IN VIEW TO REDUCE COSTS, LOGISTICS AND TRANSPORT. EVERY PURCHASE IS MADE THROUGH THE MDI PURCHASING CENTRE Components outsourcers Sub-components outsourcers MDI PLANTS Raw material Single parts outsourcers Customers

16. MDI CENTER OF PURCHASES ADVANTAGES OF THE CONCEPT MDI CONCEPT SIMPLIFIES LOGISTICS Considering the total number of MDI turnkey units needed to produce the same amount of cars as in a conventional car manufacturer’s plant, the estimated gain is around: Components outsourcers Sub-components outsourcers • % less of CO2 emission due to transportation and production. Raw material and Single partsoutsourcers • % less logistic cost. MDI PLANTS Customers

17. Classic plant (Renault Flin) MDI production concept 1 PLANT50 PLANTS Land surface :2 370 000 m²15 000 m²750 000 m² Plant surface :880 000 m²4 350 m²217 500 m² Workforce (2 shifts) :4 650-120 -6 000 - Total investment :3 000 M€ 12 M€600 M€ ADVANTAGES OF THE CONCEPT Production :375 000 cars7 500 cars375 000 cars Only1/3rdof theland surfaceis necessary with the MDI concept Only1/4thof thePlant surfaceis necessary with the MDI concept Only 1/5thof theinvestmentis required with the MDI concept 30% more workforceare employed with the MDI concept

18. ADVANTAGES OF THE CONCEPT FROM AN ECOLOGICAL POINT OF VIEW • Only 1/3rd of the surface is necessary • Better repartition of the energy needed for the production • No emissions due to the transport of the finished cars ECONOMICAL ASPECTS • Money stays in the country  no need for a strong currency • Local employment no population transfer • Distribution of knowledge and Know how QUALITY • One car each ½ hour  Careful production  Quality • Use of best techniques non comparable with massive production MARKETING • Customer buys locally manufactured cars (government) • Less import taxes (very high in some countries). COSTS • Small infrastructures to manage. • Logistic expenses drastically reduced • No spare parts stocks  parts produced « after time » when needed • MDI production concept helps to decrease productions costs

19. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS

20. CONVENTIONAL CAR MDI CATs CAR Amortization 4%Amortization 2% Plant, machinery etc…Plant, machinery etc… ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS

21. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases32% Purchases28% • Through various dealers • Through MDI purchasing centre • Higher integration of internal production

22. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases 32% Purchases 28% Production costs 11%Production costs 6% • Labour, Overheads, etc… • Simple production techniques • Uses of existing public facilities • Labour, Overheads, etc… • Heavy production method • Integrated services • Labour transport • Hospital • Security services • Banks

23. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases 32% Purchases 28% Production costs 11%Production costs 6% R & D 5% Licence fee 10% • R & D • International Motor shows • World wide advertising • Commercial strategic offices • Marketing resources • Dividends

24. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases32% Purchases 28% Production costs 11%Production costs 6% R & D 5% Licence fee 10% Logistic 8% Logistic 1% • Raw materials transport and delivery • Parts suppliers delivery • Care during transport • Car park • Transport of cars to terminals • Transport of cars to dealers • Preparation before selling the car (cleaning) • Fixing damages during transport (10% of the total production) • Raw materials transport and delivery • Parts suppliers delivery

25. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases 32% Purchases 28% Production costs 11%Production costs 6% R & D 5% Licence fee 10% Logistic 8% Logistic 1% Commercial costs 18% Commercial costs 7% • International Motor shows • World wide advertising • Commercial strategic offices • Marketing resources • Local advertising • Salesmen salaries • Commissions

26. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases 32% Purchases 28% Production costs 11%Production costs 6% R & D 5% Licence fee 10% Logistic 8% Logistic 1% Commercial costs 18% Commercial costs 7% Dealers commission 18%

27. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases 32% Purchases 28% Production costs 11%Production costs 6% R & D 5% Licence fee 10% Logistic 8% Logistic 1% Commercial costs 18% Commercial costs 7% Dealer commission 18% Overheads 4% Overheads 8%

28. CONVENTIONAL CAR MDI CATs CAR ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Amortization 4%Amortization 2% Purchases 32% Purchases 28% Production costs 11%Production costs 6% R & D 5% Licence fee 10% Logistic 8% Logistic 1% Commercial costs 18% Commercial costs 7% Dealers commission 18% Overheads 4% Overheads 8% Gross margin 2% Gross margin 38%

29. ADVANTAGES OF THE CONCEPT SELLING PRICE / COST ANALYSIS Gross margin 38% THIS RESULT IS POSSIBLE BECAUSE OF THE EXISTING MARKET PRICES

30. NUMBER OF TURNKEY UNITS PER COUNTRY • Each turnkey unit is planed to fit in a specific area that will absorb the production • The number of people in urban area HOW DOES THE CONCEPT WORK ? • Factors taken into account: • The actual market (number of new and used cars) • A targeted potential market for MDI (around 1%) • The GDP of the country

31. For example: France can be owned by various « Dealers/Manufacturers/Partners » (For example 7 partners) 1– 2 – 3 – 4 – 5 – 6 – 7 whom together with MDI are shareholders of the company «MDI France» Managed by MDI HOW DOES THE CONCEPT WORK ? NUMBER OF TURNKEY UNITS PER COUNTRY 21 production plants

32. HOW DOES THE CONCEPT WORK ? The “MDI Country” company If several « Dealers/Manufacturers/Partners »own the various production plants of a country, the « MDI country » company will: • Manage the relationship and competition between the plants inside the country and with foreign « Dealers/Manufacturers/Partners »through a share holders agreement • Manage solidarity between its share holders in case of a « force majeure » • Coordinate huge fleetcontracts from big companies or administration of the country, for a fair distribution of special orders amongst the various factories. • Own license(s) and the know how • Make the link with the MDI centre of purchases This company does not earn any profit

33. HOW DOES THE CONCEPT WORK ? A PURCHASING CENTRE To obtain the benefit of costs reduction due to bulk purchase the « purchase centre » will directly deal with them for all the turnkey units. All the « Dealers/Manufacturers/Partners » will have shares in the purchase centre, to have the possibility to controlthat prices negotiated with outsourcers applies to them. Using the network of all the turnkey units, new outsourcers with lower prices will be identified and purchasing cost will be decreased even more.

34. The acquisition is made through four steps HOW DOES THE CONCEPT WORK ? AQUIRING AN MDI TURNKEY UNIT Acquiring an MDI turnkey unit is a partnership that: • participate tofinance the development of MDI products • give the possibility to the « Dealers/Manufacturers/Partners » to earn very interesting financial margins • helps tofight against pollution

35. 1) Execution of the « option and cooperation » agreement HOW DOES THE CONCEPT WORK ? FOUR STEPS TO ACQUIRE THE LICENSE • On the execution date a down payment of 2.5% of the total investment is required. • This down payment freezes the territory defined for the turnkey unit and stops MDI from dealing with other parties with regards to that specific area  Beginning of a real partnership  Exclusivity for the defined area • As a result of the partnership, the plant’s margin will be divided into 75% for the « Dealers/Manufacturers/Partners » and 25% for MDI (through licence fee). • This proportion will change to MDI’s advantage for the contract signed after the beginning of car production.

36. HOW DOES THE CONCEPT WORK ? FOUR STEPS TO ACQUIRE THE LICENCE 2) Execution of the « Licence agreement » • On the execution date a payment of 8.3% of the total investment is required • This step will occur as soon as the cars fit the specifications defined by MDI and is ready to be produced

37. HOW DOES THE CONCEPT WORK ? FOUR STEPS TO ACQUIRE THE LICENCE 3) Beginning of the production in Carros • Production starts in Carros , the rest of the amount falls due • At that stage a timeframe for building the factory and a payment schedule for the turnkey unit will be defined

38. The plant is built up • The tooling system and the machinery are delivered • A training period for the foremen is organized in Carros HOW DOES THE CONCEPT WORK ? FOUR STEPS TO ACQUIRE THE LICENCE 4) Building the turnkey unit • The payment for this phase is made in accordance with the schedule agreed in step 3 and can be financed (up to 70%) by MDI

39. MiniCATs and CityCATs, OneCATs, MultiCATs Others MDI products can be licensed on the basis of one unique license for a country (i.e. Tow tractors, generators etc…) in countries with less than 100.000.000 peoples. WHICH PRODUCTS ARE CONCERNED BY MDI’S PRODUCTION CONCEPT ?

40. MDI IN INDIA TATA MOTORS IS THE EXCLUSIVE LICENCED FOR INDIA

41. MDI IN INDIA TATA MOTORS IS THE EXCLUSIVE LICENCEE FOR INDIA « Tata Motors, in keeping with its role as the leading company in India for automotive R&D, has signed an agreement, in yet another exciting engineering and development effort, with MDI of France for application in India of MDI’s path-breaking technology for engines powered by air – which may be the ultimate environment-friendly engine yet. Besides, the engine is efficient, cost-effective, scalable, and capable of other applications like power generation. The agreement between Tata Motors and MDI envisages application and licensing of the technology for all the products in India. » Extract of Press release 25th January 2007

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